Portugal's Alojamento Local regime governs all holiday rentals. Here is everything you need to know about licences, taxes, restrictions, and running a successful let in 2025.
This article is for informational purposes only and does not constitute legal or tax advice. Portuguese law is complex and has changed significantly in recent years — always consult a qualified Portuguese lawyer (advogado) and tax adviser (contabilista certificado) before operating.
Portugal has been one of Europe's most exciting property markets for a decade, and short-term holiday rental has played a central role in that story. The Algarve, Lisbon, Porto, and increasingly the Silver Coast (Costa de Prata) and Alentejo have all attracted significant investment from both domestic and international buyers looking to generate holiday rental income.
But the regulatory environment has been in flux. The 2018 amendments to the Alojamento Local (AL) law, followed by the 2023 Mais Habitação (More Housing) package, have changed the rules significantly. Hosts who were operating comfortably under the old framework need to understand what has changed — and new entrants need to understand the current landscape clearly before investing.
This guide explains the current position as of 2025.
Alojamento Local is the legal category for short-term tourist accommodation in Portugal that is not a hotel, guesthouse (pensão), or similar licensed establishment. All holiday lets — apartments, villas, guesthouses (hostel-style), and rural tourism properties — must be registered as Alojamento Local with the Serviço de Estrangeiros e Fronteiras and the Registo Nacional de Alojamento Local (RNAL), the national registry maintained by the Turismo de Portugal authority.
AL registration is not optional. Operating without registration is illegal and subject to fines. More practically, major OTAs including Airbnb and Booking.com require a valid RNAL number for listings in Portugal.
Portuguese law distinguishes between:
The registration type affects the requirements, the capacity limits, and in some areas the availability of new registrations.
To register an Alojamento Local:
Mera comunicação prévia: Submit a prior communication (mera comunicação prévia) to the local câmara municipal (town hall) through the balcão único electrónico (BUE) portal or via the ePortugal digital services platform. This is a notification, not an application — you declare that you are opening an AL and confirm it meets the legal requirements.
RNAL number: After submission, you receive a RNAL registration number within a few days. This must be displayed on all advertising, listing platforms, and at the property.
Câmara inspection: The câmara has 60 days to inspect the property and verify compliance. In practice, many câmaras do not inspect promptly, but the inspection right exists and properties that do not comply can be de-registered.
Condominium rules: For apartments, the condominium must not have a ban on Alojamento Local use in its house rules (regulamento do condomínio). Check before purchasing — the 2018 amendment to the AL law allows condominiums to vote (by majority of at least 50% of the building's total floor area) to prohibit new AL registrations.
In July 2023, Portugal's government passed the Mais Habitação package, which included the most significant restrictions on Alojamento Local since the regime was created. The headline measures were:
Moratorium on new AL licences in Lisbon and Porto: New AL registrations for apartment-type properties were suspended in the cities of Lisbon and Porto. Properties that already held AL licences were not affected, but no new licences could be issued for apartments in these cities.
Mandatory licence renewal: All existing AL licences were made subject to renewal every two years. This introduced ongoing compliance obligations where previously licences were indefinite.
Increased tax on AL income: The IRS (income tax) rates applicable to AL income were increased for some categories.
Transfer of licences on property sale: The ability to transfer an AL licence to a new property owner on sale was maintained but with conditions.
In a significant policy reversal, the new Portuguese government (elected in March 2024) announced in late 2024 that the Lisbon and Porto moratoriums would be lifted from 1 January 2025 for properties located outside certain designated high-pressure zones. By the time of writing in early 2025, new registrations are again available in many parts of both cities, though specific parishes (freguesias) with the highest housing pressure may still maintain restrictions.
This is a rapidly evolving area — check the current status directly with the relevant câmara municipal before making purchasing decisions.
The Algarve remains Portugal's dominant holiday rental market. The region runs from the Spanish border at Castro Marim through the dramatic limestone cliffs of the Barlavento coast to the sandy beaches of the sotavento. Annual visitor numbers run at approximately 9 million, with accommodation demand concentrated in the June–September season but growing in the shoulder months as digital nomads and retirees extend their stays.
