Lisbon Caps Short-Term Rentals at 10%, Blocking New Licences Citywide

Lisbon residents who have watched holiday rentals swallow up entire stairwells just saw the meter move: a cross-party deal at city hall has lowered the citywide ceiling on short-term lets to 10 %, a figure that could block fresh licences across the capital almost immediately while cancelling thousands of dormant ones.

Why the 10% cap matters to Lisbon residents

The newly approved 10% threshold creates an absolute containment line that turns the tap off for additional short-term rentals once one in ten homes in any area is listed for tourists. Because the current housing supply already includes a 7.2% city average of local accommodation, even a modest uptick would trigger a freeze on new licences. Officials hope the measure will take heat out of touristic hotspots, answering years of resident pressure for tighter controls and signalling a firm municipal cap on speculative conversions.

What changes for each neighbourhood

Six historic parishes—Santa Maria Maior, Misericórdia, Santo António, São Vicente, Arroios and Estrela—are already above the new limit. Meanwhile Avenidas Novas sits in a grey zone between 5 % and 10 %, where applications may still be considered case by case. The rules also allow owner-occupied dwellings to rent out single rooms, but only if the unit is at least a T2. That nuance tries to protect families who rely on that income while discouraging the wholesale conversion of luxury apartments that could otherwise return to long-term leases.

Political chess behind the vote

Mayor Carlos Moedas relied on his centre-right coalition and the two deputies from Chega to push the regulation through. The Socialist opposition, joined by Livre, PCP and the Left Bloc, argued for an even lower ceiling but could not outnumber the majority. The outcome underscores the art of policy compromise in a minority executive, with the decisive Assembly vote scheduled for early next week.

Potential ripple effects on housing prices

Economists predict noticeable movement in property prices as investor appetite cools. A slowdown in foreign investment could redirect units into mid-term leases, echoing the pandemic conversion that briefly drove rents down. The European Commission already lists Portugal as facing a 35% overvaluation in urban housing; city officials hope the measure will curb rent inflation and encourage a supply rebound without eroding the neighbourhood character that draws visitors in the first place.

Tourism sector bracing for new rules

Market analysts forecast that Airbnb hosts will face softer occupancy rates but stronger demand for the premium segment that can command higher prices. Stricter limits on complementary commerce inside buildings, mandatory liability insurance and the purge of inactive licences could also reduce friction with neighbours, while shrinking overall tourism revenue by a margin critics call manageable in the name of economic diversification.

Next steps and what to watch

All eyes now turn to the Municipal Assembly’s December verdict. Should lawmakers endorse the plan, an expanded enforcement squad will oversee a cancellation wave of non-compliant permits after the March insurance deadline. A digital one-stop portal and a new mediation office are expected to streamline disputes, yet legal challenges from property owners remain likely. For now, resident watchdogs are cautiously optimistic that the city has finally chosen homes over hotel keys.