Funchal City Council Temporarily Halts New AL Licenses in Apartment Buildings
The Funchal City Council has officially approved a provisional suspension on the issuance of new licenses for Alojamento Local (AL) within collective housing buildings. The measure, announced today, will be in effect for a maximum period of six months and is a direct response to what the council describes as the "continuous growth of these units." The decision was made by the municipal executive, which is led by a coalition of the PSD and CDS-PP parties.
According to the council's statement, this suspension is an essential preliminary step before undertaking an extensive mapping of the municipality's 10 parishes. This study aims to identify areas that have become saturated with short-term rental properties. The findings will form the basis for a new, comprehensive regulation for the local accommodation sector. The proposal was approved at the weekly executive meeting, with the opposition councilors from the Confiança coalition abstaining from the vote.
The opposition cited "serious doubts" regarding the legality of the suspension, arguing that regulation of the sector should be a planned, rigorous process rather than an ad-hoc measure. However, Funchal's Mayor, Cristina Pedra, defended the decision, stating that a formal diagnostic of the AL situation is already underway. This process will define future "containment zones" and "liberalization zones." The mayor also noted that the ultimate policy would be defined by the administration that wins the upcoming local elections on October 12th.
This move follows a recent controversy involving the licensing of AL units in an apartment building constructed by the CORTEL housing cooperative with public funds. The situation, first brought to light by the Confiança coalition in July, prompted an official inquiry, the results of which are expected in September.
The scale of the AL sector in Funchal is substantial. The municipality, with a population of over 108,000, has approximately 9,000 beds in the AL sector across 6,000 registered rooms. The number of registrations has grown by 182% between 2022 and 2025. Currently, the bed capacity in local accommodations is equivalent to over 25% of the capacity of Funchal's traditional hotel industry, highlighting the sector's significant impact on the local tourism and housing landscape.
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