Some businesses start with a simple gesture: putting a property online and accepting bookings. The problem is that, in Portugal, not all "daily rentals" are just rentals. In many cases, we are already talking about local accommodation, with its own rules, formal obligations, and fines that surprise those who thought a contract and good faith were enough.

Short-term rental agreements (AL) exist at a sensitive intersection between civil law, tourism regulations, economic oversight, and even condominium disputes. A detail in the framework can separate a legal and safe operation from an irregular activity that ends in registration cancellation, temporary ban, and administrative offense proceedings.

In this article we explain how to frame short-term rental/AL contracts, what the most relevant new rules are for those who operate or intend to operate them, which duties generate the most fines, how administrative offenses work, and what to do to reduce risk before an inspection occurs.

Are short-term rentals and short-term leases the same thing?

No. And this confusion is the root of many problems.

In the classic sense, a lease is a civil contract in which the use of a property is granted for a period of time in exchange for rent, with a set of typical rules. Local accommodation, on the other hand, is a specific legal framework for providing temporary accommodation services, often to tourists, in exchange for payment.

In practice, when the objective is temporary accommodation with associated services and guest turnover, the framework tends to resemble short-term rentals. And when entering the short-term rental market, specific duties also come into play: registration, identification, insurance, complaints book, advertising rules, and inspection.

Therefore, before signing, advertising, or accepting reservations, the first step is to understand the context. Because a contract that calls what is actually the operation of local accommodation a "lease" may not protect anyone.

When does a short-term lease agreement become a short-term rental?

There is no single magic sign, but there is a pattern.

When temporary accommodation is provided, with frequent turnover, advertised on platforms, and offered to the public as "accommodation," the law tends to view this as the provision of local accommodation services.

There is one particularly sensitive point: many owners try to "resolve" the issue with very short contracts to avoid regulations. This often fails when reality shows that the property is being exploited as short-term rental.

Ultimately, what matters is the set of facts. And when the authorities intervene, the name you wrote on the contract carries less weight than how the property is used and marketed.

New rules: what has changed recently in local accommodation?

The regulations governing local accommodation have been subject to changes and revisions. What matters to those who are operating or want to operate such accommodation is understanding three trend lines.

1. There were changes that simplified and adjusted the system, including the repeal of more restrictive measures that had been introduced in 2023.
2. The role of municipalities has gained importance, with the possibility of defining local areas and rules, which means that the same project may be viable in one municipality and blocked in another.
3. The logic of permanent obligations, such as valid insurance and availability of proof, was reinforced, with direct consequences for registration.

The result is simple: today, short-term rental agreements require legal planning and attention to municipal regulations, condominium bylaws, and ongoing obligations.

The power of municipalities: areas of containment and sustainable growth.

One of the most relevant points in the new rules is the scope given to municipalities to create territorial regulations.

In practice, a municipality can approve regulations that create containment zones and sustainable growth zones, setting limits on the installation of new local accommodation in certain areas.

This has a direct impact on those who want to start a business. It may happen that their property is in an area where it is no longer possible to register a new short-term rental, or where there are specific restrictions.

The prudent rule is simple: before investing in construction, furniture, and marketing, confirm the local situation. If the municipality has defined areas, ignoring this could mean spending money only to be unable to operate later.

Condominium: the point that generates the most conflict in short-term lease agreements.

There's a recurring reality: the contract is properly drawn up, the registration exists, but the condominium collapses.

The new rules maintain and reinforce the importance of coexistence in a building. The person responsible for the establishment must provide the condominium with a telephone number and email address, and there is a provision for an additional contribution to cover expenses for increased use of common areas, with a percentage limit.

This means that, in a building with intensive use of elevators, stairs, cleaning, and wear and tear, the condominium association can decide on an additional contribution within the legal limit.

In practical terms, this doesn't replace dialogue. But it helps to frame expectations: those who run short-term rentals in a building have to manage impacts, because pressure from the condominium association is one of the most common reasons for complaints and inspections.

If you want to prepare for the topic in a comprehensive way, it may be helpful to read Lease Agreement: Landlord and Tenant Clauses and Obligations.

Registration and advertising: the mistake that leads to hefty fines.

One of the most expensive mistakes is advertising, brokering, or offering local accommodation without a valid registration, or with an outdated registration.

This is not a bureaucratic detail. Under the current regime, offering, providing, advertising, and brokering for unregistered establishments or those with outdated registrations is treated as a serious economic offense.

The same applies when local accommodation is promoted in violation of the lease agreement or operating permit, if one exists.

In practice, if the property is rented and the tenant decides to operate it as a short-term rental without the landlord's authorization, the risk is not only civil. There may be administrative liability related to the irregular operation.

Mandatory insurance: an ongoing obligation, not a piece of paper "for the drawer"“

Mandatory insurance is one of the aspects that most often catches operators off guard.

