Airbnb has welcomed the decision by Lisbon City Hall to overturn restrictions on short-term rentals, arguing that the measures failed to deliver their stated goal of improving housing affordability in the Portuguese capital.

Lisbon first introduced restrictions on short-term rentals in 2019, targeting selected districts in an effort to curb rising housing costs. Since then, however, market data suggests that affordability pressures have intensified rather than eased.

According to available figures, the annual growth rate of house sale prices in the Lisbon Metropolitan Area has nearly doubled since the restrictions were introduced. At the same time, annual rental price growth accelerated from 5.7 percent to 9.2 percent. Hotel prices have also surged, rising by around 30 percent between 2022 and 2024 alone.

New rules expand hosting across the city

Under the revised framework approved by City Hall, restrictions will be eased in 18 districts, allowing residents in more parts of Lisbon to host short-term rentals. The new rules permit short-term rental activity of up to 10 percent of the local housing supply across the city.

Supporters of the policy change argue that the updated approach strikes a better balance between housing needs and economic reality, allowing residents to generate supplementary income while maintaining limits on overall supply.

For many hosts, short-term renting is not a primary occupation. Data cited by Airbnb indicates that seven in ten Lisbon hosts share only one home and rely on hosting as a way to offset rising living costs rather than as a full-time business.

Affordability for residents and visitors

Airbnb maintains that easing restrictions will help make Lisbon more affordable not only for locals, but also for visitors. Hotel accommodation in the city remains heavily concentrated in central districts, with significant new capacity under construction.

In the Santo António district, for example, there are reportedly around three hotel or similar accommodation rooms for every five local residents, underscoring the imbalance between residential and tourist infrastructure.

Sara Rodríguez, Head of Public Policy for Spain and Portugal at Airbnb, said that Lisbon’s previous short-term rental rules reduced income opportunities for residents while pushing accommodation prices higher for visitors. She argued that housing affordability challenges are primarily driven by insufficient housing supply rather than short-term rentals.

A wider pattern across global cities

Lisbon’s experience mirrors outcomes seen in other cities that introduced strict limits on short-term rentals as a housing policy tool.

In Edinburgh, restrictions that led to a 22 percent drop in short-term rental listings were relaxed earlier this year after rents and hotel prices reached record highs, rising at twice the pace of the national average.

Barcelona has enforced short-term rental restrictions for more than a decade, including a ban on new licenses. Despite a reduction in short-term rental supply, rents in the city increased by around 70 percent and house prices by approximately 60 percent over the same period.

Amsterdam capped short-term rentals at 30 nights per year in 2019. Between 2019 and 2024, Airbnb listings in the city fell by 54 percent, yet rents rose by more than a third, significantly outpacing the national rental increase of 13 percent.

In New York City, a de facto ban on most short-term rentals introduced in 2023 led to a reported 92 percent drop in Airbnb listings. However, housing vacancy rates remained unchanged and rents continued to climb, while hotel prices reached record levels.

Rethinking the role of short-term rentals

The reversal of Lisbon’s restrictions signals a shift in how cities are reassessing the relationship between short-term rentals and housing affordability. Rather than treating short-term rentals as the primary driver of housing pressures, policymakers are increasingly confronting broader structural issues, including housing supply shortages and rising construction costs.

As Lisbon moves forward with its revised framework, the city’s experience is likely to be closely watched by other urban centres grappling with similar challenges.