# Portugal's AL Revolution: How November 2024 Regulatory Changes Are Reshaping Short-Term Rental Investment in the Algarve ## Game-Changing Reforms Take Effect November 1, 2024, marked a pivotal moment for Portugal's short-term rental market. The new Alojamento Local (AL) regulations have fundamentally transformed the landscape for property investors, particularly in the Algarve, where holiday rentals represent a cornerstone of the real estate investment strategy. ## Key Changes That Matter for Investors ### AL Licenses Now Fully Transferable The most significant change is the restoration of transferability for AL licenses. Unlike the previous restrictions, these licenses can now be transferred under all circumstances, dramatically increasing the value and liquidity of properties with existing AL registrations. This change alone makes properties with AL licenses significantly more attractive investment assets. ### New Registration Opportunities Open Up The repeal of Article 19 of the "Mais Habitação" law means new AL registrations are once again permitted throughout Portugal, with limited exceptions in designated containment areas like central Lisbon and Ericeira. For Algarve investors, this opens up fresh opportunities in previously restricted areas. ## Municipal Autonomy Creates Local Variations ### Strategic Implications by Region Municipalities now have enhanced powers to regulate AL operations within their boundaries. While this creates some uncertainty, it also presents opportunities for savvy investors who understand local dynamics: - **Lagos and West Algarve**: Currently maintaining open registration policies - **Faro**: Implementing measured restrictions in high-density areas - **Coastal municipalities**: Generally favoring tourism-friendly policies ## Investment Strategy Adjustments ### Enhanced Property Values Properties with existing AL licenses have gained significant value due to transferability. Our analysis suggests these properties now command premiums of 15-20% over similar properties without licenses, particularly in prime coastal locations like Luz, Burgau, and Salema. ### New Capacity Limits Create Opportunities The new maximum capacity of 9 rooms and 27 guests for AL establishments creates clear parameters for investors. This standardization helps in property selection and renovation planning, particularly for larger villa investments. ## Operational Changes for Current Owners ### Simplified Management Requirements - AL records no longer expire automatically - Primary residence AL properties can operate year-round without the previous 120-day limit - Enhanced guest capacity flexibility with fold-up beds (up to 50% of normal beds) ### Enhanced Safety and Compliance Standards The new regulations maintain strict safety requirements including fire extinguishers, first aid equipment, and proper electrical/gas installations. These standards, while adding initial costs, protect long-term investment value and guest safety. ## Tax Implications Remain Unchanged Importantly, the taxation framework for AL properties remains stable. The 3-year rule for capital gains tax benefits continues to apply, providing predictable tax planning for investors considering property sales. ## Strategic Opportunities for 2025 ### Prime Investment Timing With transferable licenses and reopened registrations, early 2025 presents optimal conditions for AL investment in the Algarve. Properties with existing licenses offer immediate income potential, while new acquisitions can benefit from streamlined registration processes. ### Focus Areas for Investment - **Established coastal towns**: Lagos, Sagres, and Vila do Bispo offer stable regulatory environments - **Emerging areas**: Previously restricted zones now opening up for new registrations - **Premium properties**: Villas and apartments that can maximize the new 27-guest capacity limits ## Looking Ahead These regulatory changes signal Portugal's commitment to balancing tourism revenue with housing market stability. For Algarve investors, the new framework provides clearer rules, enhanced asset liquidity, and expanded opportunities. The key to success lies in understanding local municipal variations and acting quickly on properties with existing AL licenses, which have become significantly more valuable overnight. *For detailed guidance on navigating these new regulations and identifying optimal AL investment opportunities in the Algarve, VerLuz.Homes continues to monitor market developments and regulatory changes affecting international property investors.*