Investing in Tavira Property in 2025–26 - Short Term vs Long Term Rent

If you’ve been reading any of our previous blogs, Tavira is evolving fast. With consistent price appreciation, growing foreign interest, new infrastructure and shifts in rental regulation, investors are asking: Should I aim for a long-term (residential) lease or a holiday/short-term let in Tavira if I’m investing in a property here? 

The answer depends on many variables. In this post, we break down the tradeoffs, current conditions, risks and what makes sense when buying a property in Tavira for 2025–26.

Current Market & Context in Tavira

To set the stage, here’s what the Tavira market looks like in 2025:

• Price per square metre: In 2025, average asking prices in Tavira are approximately €3,300/m² for apartments and €3,700/m² for houses/villas.
  
  
• Rising demand & foreign buyers: A key trend is sustained interest from international buyers, particularly in historic areas, coastal and near-coast properties.
  
  
• Construction cost pressure: The cost of construction and renovation in Portugal has risen (3.8% year-on-year in some reports), which squeezes margins, especially for renovation-heavy investments.
  
  
• Regulation shifts in AL licensing: Changes in the Alojamento Local (AL) regime now allow AL licenses to be transferable with property sale and remove the requirement for renewal — a positive for existing AL operators.
  
  
• AL licensing constraints: Many municipalities, including parts of the Algarve, are suspending new AL registrations in tourist zones to preserve housing supply.

All that means that the choice between long-term and holiday rental is a more nuanced decision in Tavira’s current climate.

Long-Term Let vs. Holiday Rental: What to Consider

Here’s a side-by-side view of key factors and how they play out in Tavira.

Long Term Benefits:

• Stable rent and consistent income
• Possible that it would be tax favourable with the 2026 budget
• Lower maintenance burden
• Tenant security and screening
• Local demand

Short Term Benefits: 

• Greater earnings potential with peak demand
• Personal use options
• Currency hedge for foreign owners
• Market visibility and resale value
• Tax deductible operating expense

Key Considerations Before Choosing

• Location and zoning: Beachfront or riverside properties favour holiday lets; inland or residential zones perform better long-term.
  
  
• Your risk tolerance: Can you weather off-season vacancies, or do you prefer predictable monthly income?
  
  
• Time and management: Managing frequent guest changeovers is demanding unless you hire an agency. Long-term tenants require far less oversight.
  
  
• Regulation: Always check the Câmara Municipal’s current AL map and PDM zoning before assuming short-term permissions.
  
  
• Tax projections: Compare after-tax yields, not just gross income. The 2026 tax incentive may tilt returns toward the long-term.
  
  
• Future resale: Properties with transferrable AL licences can command premiums, but only where licensing remains unrestricted.

Our View as Local Tavira Estate Agents

Tavira remains one of the most balanced investment markets in the Algarve. Unlike western resorts, it still offers attainable entry prices and a loyal tenant base.

For pure investors seeking passive stability, the long-term moderate-rent model looks increasingly attractive thanks to upcoming tax cuts. For lifestyle investors who enjoy hosting and using the property themselves, holiday lets remain viable, provided AL rules and running costs are managed carefully.

As 2026 approaches, success will depend less on guessing the “better” model and more on aligning location, compliance, and personal bandwidth.