Portugal housing market is undergoing a significant change as the country’s “Mais Habitação” (More Housing) law seeks to address housing shortages. While the law aims to create a fairer housing market for residents, it’s inadvertently impacting the future of hostels, guesthouses, and vacation rentals. The law places restrictions on properties classified as “alojamento local” (local accommodation), including guesthouses, hostels, and Airbnb-style rentals, leading to concerns about the survival of family-owned businesses and the country’s tourism industry.
The Law’s Impact on Accommodation Establishments
The Mais Habitação law introduces stringent rules for alojamento local properties, which are under threat due to various provisions:
- New Openings Blocked: The law restricts new alojamento local licenses until 2030, affecting businesses’ expansion plans.
- Renewal Every 5 Years: After 2030, existing licenses will need to be renewed every five years, subject to local authorities’ discretion.
- Hefty Taxes: Properties outside low-density areas will face higher property taxes, including a new tax called CEAL, which may strain small businesses.
- License Approval: New short-term rentals require unanimous approval from neighbors to obtain a license, except for hotels.
Government’s Justification
Portugal government introduced the law to address housing shortages and provide better housing access to its citizens. The housing ministry emphasized the need to balance urban pressures, real estate investments, and tourism with creating affordable housing options for residents. The law aims to achieve this balance by promoting long-term rentals while controlling short-term accommodations.
Unintended Consequences
Despite the government’s assertion that hostels and guesthouses won’t be affected, industry insiders disagree. The law’s broad language and terms like “accommodation establishments” cause confusion, and many believe that hostels and guesthouses could be adversely impacted.
Challenges to the Sector
The law’s implications are concerning for Portugal’s vibrant tourism industry:
- Threat to Businesses: Hostel owners are concerned about the uncertainty created by short renewal cycles and new taxes, potentially leading to closures.
- Financial Strain: New taxes, especially the CEAL tax, could burden small businesses that may struggle to cover the additional costs.
- Potential Job Losses: The legislation’s impact on the industry could lead to job losses and the closure of establishments, further affecting Portugal’s economy.
- Uncertain Future: The new law’s effects could put unique, individually owned hostels that contribute to the cultural experience of travelers at risk.
Conclusion
While Portugal government intends to strike a balance between housing for residents and the thriving tourism industry, the Mais Habitação law’s broad provisions inadvertently jeopardize the future of hostels, guesthouses, and vacation rentals. The law’s effects on small businesses, jobs, and the country’s tourism appeal warrant careful consideration as the government moves forward with its housing reform agenda.