Portugal Restores Transfer Rights for Short-Term Rental Licenses

The Portuguese government has recently approved a key change regarding local accommodation licenses, marking a return to a system where these licenses can be transferred upon the sale of a property. Previously, under rules introduced earlier in 2023, licenses were non-transferable, even in the case of events like death, divorce, or inheritance. This change is part of broader legislative reforms designed to address issues in the housing market, particularly in high-demand urban areas.

The original rule prohibiting the transfer of local accommodation licenses was part of a government effort to curb the proliferation of short-term rentals, which were seen as exacerbating the housing crisis, particularly in popular tourist destinations like Lisbon and Porto. The aim was to protect long-term rental markets and prevent housing prices from being driven up by the high demand for tourist accommodations. However, this measure faced significant criticism from property owners, real estate professionals, and various stakeholders in the tourism industry, who argued that the inability to transfer licenses reduced property values and created legal and financial difficulties in transactions involving real estate used for local accommodation.

The government’s decision to reverse this rule reflects a recognition of the need for a more balanced approach. The new policy reinstates the ability to transfer local accommodation licenses between property owners, which is expected to stabilize the market and offer more flexibility for property owners. It also addresses concerns that the previous policy disproportionately affected small-scale property owners, who relied on income from short-term rentals.

One of the key aspects of the new law is the emphasis on decentralization. The government has granted municipalities the authority to regulate local accommodation in their jurisdictions, particularly in areas where demand for housing is high. This means that local governments can tailor their regulations to the specific needs and conditions of their areas, potentially imposing stricter rules in neighborhoods facing severe housing shortages or loosening them in regions where tourism is a vital part of the economy.

This decentralized approach is intended to provide a more nuanced solution to the housing crisis, allowing for targeted interventions that reflect the unique circumstances of each municipality. By empowering local authorities, the government aims to balance the interests of property owners, residents, and the tourism industry.

The decision to allow the transfer of local accommodation licenses has been met with mixed reactions. Many in the real estate and tourism sectors have welcomed the change, seeing it as a necessary correction that will help maintain property values and support the local economy. On the other hand, some housing advocates remain concerned that the move could lead to a resurgence in short-term rentals, further driving up housing prices and exacerbating the shortage of affordable housing.

The broader implications of this policy change will likely unfold over time, as municipalities begin to implement their own regulations and the market adjusts to the new legal framework. The government has indicated that it will continue to monitor the situation closely and may introduce further adjustments if necessary to ensure that the housing market remains balanced and accessible to residents.

The Portuguese government's decision to reintroduce the transferability of local accommodation licenses marks a significant shift in housing policy. By decentralizing regulation and giving municipalities more control, the government aims to address the complex challenges of the housing market while supporting the tourism industry. This move is expected to bring stability to the real estate market, but its long-term impact on housing affordability and availability will depend on how local authorities choose to implement the new regulations.