Alojamento Local (AL) is the Portuguese licence for short-term rentals: holiday apartments, houses, rooms and small guesthouses rented to tourists for stays of up to 30 days. After years of political back-and-forth, the rules have settled. Responsibility now lies with the municipalities, the national freeze is gone, and licences are again permanent and transferable. At the same time, the market has matured: tourism is still at record levels, but growth has slowed, and AL in particular is seeing fewer overnight stays.
Alojamento Local is often simply called “Airbnb”, but that is misleading. Airbnb is only one of several booking platforms, and in our experience most AL bookings in Portugal now come through Booking.com, with Airbnb, Vrbo and direct bookings making up the rest. For owners this matters: a good AL is listed on several channels, and the licence, rules and taxes are the same whichever platform the guest uses.
This guide explains the current rules, what to check before you buy a property for AL, the equipment you need, how AL income is taxed for non-residents and how to judge the real rental potential.
The 2023 “Mais Habitação” package froze new AL apartment licences nationwide, limited licences to five years and introduced an extraordinary AL tax (CEAL). Decree-Law 76/2024, in force since 1 November 2024, reversed this:
For investors this is the key change. The risk of a sudden national ban, which dominated the debate in 2023, has been largely replaced by local, evidence-based rules that are reviewed on a fixed cycle. That makes the regulatory picture more predictable, but it also means the right answer depends on the municipality and even the parish.
Lisbon: the city’s municipal AL regulation (RMAL), published in December 2025, works with two levels. In absolute containment areas (an AL-to-housing ratio of 10 % or more), new registrations are not allowed except in narrow cases, such as the rehabilitation of buildings vacant for more than three years. In relative containment areas (5 to 10 %), new registrations need the council’s express authorisation. The areas are defined by parish and also by individual neighbourhood, so a property outside a containment parish can still sit in a contained neighbourhood. After a reclassification in April 2026, the parishes in absolute containment are Santa Maria Maior, Misericórdia and Santo António, and those in relative containment are Arroios, Estrela and São Vicente. Always check the exact address on the City of Lisbon’s AL page, as the map is reviewed regularly.
Porto: the municipal regulation (Regulation 1462/2024, in force since December 2024) uses a single “pressure ratio” per parish: the number of registered ALs compared with homes used as permanent residences or long-term rentals. Parishes with a ratio of 15 % or more are containment areas, where new registrations are only possible by exception, for example new-build or rehabilitation projects of special interest to the city. These are Vitória, São Nicolau, Sé, Santo Ildefonso and Miragaia, with ratios that were well above the threshold when the rules were set (from about 22 % in Miragaia to about 60 % in Vitória). All other parishes are sustainable growth areas: Aldoar, Bonfim, Campanhã, Cedofeita, Foz do Douro, Lordelo do Ouro, Massarelos, Nevogilde, Paranhos and Ramalde. There, new ALs are allowed until the parish reaches the 15 % ratio, so each parish effectively has a cap on how many more licences can be issued. Check the address on the Porto AL map.
In the Algarve, most coastal municipalities have so far not introduced general freezes.
Temporary suspensions until the end of 2026: Decree-Law 151/2026, in force since 31 July 2026, gives municipalities with more than 1,000 ALs that have not yet adopted their own regulation until 31 December 2026 to do so. During that time they may suspend new registrations, as Sintra has done in some urban parishes, but never beyond 31 December 2026. Existing registrations are not affected. For buyers, this is a temporary, local risk with a fixed end date, not a return to a national ban, but it does mean checking the municipality’s current status before you buy.
EU rules: since 20 May 2026, an EU regulation requires platforms to check that listings show a valid registration number. Unregistered listings will increasingly be removed, which favours properly licensed owners.
If AL income is part of your plan, check it before you sign the CPCV, not after:
Our most important tip: before you buy, ask one or two professional AL management companies for a revenue estimate for the specific property. These companies manage hundreds or thousands of units, see real booking data and tend to be very sober in their business cases, often more sober than sellers’ agents or online calculators. Ask for expected occupancy, average daily rate by season, their fee and the net income after cleaning, platform commissions and taxes. Management fees in Portugal are typically 15 to 25 % of rental revenue.
Companies frequently named among the largest AL managers in Portugal include:
This is not a ranking. Local specialists can be a better fit, especially in smaller towns or for premium villas. Compare at least two offers and ask for references from owners with similar properties.
In our view, the best entry point at the moment is a T2 or T3 (two or three bedrooms) with two bathrooms. These apartments and houses are flexible: they suit couples travelling together, families and small groups, which widens your target market and helps occupancy outside the peak season. A second bathroom makes a noticeable difference in reviews and in the price guests are willing to pay. And when you eventually sell, a T2 or T3 with two bathrooms appeals to a much broader range of buyers, including owner-occupiers and long-term landlords, than a studio or T1 designed purely for tourists.
