Lagos, Portugal, is one of the Algarve’s most popular destinations, attracting tourists and long-term residents alike. As a property owner, deciding between short-term and long-term rentals depends on several factors: profitability, management effort, legal regulations and market demand.

With recent changes to Portugal’s rental laws in 2024, it's crucial to understand your options before committing to a rental strategy.

Short-Term Rentals in Lagos, Portugal

Pros:

✅ Higher Income Potential – Lagos sees a huge influx of tourists, particularly between May and October, allowing for premium nightly rates and strong seasonal earnings.

✅ Flexibility – You can adjust pricing based on demand, block off dates for personal use and capitalise on high-season events.

✅ More Control Over Your Property – With short stays, you can frequently inspect and maintain your property, reducing long-term wear and tear.

Cons:

❌ Regulatory Requirements – Short-term rentals require an Alojamento Local (AL) license, which involves safety inspections and compliance with municipal laws. Some areas have restrictions on new AL licenses.

❌ Seasonal Demand Fluctuations – While summer occupancy is high, winter months can be slow, requiring strong off-season pricing strategies.

❌ Higher Management Effort – Frequent guest turnover means constant cleaning, check-ins and guest communication, often requiring a property management company.

Long-Term Rentals in Lagos, Portugal

Pros:

✅ Stable, Predictable Income – Fixed monthly rent provides steady income without seasonal fluctuations, ideal for long-term financial planning.

✅ Lower Operating Costs – Less turnover means lower maintenance, cleaning and marketing costs compared to short-term rentals.

✅ Simpler Regulations – No AL license is required for long-term rentals. Instead, you follow Portugal’s tenancy laws, which provide legal structure for landlord-tenant agreements.

Cons:

❌ Lower Income Potential – Monthly rental rates are significantly lower than short-term rates, meaning less overall earnings, especially during peak seasons.

❌ Less Flexibility – Long-term leases limit your ability to adjust rental rates frequently or use the property for personal stays.

❌ Tenant Risks – Portugal’s rental laws favour tenants, meaning evicting a non-paying tenant can be a lengthy process. Choosing reliable tenants is critical.

Portugal’s 2024 Short-Term Rental Law Changes – What You Need to Know

In October 2024, the Portuguese government reversed some restrictive measures on short-term rentals, making it easier for property owners to operate legally. Key updates include:

✔️ AL Licenses Are Transferable – Previously, if you sold a property, the AL license could not be transferred to the new owner. This rule has now been removed.

✔️ No More Mandatory AL License Renewals – Licenses no longer expire, making long-term planning easier for short-term rental owners.

✔️ Municipal Regulations May Still Apply – While national rules have eased, Lagos and other municipalities can impose their own short-term rental regulations.

Which Rental Strategy Works Best in Lagos?

✅ If you want to maximise income and have a hands-on (or managed) approach, short-term rentals are the most profitable choice in Lagos, especially with high tourist demand. However, be prepared for seasonal fluctuations and regulatory requirements.

✅ If you prefer stability and lower management effort, long-term rentals offer consistent income without frequent guest turnover. This is ideal if you’re looking for lower maintenance and regulatory complexity.

How Resort Rentals Can Help

At Resort Rentals, we specialise in property rental and management in Lagos. Have some questions? Get in touch with one of our helpful team today.