Key locations and their characteristics:
Algarve AL registrations are generally straightforward outside the major urban centres. The câmaras of Loulé, Silves, Lagos, and Lagoa are all processing new registrations normally.
Lisbon's position had been one of the most debated AL markets in Europe due to the 2023 moratorium. With registrations reopening in 2025, the question for new investors is where specifically within the Lisbon metropolitan area they can operate.
Central Lisbon parishes including Santa Maria Maior (Alfama, Mouraria), Misericórdia (Bairro Alto), and Santo António (Chiado) may remain under tighter control. The suburban câmaras of Cascais, Sintra, and Oeiras — which cover the highly desirable Lisbon Riviera — are separate municipalities and were not subject to the Lisbon city moratorium.
Porto's short-term rental market has matured significantly. The city's historic centre (UNESCO World Heritage Site) had severe overtourism concerns that drove the moratorium. As restrictions ease in 2025, the adjacent neighbourhoods of Foz, Bonfim, and Paranhos are attracting investment from hosts who want Porto access without the city-centre licensing complexity.
The Douro Valley — two hours from Porto — offers an emerging rural tourism market with strong appeal to wine tourists, walkers, and visitors from the UK, Germany, and Scandinavia.
The Silver Coast between Lisbon and Porto — including Nazaré, Óbidos, Peniche, and Ericeira — is one of Portugal's fastest-growing holiday rental markets. Ericeira in particular has world-class surfing (a World Surfing Reserve) and a growing reputation as a wellness and outdoor lifestyle destination. Property prices are significantly lower than the Algarve, and tourism infrastructure is improving rapidly.
Portuguese-sourced rental income is taxable in Portugal regardless of the owner's residence. For non-resident owners:
For resident owners, AL income is added to other income and taxed at the progressive IRS rates (which can reach 48% for high earners), though the regime réel equivalent (categoria B with simplificado or contabilidade organizada options) allows expense deductions.
Portugal's NHR regime — which offered 10 years of flat-rate or exempt tax treatment for qualifying new residents — was significantly reformed in January 2024. The original NHR was replaced by the IFICI (Incentivo Fiscal à Investigação Científica e Inovação) regime, which targets specific professional categories rather than all new residents.
For most AL operators who are not in the qualifying professional categories (researchers, technology professionals, qualified entrepreneurs), the original NHR is no longer available. Those who were already registered under the original NHR before 1 January 2024 retain their existing rights for the remainder of their 10-year period.
IMI is Portugal's annual property tax, equivalent to UK council tax, levied on the taxable value (VPT — Valor Patrimonial Tributário) of the property. Rates are set by each município and typically run at 0.3–0.45% for urban properties. AL operators pay IMI at the standard rate.
IMT is a one-off transaction tax paid on property purchase, ranging from 0% to 8% depending on property value and type. Factor this into your acquisition cost calculations.
All Alojamento Local properties must:
Portugal does not have the same prescriptive pool fencing law as France, but the AL regulations require that pool areas be maintained safely. Insurance policies typically require fencing and alarms. Check your specific policy requirements.
For UK-based owners letting Portuguese properties, having a reliable local caretaker (or property management company) is the most important operational relationship you will have. Look for caretakers who offer check-in services, emergency response, pool maintenance, and gardening in one package. Many Algarve areas have established networks of English-speaking property managers catering specifically to the UK owner market.
The Algarve season runs July to August at peak, with strong shoulder demand in May, June, and September. October to April is low season for most coastal properties, though a small winter market exists for retirees and golf tourists (Vilamoura and Quinta do Lago golf courses operate year-round). Build your pricing model around the 14–16 peak and high-season weeks that will generate the bulk of your annual revenue.
Managing a Portuguese holiday let across multiple booking platforms, coordinating with local caretakers, and staying on top of guest registration obligations requires a centralised management system. LetPilot gives you the tools to automate guest communications, manage bookings and payments, schedule housekeeping, and track revenue performance — whether you are managing one villa in the Algarve or a portfolio across Portugal. Try LetPilot free at letpilot.co — no credit card required.