Portugal’s tourism has boomed over the past decade, and 2025 set new records with 32.5 million guests and 82.1 million overnight stays in tourist accommodation. But growth is slowing: overnight stays in AL fell by 2.3 % in 2025 and by 2.8 % in the first quarter of 2026, while hotels and rural tourism still grew. At the same time, the supply of AL units grew strongly during the boom years.
For new owners this means: plan with realistic occupancy and prices, not with the peak years. A property in a good location, with good reviews and professional management will still perform well; an average apartment in an oversupplied area may earn noticeably less than a few years ago. Many owners now combine short-term rental in high season with mid-term rentals (one to several months) in low season.
Porto is significantly cheaper than Lisbon: in September 2026, median asking prices were about €4,350 per m² in Porto against about €6,250 in Lisbon. Prices in the Algarve are similar to Porto on average (about €4,200 per m²), but demand there is highly seasonal.
A lower purchase price does not automatically mean a much higher yield, because nightly rates and rents in Porto are lower too. But Porto combines three advantages: a lower entry ticket, demand all year round from city tourism, students and professionals, and room for new licences in ten sustainable growth parishes, while most of central Lisbon is closed to new AL. For investors who are not planning to use the property themselves, we therefore see Porto as the most balanced of the three markets.
Before committing to AL, compare it with a classic long-term lease. Since 2026, rental income from residential leases with a monthly rent of up to €2,300 is taxed at a reduced flat rate of 10 % instead of 25 %, for income received until the end of 2029, and this applies to non-residents as well. Long-term rental also needs no AL licence, is not affected by containment areas, involves far less work and has a further advantage for non-resident buyers: since 2026, non-residents buying a home pay a flat 7.5 % IMT, but the difference to the normal rates is refunded if the property is let on a residential lease at a moderate rent within six months and for at least 36 months in the first five years. A holiday rental does not qualify for this refund.
An illustrative example for a 50 m² T1 in Porto. Both options are calculated at the upper end of realistic income expectations. The holiday rental is run by a management company charging 20 % plus VAT; the long-term rental is managed by the owner, which is realistic because a long-term lease needs little ongoing work. Because AL properties can be bought by residents and non-residents, the IMT and therefore the yield are shown as a range. Figures are rounded estimates as of October 2026.
Assumptions: purchase price €220,000 (about €4,400 per m²). Holiday rental: average €100 per night at 65 % occupancy, about €23,700 a year including VAT; cleaning is covered by guests’ cleaning fees; utilities €100 a month. Long-term rental: €1,000 a month (about €20 per m²), utilities paid by the tenant. Condominium fees €30 a month in both cases. IMT: about €7,000 at the normal rates for residents, or a flat 7.5 % (€16,500) for non-residents; for a long-term lease at a moderate rent, non-residents get the difference refunded. Value growth: 2 to 4 % a year.
| Holiday rental (AL) | Long-term rental |
|---|---|---|
Purchase price | €220,000 | €220,000 |
IMT | €7,000 (resident) to €16,500 (non-resident) | about €7,000 (non-residents after refund) |
Stamp duty (0.8 %) | €1,760 | €1,760 |
Total investment | €229,000 to €238,000 | about €229,000 |
Gross income per year | €23,700 | €12,000 |
VAT (6 %) | –€1,340 | – |
Platform commissions | –€3,560 | – |
Vacancy reserve (5 %) | – | –€600 |
Management | –€4,960 (20 % plus VAT) | none (self-managed) |
Utilities and internet (€100 a month) | –€1,200 | – |
Condominium (€30 a month), insurance, IMI | –€900 | –€800 |
Maintenance reserve | –€800 | –€400 |
Accountant | –€600 | –€200 |
Income tax | –€1,960 (non-resident: 25 % on 35 %) | –€1,020 (10 %) |
Net rental income per year | about €8,400 | about €9,000 |
Net yield, year 1 (on total investment) | 3.5 to 3.7 % | about 3.9 % |
Net yield, year 2 onwards (on purchase price, without value growth) | about 3.8 % | about 4.1 % |
Value growth per year (2 to 4 %) | +€4,400 to +€8,800 | +€4,400 to +€8,800 |
Total return, year 2 onwards, with value growth (on total investment) | 5.4 to 7.5 % | 5.8 to 7.8 % |
Please note: this business case is a simplified simulation based on assumptions, not a forecast or investment advice. Actual income, costs, taxes and value growth depend on the specific property, its location and condition, market developments, your tax situation and future changes in the law. Before buying, have the figures checked for the specific property by an AL manager, a tax adviser and, if relevant, your bank.
How to read the yields: the year-1 net yield and the total return are calculated on the total investment, consisting of the purchase price, IMT and stamp duty. From year 2 onwards, the one-off purchase costs are behind you, so many investors look at the net yield on the purchase price alone, which is the figure shown without value growth. Not included are notary, registration and lawyer’s fees, which usually add a further €2,000 to €4,000, and furnishing. Many apartments, especially those already operating as AL, are sold furnished; if not, expect additional costs of roughly €5,000 to €10,000 for a holiday rental and less for a long-term let, which lowers the yields accordingly. The example assumes constant income; in practice, a new holiday rental often earns less in its first months while it builds up reviews. With value growth included, the total return from year 2 onwards rises to roughly 5.5 to almost 8 % a year, based on conservative growth of 2 to 4 % a year, well below the roughly 9 % Porto recorded over the past year. Value growth is not cash: you only realise it when you sell, and capital gains tax then applies. Residents pay progressive income tax on the same 35 % of AL income, so depending on their other income their tax can be higher than in the table, which narrows the upper end of the AL range.
