Portugal proposes reversal of short-term rental restrictions – “Mais Habitação” – update
Revisiting the Mais Habitação: proposed reversals for short-term rental restrictions and its impact for property owners
Update: On August 7, 2024, the legislation revoking CEAL (extraordinary contribution on local accommodation) and the fixation of the depreciation coefficient for the calculation of IMI (municipal property tax) was published in the Diário da República. The remaining changes to the legislation introduced by the “More Housing” package are still pending parliamentary vote and subsequent official publication to come into effect. We will continue to update this and all Mais Habitação articles to keep you updated.
Original article – may 2024
In 2023, the Portuguese government introduced the Mais Habitação programme, implementing sweeping reforms designed to address housing shortages. These changes significantly impacted property owners and investors across Portugal. For a complete overview of these measures, please refer to our complete guide on Mais Habitação and its implications for short-term rentals in Portugal.
As we step into 2024, the new government has proposed 30 measures to help the portuguese housing sector, which also include the reversal several laws that directly affect the short-term rental market. This article explores these proposed changes and the impact they will have, if approved, for short-term licence owners and new investors.
If you’re curious to find out how much you could be earning with your property either as a short-term rental or as an alternative rental, you can use our calculator and find out now.
Reversal of short-term rental licences restrictions and expiration conditions
The 2023 “Mais Habitação” package strictly restricted the issuance of new licences, and at the same time set up expiration conditions for existing ones. The new government proposes to reverse all these generic restrictions, giving back to each municipality the decision-making power regarding new and existing licences.
Reversal of bans on new short-term rental licences
The original Mais Habitação measures prohibited the issuance of new short-term rental licences for apartments in all areas except the designated “interior” territories, and, in the coastal areas and bigger cities, exceptions were made only for detached houses.
In Porto, it was and is still possible to get a short-term rental licence for “service” apartments, such as stores or offices turned into living spaces. Get in contact with our local experts to know more about your options now.
With this 2023 measure, municipalities were required to conduct studies that ought to be published through the Municipal Housing Charter to check for the absence of housing shortages in all parishes simultaneously before being allowed to grant new licences in any location.
What could change?
The proposed reversal would restore the power to local municipalities, enabling them to determine the right balance in each parish (or even smaller areas) for new licences to be issued. This decentralisation could lead to a more targeted control of the market in all urban areas, allowing a more even of short-term rentals in each location, revitalizing the market once again.
This was similar to the previous measures in place that lead to the previous alojamento local regulations in Porto, and the 2022 Lisbon licence suspensions and its short-term rental containment areas.
Reversal of licences expiration conditions
With “Mais Habitação”, new licences issued after April 2023 were set to expire after five years; for older, previously existing licences, the government decided on establishing a grace period of 7 years, so their 5 years period would only start in 2030.
Additionally, licences became non-transferable, so they would expire if its holder wished to transfer them to another individual or entity. In the case of them being held by a company, they would also expire if the company underwent total or even partial ownership changes.
What could change?
The government proposes eliminating these conditions, allowing licences to remain valid indefinitely and to be transferable once again, in an attempt to stabilise the investment landscape once again, making it more attractive now and into the future to retain and acquire short-term rental properties in Portugal.
Reversal of the extra taxes
Reversal of the CEAL Tax
This tax was created by “Mais Habitação” to put more financial pressure on apartment owners in urban centres who engaged in short-term rentals, in an attempt to move more properties into the long term market.
As such, it exempted other types of properties, like rooms, detached houses, primary residences used for short-term rentals for less than 120 nights a year, and all short-term rentals in the interior territories too. Azores and Madeira, as autonomous regions, were free to decide to implement this tax or not; and recently Azores decided against it.
What could change?
The proposed legislation seeks to abolish the CEAL tax entirely, removing an additional financial burden from property owners and potential investors, giving them more freedom to decide how to optimise the income generated by their properties.
Reestablishing the IMI depreciation coefficient
The IMI (Municipal Property Tax) is a property tax that is calculated using the “coeficiente de vetustez”, an age-related depreciation coefficient that adjusts the taxable value based on how old a given property is. However, the “Mais Habitação” legislation eliminated the application of this coefficient for short-term rentals, leading to higher tax rates for these properties.
What could change?
The new government has proposed to reverse this change, making the tax calculation equal for all properties once again, which would lead to a decrease in property taxes to be paid by short-term rental owners in the future.
What lies ahead
As these proposals are updated or approved, we will update this post and our complete guide on Mais Habitação for short-term rentals.
In the meantime, whether you are looking to explore profitable alternative rental strategies such as mid-term rentals or flexible renting, or if you need assistance in navigating the upcoming changes to prepare for a new AL licence, our team is ready to support you.
Contact us today for expert guidance and to make the most of your property investments in this shifting landscape.
