What Algarve Property Owners & Investors Need to Know About Alojamento Local (AL) Licensing

Discover how Portugal’s evolving Alojamento Local (AL) laws impact Algarve property owners and investors. With municipal control over licenses from July 2025, understanding local restrictions, license transfer rules, and new market dynamics is critical. Stay informed and protect your investment.

By LiveAlgarve on 18th July 2025 - 4-5 m. reading time 

What’s Currently Happening in the Algarve

Portugal’s short-term rental market has seen two major AL (Alojamento Local) regulatory shifts in the past couple of years:

1. Mais Habitação Law (October 2023) – Tightened rules, including suspensions of new licenses in built-up zones, 5-year license terms, non-transferability, CEAL tax, and restrictions in condo settings.
2. Regulatory Reforms (May–June 2025) – The current government repealed key restrictions: new AL license issuance is now under municipal control, licenses are transferable, 5-year expiry is removed, CEAL and fixed IMI coefficient scrapped.

Locally, the Algarve, especially areas like Albufeira, Lagos, Portimão, and Faro, has been at the forefront of AL activity, with municipalities designating "conflict zones" in saturated areas.

Why July 2025 Is a Key Moment

• As of mid‑2025, municipalities hold authority over issuing new AL licenses, particularly important in hotspot zones.
• Owners with older AL licenses or newly purchased properties need to verify transfer and local compliance.
• Removing CEAL and expiry rules simplifies licensing, but local objections and zoning caps may still apply.

Market Highlights: Risk & Opportunity

• Licence Transferability Restored – AL licenses can now follow property sales, protecting investment value.
• Dynamic Local Regulation – Some municipalities are temporarily freezing new AL in high-density areas, while others remain open,creating uneven inventory and potential price shifts .
• Supply Tightening – With fewer new licenses in certain zones, demand for licensed ALs may push prices and rental yields higher.
• Long-Term Stability – License longevity and clarity around taxes offer more predictable returns,especially appealing to investors from France, Switzerland, Brazil, and beyond.

How We’re Helping Right Now

Here’s how Live Algarve supports owners and investors in this new regulatory environment:

License Audit & Verification

We can check current AL licenses, confirming transferability, municipal compliance and lack of local restriction.

Strategic Property Advice

If AL is constrained locally, we recommend converting to long- or mid-term rentals, or choosing licensed properties in less regulated zones.

Local Regulation Updates

We monitor changes by municipality, updating readers with news and updates.

What This Means for You (as of July 2025)

Summary

The Algarve remains a prime location, but with evolving regulations, experienced, local insight is more crucial than ever. 

At Live Algarve, we’re committed to guiding you safely and successfully through the Algarve property market. 

Contact us today to review your portfolio, assess a planned purchase, or to explore exclusive Algarve property listings.