Photo Credit: Photo Credit: Aayush Gupta
Portugal's Sweeping Housing Law Raises Concerns for Tourism Industry's Future
Portugal’s parliament approved the Mais Habitação, which translates to “More Housing,” law. While intended to level the playing field for residents, this legislation’s sweeping impact is raising concerns within the tourism industry. It is threatening hostels, guesthouses and vacation rentals.
The law specifically targets properties classified as alojamento local, which means “local accommodation.” It encompasses small guesthouses, hostels and Airbnb-style rentals. Under the new rules, openings for these properties will be barred until 2030. The operational licenses also will require renewal every five years. These accommodations will face substantial new taxes, potentially jeopardizing many family-owned businesses and reshaping Portugal’s burgeoning tourism sector.
The legislation addresses the pressing housing issue in Portugal, where the housing ministry aims to expand the public housing stock. Amidst pressures, real estate investments and tourism influx, the law’s proponents argue it complements existing measures by offering a timely response.
License To B&B
The uncertainty surrounding the law’s scope raises concerns within the industry. The government insists that hostels and guesthouses are exempt. Legislation refers to them as “accommodation establishments.” The new rules impose a moratorium on issuing new licenses until 2030 with potential suspensions in case of housing shortages.
The law increases property taxes for alojamento local properties outside of low-density areas. It also introduces a new tax, starting at 15 percent, referred to as CEAL. Additionally, new short-term rentals must obtain unanimous approval from neighbors to acquire a license.
Tourism Will Be Affected
While Portugal’s housing law aims to address the housing crisis, it has drawn criticism for its potential impact on the tourism sector. The legislation could devastate the entire industry, warns a report by the Associação Hostels de Portugal. Portugal boasts 826 registered hostels, with nearly 80 percent owned individually. The data indicates that around half of the country’s hostels have shut down since the pandemic.
Critics also express concern that the legislation may hinder the development of diverse accommodations for tourists. As the government seeks to strike a balance between the needs of residents and the demands of tourism, the future of Portugal’s accommodations industry remains uncertain.