Machico Shuts Its Town Centre to New Holiday Lets and Requires Parking for Every New One Elsewhere in the Madeira Municipality

Machico, on the east coast of Madeira, has closed its town centre to new short-term rental registrations and set parking rules for new holiday lets across the whole municipality. The Regulamento Municipal do Alojamento Local de Machico (Machico Municipal Short-Term Rental Regulation) was approved by the Assembleia Municipal (Municipal Assembly) on 30 September and published in the Diário da República (the official gazette) on Friday 23 October as Aviso n.º 26359/2026/2.

Article 12 says the rules take effect the day after publication. The mayor's covering notice says the next working day, which is Monday 26 October. Either way, they apply from early next week at the latest.

A containment area for the town of Machico

The regulation creates a containment area covering the Vila de Machico (the town of Machico), drawn on a map in its first annex. The council used a "pressure ratio": short-term rental registrations divided by the total number of buildings, counted from the National Statistics Institute's geographic base. Any area at or above 10 percent can be made a containment area. The town has 122 registrations on Turismo de Portugal's national register and a ratio of 15.7 percent, according to the second annex.

In the containment area, no new short-term rental registration is accepted, with two exceptions:

• Restored buildings: a building that was in ruins or in poor or very poor condition, and that has risen at least two conservation levels after rehabilitation works under the urban rehabilitation rules.
• New buildings with three or more floors, within the 25 percent cap described below.

Neither exception covers the "estabelecimento de hospedagem" (guesthouse) category, which is banned outright in containment areas.

New registrations granted under the exceptions, for houses and apartments, cannot be sold or transferred to someone else during the owner's lifetime. They can still pass on inheritance, be given to a spouse, partner, child or parent, or move in a divorce or separation. Registrations that already exist are not affected by the transfer ban.

The council will check the ratio every year and review the containment area at least every three years, reporting to Turismo de Portugal. It can declare other parts of the municipality containment areas once they reach the 10 percent ratio, by a decision published in the Diário da República.

Rules for new holiday lets anywhere in Machico

Outside the town as well, a new short-term rental must meet these requirements, or the council can oppose its registration:

• Car access to the property.
• Parking: one space per room for room rentals; one space for a studio, one-bedroom or two-bedroom home; two spaces for a three-bedroom home; one more space for each bedroom above three; and one space per four beds for a guesthouse. Owners cannot pay the council a fee instead of providing parking, except for the restored buildings described above.
• A 25 percent cap: in buildings divided into separately owned units with three or more floors above ground, no more than a quarter of the units can be short-term rentals.
• No basements: no short-term rental is allowed on a floor below ground level.
• Farm stores: buildings licensed as agricultural storage cannot be used until works give them the conditions required of a home.

Registration is by "comunicação prévia com prazo" (prior notice with a deadline). Machico now also requires a floor plan marking the unit and, for a building from before 1951, a council certificate confirming its age. The council no longer accepts paper filings. It will also adopt an annual inspection plan.

Why the council acted

The preamble says short-term rentals are growing in the municipality and that housing prices demand "a very high" share of family income. It cites Decreto-Lei n.º 76/2024, which gave councils the power to set containment and sustainable-growth areas and to limit the transfer of new registrations. Our guide to registering an Alojamento Local explains the national rules, and we reported in July that the Government let tourist-pressured councils freeze new short-term rentals until the end of 2026. Elsewhere in Madeira, Funchal has proposed doubling its tourist tax from January.