The recent Decreto-Lei n.º 76/2024, enacted on October 23, 2024, marks a pivotal moment for Portugal’s housing and tourism sectors, particularly focusing on local accommodation establishments. With the increasing pressure of tourism on housing markets, this legislation aims to balance the needs of both sectors by modifying the legal framework governing local accommodation, first established under Decreto-Lei n.º 128/2014. It offers a structured response to the challenges posed by the rapid growth of short-term rentals, aiming to create a more sustainable, regulated, and equitable housing landscape in the country.

The law stems from the government’s “Construir Portugal: Nova Estratégia para a Habitação” initiative, which includes short-term measures to increase housing supply, strengthen the rental market, encourage youth housing, and ensure housing accessibility for citizens. This strategy is framed by the broader constitutional rights to private property, entrepreneurship, and housing, ensuring that all policies aim to protect these foundational rights while addressing growing urban and economic pressures.

Key Provisions of Decreto-Lei n.º 76/2024:

1. Increased Powers for Municipalities

The legislation shifts a significant portion of regulatory power to local municipalities, enabling them to create and implement their own rules regarding local accommodation. This decentralization is one of the most notable aspects of the decree-law, reflecting a recognition of the diverse pressures faced by different regions and cities.

Municipalities are empowered to establish local regulations for the operation of local accommodations within their jurisdictions. This regulatory capacity is crucial in regions where there is a high concentration of local accommodation establishments, defined as areas with more than 1,000 registered units. In such areas, municipalities must, within 12 months, deliberate and decide whether to implement regulatory measures.

Additionally, municipalities are allowed to appoint a local accommodation ombudsman, whose role is to mediate disputes between residents, accommodation operators, and third parties, such as neighbors. The ombudsman can issue recommendations and approve best practice guides, acting as a resource for ensuring harmonious coexistence between long-term residents and temporary visitors.

2. Zoning: Containment and Growth Areas

To preserve the social fabric of local neighborhoods and mitigate the impact of excessive tourism on housing availability, municipalities can establish “containment areas” and “sustainable growth areas”.

• Containment areas are regions where the concentration of local accommodation units is deemed to be too high, causing potential negative effects on housing availability and the local community. In these areas, municipalities may limit or prohibit new registrations for local accommodations, with the aim of reducing housing market distortions and ensuring that long-term housing remains available for residents.
• Sustainable growth areas are neighborhoods where the local government sees potential for controlled growth in local accommodation. These areas will be subject to closer monitoring, with specific requirements in place to prevent overdevelopment and maintain balance between tourism and residential needs. Municipalities will have the authority to impose limits on new registrations, ensuring that the number of local accommodation units does not exceed a sustainable threshold relative to available long-term housing.

These zoning rules are designed to be reassessed every three years, ensuring that they remain responsive to shifting conditions in both the tourism and housing markets. Additionally, the law mandates that any containment or sustainable growth measures must be based on detailed studies evaluating the local impact of short-term rentals on housing supply, neighborhood character, and environmental factors.

3. Changes to Registration and Regulatory Processes

The decree introduces several changes to the process of registering and operating local accommodation establishments. For example, municipalities are given the power to oppose registrations under certain conditions, particularly if a proposed accommodation unit violates municipal zoning rules, lacks proper authorization, or fails to meet specific environmental and building standards.

Additionally, the law emphasizes the need for better coordination between local governments and the national tourism board. Local authorities must report new accommodation registrations to the Turismo de Portugal, ensuring that the central government maintains a comprehensive database of all local accommodations operating in the country.

Another noteworthy change is the introduction of stricter regulations on hostels. The law mandates that any establishment intending to operate as a hostel in a multi-family building (i.e., apartment buildings) must first secure the approval of the building’s condominium assembly. This provision aims to protect residents in these buildings from the potential disruptions caused by hostels, particularly in urban areas where noise and foot traffic can be significant concerns.

