The Municipality of Funchal has approved a measure for the short-term rental sector (alojamento local suspension): temporarily suspending new registrations for short-term touristic rental accommodation (alojamento local) establishments across most of the city.
This decision comes at a time of intense real estate pressure, rising housing prices, and exponential tourism growth, factors that have profoundly affected the availability of homes for residents.
Why Suspend New Registrations?
The move is linked to recent changes in the Legal Framework for Alojamento Local, which give municipalities more power to regulate this activity.
The main objective is to balance the economic benefits of tourism with the right to housing, encouraging policies that support long-term rentals and affordable housing for young people.
Statistics from the Portuguese National Institute of Statistics (INE) reveal that:
- Housing prices in Funchal are well above both national and regional averages.
- Rental contracts have decreased while rents have sharply increased.
- Since 2022, local accommodation registrations have surged by 182%, with a strong focus on converting apartments into short-term rentals.
What Will Change?
The measure implements the immediate suspension, for six months (extendable for another six), of new local accommodation registrations in the following categories:
- Apartments
- Guesthouses, rooms (except those in private homes and standalone houses)
This suspension covers the entire municipality of Funchal and aims to give authorities the time to create a specific regulation. This regulation will likely introduce containment zones and establish guidelines for sustainable growth in the sector.
What Are the Exceptions?
The suspension will not apply to:
- New registrations of local accommodation in standalone houses
- Rooms within private homes
As such, the abovementioned exceptions are designed to avoid excessively penalising private initiatives, while still keeping some flexibility in the market.
Conclusion
The suspension of new local accommodation registrations represents a strategic response by the Municipality of Funchal to housing pressure and the rapid expansion of tourism.
Therefore, by prioritising housing availability for residents while supporting sustainable tourism, Funchal is seeking a more balanced model. One that serves the local community and the economy through the alojamento local suspension.
This article is for informational purposes only and does not constitute legal or professional advice. The situation regarding local accommodation regulation in Funchal may change. New measures may be debated and approved. Readers must consult official municipal sources or seek professional guidance for the most up-to-date information.
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