The result surprises many investors: even at the upper end of expectations, the long-term rental earns slightly more than the managed holiday rental, with a higher yield on a lower investment, and with far less work, risk and dependence on licensing rules and tourism trends. The main reasons are the lower tax rate, the IMT refund for non-residents, no platform commissions and no management fee. A holiday rental only pulls ahead if you manage it yourself, which adds roughly €5,000 a year but means running a small hospitality business, if the property clearly outperforms the market, or if you want to use it yourself from time to time.
Your own figures will depend on the exact location, the condition of the apartment and the management offer. That is why we recommend getting an estimate from an AL manager and a long-term rental quote for the specific property before you buy.
Every AL must meet basic conditions: good state of repair, connection to public water and sewage (or approved alternatives), windows or a balcony to the outside, adequate furniture and equipment, blackout systems, locks that ensure guests’ privacy and clean, hygienic conditions. In addition, for units up to 10 guests:
Above 10 guests, the full fire safety regulations apply. Ready-made starter kits with extinguisher, fire blanket, first-aid kit, AL plaque and signage are sold online, for example at kit-alojamento-local.pt. Civil liability insurance covering fire and damage to guests and third parties is mandatory, and the licence can be cancelled without it.
AL income is business income (category B). Under the simplified regime, which applies up to €200,000 of annual turnover, only 35 % of the gross rental income from apartments and houses is taxable. For non-residents, this taxable portion is taxed at a flat 25 %, which corresponds to roughly 8.75 % of gross income. Residents pay progressive income tax rates on the same 35 %.
Two practical warnings:
Check the tax return carefully. The low effective rate only applies if the income is declared correctly. AL income is reported in Annex B (Anexo B) of the annual income tax return (Modelo 3), which non-residents also have to file, usually between April and June of the following year. In Annex B, the income must be entered as AL income from apartments or houses, so that the 0.35 coefficient of the simplified regime is applied, and the return must indicate that the simplified regime applies. If the income ends up in the wrong field, or the simplified regime is not selected, the tax office treats the full amount as taxable, and the 25 % rate is applied to 100 % of the income instead of 35 %.
A simple example with €30,000 of gross rental income from an apartment:
| Declared correctly | Declared incorrectly |
|---|---|---|
Taxable income | 35 % = €10,500 | 100 % = €30,000 |
Income tax at 25 % | €2,625 | €7,500 |
The mistake would cost almost €4,900 in a single year. It is not always easy to correct afterwards, so avoid it from the start:
Use an accountant who regularly works with AL and non-resident owners. The fee is small compared to the cost of a wrong return.
VAT: AL bookings carry 6 % VAT. Residents with low turnover (up to €15,000 a year) can be exempt; non-residents generally cannot rely on this exemption and should plan to charge VAT from the first booking.
You may also have to declare the income in your home country under the relevant double taxation treaty.
As your buyer’s agent, we check licences, containment areas and condominium rules before you commit, and connect you with AL managers for a realistic revenue estimate. Book a free consultation.
Yes, in most of the country. Since November 2024 there is no national freeze. Municipalities can limit or prohibit new licences in containment areas, so check the specific parish.
In general yes, licences are transferable again. In containment areas, councils can restrict transfers, so confirm with the municipality before buying.
Under the simplified regime, 25 % on 35 % of gross income from apartments and houses, about 8.75 % of gross income. VAT of 6 % usually applies as well.
No. The five-year limit introduced in 2023 was abolished in November 2024.
In good locations with professional management, yes. But the market is normalising: plan with realistic figures and get an independent revenue estimate before buying.
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4 Responses
How do I change ownership of an AL? I bought a place, but need to change the ownership of AL. Thank you.
Hi Amanada, you have to check with the city hall if they allows taking over an AL licence and you need to change the AL ownership with the signature of the CPCV
“Guten Tag! Ich plane, eine Immobilie in Portugal als Alojamento Local zu vermieten, und benötige dafür eine portugiesische Steuernummer (NIF). Ich habe gehört, dass es Online-Dienste gibt, die den Prozess vereinfachen können. Können Sie mir bestätigen, ob der Dienst von pearls of Portugal zuverlässig ist und ob dies eine gültige Option für Ausländer ist, die kein portugiesisches Bankkonto haben? Vielen Dank im Voraus für Ihre Hilfe!”
Hallo Robin, vielen Dank für den Kommentar. Die NIF wird von einem Partner (Anwalt) beantragt, der nicht nur zuverlässig sondern auch sehr gewissenhaft mit den Daten der Kunden umgeht. Alle Formalitäten können Online beantragt werden