4. Protection for Long-Term Housing

One of the core objectives of this decree is to protect long-term housing availability. The legislation includes several measures designed to curb the impact of local accommodation on the housing market, such as:

• Limiting the conversion of rental units into local accommodations: The law prohibits the registration of new local accommodation units in buildings or apartments that have been used for long-term residential leases in the two years preceding the registration application. This rule is particularly relevant in containment areas, where the housing crisis is most severe.
• Ownership restrictions: The law limits the number of local accommodation units a single owner can operate within the same building, aiming to prevent large-scale buyouts of apartment buildings by investors looking to convert them into short-term rentals. The maximum number of local accommodation units that can be operated by one owner in a single building is nine units, and these must not exceed 75% of the building’s total apartments.
• Mandatory insurance coverage: Operators of local accommodation units are now required to secure mandatory insurance to cover any damages caused by their guests. This rule ensures that neighboring residents are not financially burdened by the actions of temporary visitors.

5. Local Participation and Conflict Resolution

The law introduces new mechanisms for resident participation and conflict resolution. In buildings where local accommodation is permitted, residents (especially in condominiums) have a formal avenue to oppose the operation of these units if they can demonstrate that the accommodations have caused significant disruption. This opposition can be filed with the municipal government, and in cases where opposition is upheld, the local accommodation registration can be canceled.

Moreover, the introduction of a local accommodation ombudsman provides a resource for mediating disputes before they escalate to legal challenges. The ombudsman is empowered to review complaints from residents, issue recommendations, and work with accommodation operators to develop solutions that respect the needs of both residents and tourists.

6. Fiscal and Penal Measures

The decree also revises the system of penalties and fines for non-compliance with local accommodation regulations. It introduces a more robust framework for fiscal oversight, including enhanced collaboration between local governments and tax authorities to ensure that all local accommodation operators are complying with tax laws. The penalties for operating an unregistered local accommodation unit or for violating zoning regulations are classified as serious economic offenses, subject to heavy fines and the potential suspension of the operator’s business license.

Additionally, the law empowers municipalities to suspend the operation of local accommodations if they are found to be non-compliant with zoning or building regulations. In more extreme cases, municipalities can order the permanent closure of these establishments if they repeatedly violate legal standards or cause significant disruption to the local community.

Impacts and Challenges

The enactment of Decreto-Lei n.º 76/2024 comes at a time when Portugal is grappling with the double-edged sword of tourism and housing pressures. On one hand, the explosion of local accommodation options has been a boon for the tourism industry, contributing significantly to the country’s economic growth. On the other hand, the proliferation of short-term rentals has exacerbated the housing affordability crisis, particularly in cities like Lisbon, Porto, and other tourist-heavy regions.

The law’s introduction of local governance and containment measures represents an effort to address these challenges at the municipal level, where the impacts of tourism on housing are most acutely felt. By giving local governments the power to regulate the number and location of local accommodations, the decree seeks to curb the most harmful effects of short-term rentals without stifling the broader tourism industry.

However, the success of these measures will depend on the capacity of local governments to effectively enforce the new regulations. Municipalities will need to invest in administrative resources to manage the registration and oversight of local accommodations, as well as in the creation of detailed urban impact studies to justify the designation of containment areas. Additionally, the success of the law’s conflict-resolution mechanisms, such as the appointment of ombudsmen, will depend on widespread adoption by municipalities and cooperation from accommodation operators.

In conclusion, Decreto-Lei n.º 76/2024 represents a significant evolution in Portugal’s approach to regulating local accommodations. It seeks to balance the interests of tourism and housing by giving municipalities more tools to manage the growth of short-term rentals while protecting long-term housing and promoting urban sustainability. Though it faces challenges in implementation, the law sets a comprehensive legal framework for the future of local accommodations in Portugal, aimed at ensuring that tourism development does not come at the expense of affordable housing and community well-being.

In addition to the legal framework introduced by Decreto-Lei n.º 76/2024, effective property management is crucial for navigating these new regulations. Madeira Estate, a company specializing in property management in Madeira, provides comprehensive services to both property owners and investors in the region. Their offerings include administrative support, property maintenance, marketing, and client management, ensuring a hassle-free experience for those involved in local accommodations. With expertise in compliance and tenant relations, Madeira Estate supports owners in maximizing the value of their properties while staying compliant with local laws.

For more information, you can visit Madeira Estate Property Management.

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