The business owner must maintain valid third-party liability insurance, with a minimum coverage amount per claim, to cover damages to guests and third parties. And there is a practical obligation to remember: the municipality may require documentary proof of the insurance, and this proof must be provided within the specified timeframe, under penalty of consequences such as cancellation of the registration.

This is crucial: it's not enough to have taken out insurance when you started. It has to be valid. And you have to be able to prove it quickly.

In short-term lease agreements, this detail should be reflected in the business management, with renewal alerts and organized filing.

Complaint book and sign: "small details" that lead to fines.

There are obligations that seem minor, but are typical in audits.

Local accommodation establishments must have a complaints book in accordance with legal requirements.

Depending on the type of vehicle, there is a requirement to display an identification plate.

The absence of these elements may constitute a minor economic offense. The problem is that, even if it is minor, it creates a record, opens a case, and can be the start of a series of inspections.

If the goal is to reduce risk, the logic is practical: treat these duties as a permanent checklist, not as "bureaucracy".

Fines: what are the amounts and why do they vary so much?

When discussing fines, the first question is always "how much is it?".

Here there is an important detail: the infractions related to local accommodation refer to the Legal Framework for Economic Offenses, which establishes different frameworks depending on the severity and who commits the infraction.

In other words, the same infraction may carry a different fine depending on whether it is committed by an individual or a company, and within companies the penalty range varies according to size.

In general terms, typical RJCE values are:

• minor economic offense: from 150 to 500 euros for individuals, and from 250 to 12,000 euros for companies, depending on size;
• Serious economic offense: from 650 to 1,500 euros for individuals, and from 1,700 to 24,000 euros for companies;
• A very serious economic offense: fines ranging from 2,000 to 7,500 euros for individuals, and from 3,000 to 90,000 euros for companies.

This explains why, in the local accommodation sector, some fines seem "small" while others seem devastating. It's not arbitrary. It's a matter of the legal framework and the classification of the offender.

Additional sanctions: when the problem isn't the fine, it's closing doors.

Another part of the risk lies in the ancillary sanctions.

Depending on the severity and culpability, sanctions may include suspension of business activity or closure of the establishment for a period that can last for years.

In practice, for those who make a living from short-term rentals, this is the real impact. A suspension or termination is not just "a penalty." It means lost revenue, canceled bookings, reputational damage, and often, broken relationships with platforms.

Therefore, short-term lease agreements should be designed with a focus on continuity and compliance. Because the sanction that kills the business is not always the fine.

Cancellation of registration: when the operation ceases to be legal.

Cancellation of registration is one of the harshest consequences.

This can occur for various reasons, including significant breaches of contract and lack of valid insurance or failure to provide proof when required.

Furthermore, mining in violation of containment areas defined by the municipality can also have consequences.

The practical message is simple: registration is not a lifelong stamp. It requires maintenance and respect for rules that may be municipal, condominium, or legal.

What if the property is rented: landlord's authorization and contractual risk.

This is where one of the most dangerous areas begins.

If a lease agreement exists, the use of the property must respect what was agreed upon. Operating short-term rental accommodation in a rented property without proper authorization can lead to disputes with the landlord and, in certain situations, grounds for termination of the contract.

This is especially sensitive in housing contracts, where the intended use and purpose carry significant weight.

If your case involves a conflict with your landlord, it may be helpful to see Landlord's guide to terminating a rental agreement and, when there is more widespread non-compliance, Breach of contract: what to do legally.

A practical guide to reducing penalties in short-term rental contracts.

Without complicating things, there's a set of steps that avoids most problems.

1. Confirm the classification: civil lease or local accommodation.
2. Confirm local feasibility: municipal regulations, containment areas, building requirements.
3. Manage registration and keep data up-to-date, ensuring that advertising and platforms display the registration number.
4.  Ensure ongoing obligations: valid insurance and accessible proof thereof, complaints book, sign where applicable, publicized noise regulations, and contact with the condominium association.
5. Organize documentation and communications, because inspections are much simpler when the operator can quickly prove compliance.

Common mistakes that cause AL (Alcoholic Beverage) to fail inspection.

There are errors that appear repeatedly in processes.

One is operating without registration or with outdated registration.

Another option is to ignore the condominium and let the building descend into conflict.

Another is treating insurance as a "one-time thing".

And yet another is using short-term lease agreements as a way to "disguise" exploitation, without realizing that the reality of the business is what counts.

Avoiding these mistakes isn't perfectionism. It's protecting your investment.

Conclusion

Short-term rental agreements can be a solid opportunity, but only when the framework is correct and obligations are treated as part of the deal. The new rules reinforce the role of municipalities, the relevance of condominiums, and the logic of ongoing duties, and this means that improvisation is costly.

If you are starting out, regularizing your business, or facing the risk of fines and penalties, it is worth analyzing your case rigorously before taking the next step. For support in structuring the contract, verifying municipal viability, regularizing registration, and managing risk, speak with our team. lawyers in Braga.

If you are looking for a Solicitor To review the documentation and guide a secure strategy, we are available to help.