AL sign

Algarve tourism property owners push back against housing package

Say government measures will “castrate” holiday rentals sector

The Algarve Association of Hotels and Tourism Developments (AHETA) has criticised the controversial draft measures unveiled by the Socialist government aimed at boosting housing in the country, arguing that they will “kill” the short-term rental sector without increasing the number of homes available for rent to the resident population.

“The rules approved in the last Council of Ministers are castrating the activity and announce its death, in a very short time,” said AHETA in a statement that described as a “fallacy” the government’s idea that the measures, “as far as AL (alojamento local) is concerned, solve or contribute to solving the country’s housing problem.”

According to the association, the government’s ‘Mais Habitação’ (More Housing) programme “instead of encouraging and strengthening economic activity in order to raise revenue and concentrate it on the construction of homes at controlled costs, and consequent rentals at values bearable by the most disadvantaged,” will end up “destroying an activity that was very well regulated” in the past, and whose rules had put an end to the so-called “parallel beds“.

AHETA recalls that the creation of regulations for short-term holiday rentals brought an end to the ‘parallel market’ for tourist accommodation that had existed for decades in the Algarve. The result was that the State was able to benefit from the taxes collected after the sector was legalised. Now, AHETA argues, the new proposals put at risk all the work and investment made by property owners.

“What can the government say to people who put all their financial availability – and many resorted to credit – to develop their activity and now foresee a very dark end?” AHETA questions, lamenting that “the rules of the game have been changed in the middle of the championships.

“What can we say about the lack of credibility the country has in the eyes of thousands of foreigners who have also made investments here” the association adds.

AHETA is also critical of the plan to wind-up the ‘golden visas’ scheme (in respect of housing), saying the programme (officially known as ARI) “brought many millions of euros of investment and taxes into the country, especially in property” that will now be “lost” to other countries* that continue to offer attractive solutions for this foreign investment.

Our country needs to attract permanent, serious, legal investment, with longevity and, for that it is determinant to transmit security, stability to the market and investors, all that the measures now taken do not do,” the association rails, pinning its hopes on changes to be agreed during the coming month of ‘public discussion’.

Last Thursday’s meeting of the Council of Ministers was dedicated to Portugal’s  ‘housing crisis’, and introduced a raft of new measures designed to try and help fix it.

Among the measures was the decision to stop issuing new licences for short-term holiday rentals, with the exception of rural accommodation in municipalities in the country’s interior where these could boost the local economy.

Existing short-term rentals licences will also be subject to re-evaluation in 2030, and thereafter every five years.

The government also intends to encourage landlords to transfer short-term rental properties to the long-term market, with the incentive that rental income earned by those who do so by the end of 2024 will be exempt from tax until 2030, as “compensation for the (resulting) decrease in revenue”.

At the same time, the government intends to create an extraordinary levy on properties that remain in the AL sector, with revenue collected going towards housing policies.


*Portugal is in fact only one of a number of countries that is throttling back on the issuance of ‘golden visas’: Ireland did so a few days ahead of the government’s announcement, and Spain is expected to follow. The decision follow instructions from Brussels’ over two years ago.