The Rules Have Changed — and the Algarve Is One of the Best Places to Benefit

If you own — or are considering buying — a property in the West Algarve with the intention of renting it out short-term, 2026 is a pivotal year to understand. Portugal's short-term rental framework, known as Alojamento Local (AL), has undergone significant reform, and the changes are largely positive for investors in Lagos, Luz, Burgau, and Salema.

Here's what you need to know.

What Is Alojamento Local (AL)?

Alojamento Local is Portugal's official legal framework for short-term tourist accommodation. Any property rented to guests on a short-term basis — whether listed on Airbnb, Booking.com, or privately — must be registered under the AL system and hold a valid RNAL (Registo Nacional de Alojamento Local) number.

Without this registration, you cannot legally operate a holiday rental in Portugal. The RNAL number must appear on all listings and promotional materials.

The 2024–2025 Reforms: What Changed

Portugal's previous housing law — the controversial Mais Habitação programme — had placed severe restrictions on short-term rentals, including licence expiration dates, non-transferability, and near-total bans on new licences in coastal areas.

All of that changed with Decree-Law No. 76/2024, which came into force in November 2024 and continues to shape the landscape in 2026. Key changes include:

• AL licences no longer expire — they are now permanent, removing the uncertainty of five-year renewal cycles.
• Licences are transferable — when you sell a property, the AL licence moves with it. This is a significant advantage for investors looking to exit.
• No condominium approval required — you no longer need sign-off from neighbours to apply for an AL licence in an apartment building.
• The national ban on new licences has been lifted — municipalities now have the authority to manage licensing locally, rather than under blanket national restrictions.
• Maximum guest capacity is set at 27 guests across 9 rooms, with convertible beds allowed up to 50% of fixed beds.

Why the Algarve — and the West Algarve in Particular — Stands Out

Unlike Lisbon and Porto, which have already suspended new AL licences in their historic centres while drafting new local regulations, the Algarve currently has no blanket ban on new licences. This makes it one of the most accessible regions in Portugal for new short-term rental registrations.

In Lagos specifically, the short-term rental market is performing strongly:

• Median annual revenue per AL property: approximately €37,000
• Average occupancy rate: 75%
• Over 2,700 active listings in the Lagos area
• Peak season (June–September) sees near-full occupancy in well-located properties

Villages like Luz, Burgau, and Salema — with their authentic character, proximity to beaches, and limited supply — consistently attract premium bookings from European and international travellers.

What Investors Must Do in 2026

Whether you're a new buyer or an existing owner, here's a practical checklist:

• ✅ Register your property as AL with your local Câmara Municipal (town hall) via the e-balcão portal.
• ✅ Display your RNAL number on all listings and marketing materials.
• ✅ Maintain valid civil liability insurance — councils can request proof within 3 days, and failure to provide it can result in licence cancellation.
• ✅ Verify licence transfer if you purchased a property that already had an AL licence.
• ✅ Check with Lagos City Hall for any local regulations or containment zones that may affect your specific property or street.
• ✅ Keep accurate booking records and ensure tax compliance — enforcement is increasing across the Algarve.

Act Before Local Regulations Tighten

While the Algarve remains open for new AL registrations today, municipalities with more than 1,000 registered ALs are empowered to introduce their own containment zones and licensing restrictions. Lagos is approaching this threshold.

For investors, the message is clear: the window to register a new AL licence in the West Algarve is open — but it may not stay that way indefinitely.

At VerLuz.Homes, we work with buyers and investors navigating exactly these decisions — from identifying the right property to understanding the full regulatory and rental income picture. Get in touch to learn more about current opportunities in Lagos, Luz, Burgau, and Salema.

Sources: Decree-Law No. 76/2024 (Diário da República); Resort Rentals Algarve; GuestReady; Airbtics Lagos 2026 Data