Lisbon Reversed Its STR Ban... But are the NEW Rules Actually Stricter?

Lisbon is reversing its controversial short-term rental freeze. News outlets everywhere are celebrating, but there's a whole lot more to unpack.

In December 2025, the Lisbon City Council approved a major update to its Municipal Regulation on Local Accommodation (RMAL), effectively ending the 2019 blanket ban on new short-term rental registrations in high-density areas.

The change came after the data finally landed—and it wasn’t flattering.

Despite years of strict controls, housing costs didn’t come down as promised. In fact, rent growth accelerated, home prices continued climbing, and hotel prices surged.

But here’s the nuance most news coverage is missing: this is not a full rollback.

Lisbon didn’t lift restrictions. Instead of an outright ban, the city introduced a more complex containment system that still tightly controls where and how many short-term rentals can operate.

In other words: the freeze is gone, but the leash is still very much on (and it's tight).

What the New Lisbon STR Rules Actually Change (And What They Don’t)

Under the old 2019 framework, Lisbon divided neighborhoods into containment zones based on how many short-term rentals existed compared to residential homes. Here are the zones and restrictions from 2019:

Absolute containment:

• More than 20% STRs (20 STRs per 100 homes) → no new licenses

Relative containment:

• 10–20% STRs → new licenses only with special city approval

Under 10% STRs:

• No restrictions

The new regulation cuts these thresholds in half, making the system stricter in some key ways:

Absolute containment now starts at just 10% STR share

• Areas with 10 STRs per 100 homes can no longer register new licenses

Relative containment now applies from 5%–10%

• New registrations allowed with special approval

Lisbon’s overall STR saturation currently sits at around 7.2%, meaning the city as a whole hasn’t triggered a citywide freeze. But many individual neighborhoods already fall into these revised containment categories.

Additional Restrictions Most Headlines Are Missing

Even in areas where STR registrations are technically allowed, certain properties are automatically disqualified under the new rules.

New STR registrations will not be approved if the property:

• Was used as a long-term residential rental within the past five years, unless the former tenant submits the STR application themselves
• Was purchased through a municipal, parish, or local authority auction within Lisbon after the new regulation took effect

Even though the blanket ban is gone, many properties still cannot be converted into short-term rentals even if they fall under the right containment.

And then there's the citywide containment trigger: If Lisbon as a whole reaches 10% STR share, new registrations could be frozen across the municipality.

On the plus side, room-style rentals in owner-occupied homes are allowed in some relative containment zones as a compromise to support locals.

This isn’t a free-for-all revival of Airbnb in Lisbon. In some ways, it's more restrictive than before.

Why It Matters (And What the Data is Saying)

The reversal was driven in large part by hard data showing that the previous 2019 restrictions failed to achieve one of their core goals: making housing more affordable.

Since those restrictions were introduced:

• The annual growth rate of home sale prices nearly doubled
• Rent inflation accelerated from 5.7% to 9.2%
• Hotel prices jumped roughly 30% between 2022 and 2024

And Lisbon isn’t alone.

Other cities that implemented aggressive STR restrictions saw similar outcomes:

• Barcelona: Rents rose roughly 70% despite long-standing caps
• Amsterdam: Airbnb listings fell by more than half, yet rents still climbed sharply
• Edinburgh: Rental supply tightened even after regulatory crackdowns
• New York City: Listings dropped over 90%, while rents and vacancy rates barely improved

The pattern is becoming clearer:
Short-term rentals aren’t the big bad guy that's causing housing affordability issues.

Instead, rising costs are largely fueled by:

• Housing supply shortages
• Zoning and development bottlenecks
• Population growth and tourism demand

Restricting STRs without addressing supply doesn’t fix the problem. It just makes things worse for citizens who depend on short-term rental income (and gives hotels a gigantic bonus paycheck).

The Bottom Line

Lisbon isn’t throwing its doors wide open to short-term rentals. But new registrations are back—with conditions.

This is a strategic reset, not a surrender.

For hosts and investors, the takeaway is simple but critical:

Ignore the headlines and always read the fine print.

The real story lives in:

• Neighborhood-level containment ratios
• Property-specific eligibility rules
• Citywide thresholds that could trigger future freezes

In a world where STR regulations are constantly evolving, smart underwriting and deep market research aren’t optional—they’re essential.

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