Navigate Portugal’s AL Market in 2025 – Essential Updates for Investors

Portugal continues to thrive as a top destination for tourism and investment. However, 2025 brings new updates to the Alojamento Local (AL) licensing framework, especially in Lisbon and Porto, where regulations have tightened to balance tourism and housing needs. If you’re looking to invest, here’s what you need to know

 FAQs

  • The Alojamento Local license enables property owners to legally rent their homes to tourists on a short-term basis (30 days or less). It remains one of the most lucrative ways to generate rental income in Portugal.

  • Lisbon

    • Restriction on New Licenses: The city has expanded the “AL-Free Zones” in high-demand neighborhoods such as Alfama, Bairro Alto, and Baixa. New licenses in these areas are now frozen indefinitely to address housing shortages for locals.

    • Transitioning Properties: Under the changes introduced by the Council of Ministers, the Alojamento Local (AL) license now transfers with the property when an AL rental property is sold. Investors are advised to consult local authorities for detailed information.

    • Tax Updates: The municipal tourist tax in Lisbon has increased slightly, affecting the costs incurred by operators.

    Porto

    • Stricter Zoning Rules: Similar to Lisbon, Porto has restricted AL licenses in its historic center (Ribeira) and other key neighborhoods like Cedofeita and Bonfim.

    • Opportunities in Surrounding Areas: Suburban and lesser-known neighborhoods, such as Campanhã, remain open for new AL investments and offer strong growth potential due to improving infrastructure and connectivity.

    • Green Standards: Properties applying for AL licenses must meet updated energy efficiency requirements in Porto, aligning with sustainability goals.

    1. Tourism Boom: Portugal remains a magnet for global travelers, with projected visitor growth of 8% in 2025, especially from North America and Asia.

    2. High Returns in Strategic Areas: Properties in emerging neighborhoods outside restricted zones in Lisbon and Porto can yield 6-10% annual returns.

    3. Tax Benefits: The simplified tax regime for AL operators offers significant advantages, allowing for reduced rates on declared rental income.

Steps to Obtain an AL License in 2025

  1. Verify Local Regulations

    • Confirm whether the property is in a restricted zone by checking municipal maps or consulting with a local expert.

    • Properties in non-restricted zones still require registration with the local City Hall.

  2. Ensure Compliance

    • Properties must meet updated fire safety, energy efficiency, and public liability insurance standards.

    • Install signage identifying the property as Alojamento Local.

  3. Register & Await Inspection

    • Submit your application through the municipal portal or in person. Be prepared for on-site inspections to ensure compliance.

Investor Tips for 2025

  • Explore Secondary Cities: Consider investing in high-growth areas like Caparica, Braga, Aveiro, or Setúbal, where AL licenses are easier to obtain, and tourism is expanding.

  • Focus on Quality & Sustainability: Properties with eco-friendly features, such as solar panels or energy-efficient appliances, are more attractive to both regulators and renters.

  • Leverage Tax Incentives: Consult a local tax advisor to maximize benefits under Portugal’s Non-Habitual Resident (NHR) tax regime or other programs for foreign investors.

Ready to Seize the Opportunity?

The 2025 updates may pose challenges in Lisbon and Porto, but with the right strategy, Portugal remains one of the best markets for short-term rental investments.

We have two AL Smart Investment in Porto available:

Duplex for Sale at €975,000, Offering a Lucrative 6.9% Gross Yield!

2-Bedroom Property with 8.6% Gross Yield, Priced at €620,000!

For more options and to start transforming your property into a high-yield investment, speak with one of our advisors today!