Lisbon Reduces Short-Term Rental Limits From 20% to 10% in New Regulation
Lisbon City Council voted on Thursday to approve changes to the Municipal Regulation of Short-Term Rentals (RMAL). The proposal, led by the PSD, CDS-PP, and Iniciativa Liberal (IL) and supported by Chega, lowers the absolute containment ratio from 20% to 10%.
The council held a private session to select between two competing proposals:
one from the left-leaning PS advocating stricter limits
one from the PSD/CDS-PP/IL coalition
Absolute Containment and Relative Containment Explained
Abolute Containment (≥10% Ratio)
No new licenses for short-term rentals are allowed in areas where the ratio of AL units to permanent housing reaches or exceeds or equals 10%.
Existing AL units can continue operating, but new applications are automatically blocked.
Relative Containment (≥5% but <10%)
New licenses can be issued, but only under certain conditions.
There is the possibility to register AL units in the form of a “room” within a T2 or larger apartment that is the owner’s main residence.
Exceptional authorizations may be granted, but only if all legal requirements are met.
Areas Below 5% Ratio
No restrictions apply, new licenses are processed normally.
Socialist Proposal for 5% Absolute Ratio Rejected by 10-7 Council Vote
The socialist proposal recommended reducing the absolute ratio to 5% and the relative ratio to 2.5%. It received backing from seven left-wing council members - four from PS, one from BE, one from PCP, and one from Livre - but failed against the 10 votes supporting the PSD/CDS-PP/IL and Chega coalition. Socialist and left-wing members argued that a lower ratio would better control urban housing pressures, but the motion was dismissed.
Under the current Local Accommodation Regulations (RMAL), in effect since November 2019, areas of absolute containment are those with a ratio of short-term rental establishments to the number of permanent housing units "greater than 20%" (20 more short-term rentals for every 100 housing units), and areas of relative containment are those with a ratio "equal to or greater than 10% and less than 20%".
New Rules Include Civil Liability and Inactive Registrations Controls
Chega successfully proposed amendments addressing inactive short-term rentals and requiring proof of civil liability insurance and at least one reservation in the previous year.
The council approved these changes with PSD/CDS-PP/IL support, while PCP abstained and PS, BE, and Livre voted against. Vasco Moreira Rato, councilor for Housing and Urbanism, said the amendments aim “to resolve the problem of inactive establishments in the city.”
Six Parishes Face Absolute Containment With 10% Threshold From November Data
According to data from November 1, 2025, six Lisbon parishes now fall under absolute containment, and one parish falls under relative containment. The new rules also restrict exceptional authorizations for public-auction properties, limit complementary commercial uses within rental establishments, and cap the transferability of rental registrations in containment areas. The proposal will now go to the Lisbon Municipal Assembly for final approval on December 2, 2025.
Could these new rules be blueprint for Funchal and effectively tackle the housing crisis in Madeira?
Source: Expresso
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