The (possible) End of Local Accommodation in Residential Buildings

18 May, 2022
The (possible) End of Local Accommodation in Residential Buildings

The Portuguese Supreme Court of Justice has recently clarified, through a Uniformity of Jurisprudence dated March 22nd, 2022, that the exploitation of a building unit as local accommodation activity – such as Airbnb, is not permitted if it is intended for dwelling purposes in the respective constitutive title of the horizontal property.

The major outcome of this interpretation is that in a residential building divided by means of horizontal property – meaning any apartment building, any owner, without the need for a resolution of the joint owners' meeting, may request the end of the operation of a local accommodation establishment installed in a residential unit, with the grounds such local accommodation is in breach of title that incorporated the horizontal property.

The local accommodation activity has seen, in the recent years, an exponential increase in demand and, above all, in supply, particularly in large historic centers, most of which are integrated in buildings under horizontal property.

Therefore, it is expected a large number of lawsuits requesting their closure, considering that this decision covers all current local accommodation establishments, regardless of the date of registration as a local accommodation establishment at the municipality territorially competent.

Consequences may be expected, both in terms of a decrease in the profitability of this sector of economic activity and in terms of an increase in the supply of fractions for residential use.

Furthermore, the Portuguese Housing Minister confirmed that this decision should have a very significant impact on the local housing market, and we are already witnessing a special interest on the practical impacts of this latest ruling.

Following this decision, it is anticipated that, in the near future, numerous local accommodation establishments will be closed, which will inevitably have a very positive impact in the hospitality business industry.