We disrupt regular broadcasting to bring you a time-sensitive update regarding recently announced changes to the Portuguese Golden Visa program. And this time round, we’re afraid it’s not good news.
Let’s get into the details below…
The Portuguese Golden Visa program was launched in 2012 and quickly became a popular way for non-EU citizens to gain residency in Europe. We have written many times about the program’s benefits.
The program offers residency permits to those who invest in the country.
Various investment options have been available, with the residential and commercial real estate investment options being by far the most popular.
However, the pandemic brought significant approval delays. We know people, for example, who purchased a qualifying property in early 2021 and are still awaiting approval.
And starting from January 2022, the program underwent important official changes, too: Investments in residential property in Lisbon, Porto, and the coastal areas became ineligible for the Golden Visa. However, less developed regions of the country remained unaffected.
The reason for the changes was the meteoric rise of property purchase and rental prices in the country’s main metropolitan areas, and in the tourist hot-spot region of the Algarve.
Locals, whose salaries did not increase nearly as fast, were getting priced out of the local real estate market.
The government argued that the billions of dollars that came in via the Golden Visa were a big part of the problem.
But it's only partially to blame.
In recent years, Portugal has become very popular among northern Europeans and North Americans. With the rise of remote work, tens of thousands of people realized they can swap ultra-expensive and gloomy London, Oslo or Toronto for much cheaper and pleasant Lisbon or Porto. Most of these new residents have never heard of the Golden Visa.
And Portugal has suddenly become the “go-to” destination in Europe among “normal” tourists – which again has nothing to do with the Golden Visa program.
Fast forward one year, and we know that the 2022 measures did not have the desired effects. Real estate in Lisbon, Porto and other areas continued to appreciate handsomely, while stock for both sales and rentals remained constrained.
And just yesterday, on February 16, during a press conference dedicated to housing affordability in Portugal, the country’s prime minister announced a series of measures designed to tackle the housing crisis and combat property speculation.
Restricting the country’s Golden Visa program was one of the measures announced. Here are the main points confirmed during the event:
- No new Golden Visas applications will be accepted (via the RE option, at least).
- For existing Golden Visa holders qualified via the real estate route, renewals will be approved only if the property is used as a permanent dwelling by the owner or their immediate family, or if the property is rented out long-term (i.e. not Airbnb rentals).
The section of the video recording of the conference pertaining to the Golden Visas runs from 25:50 to 26:45, covering less than one minute, and leaves a lot of room for speculation and guesswork.
Here are some of the unanswered questions that we have:
- Will ALL Golden Visa categories be scrapped, or only property-related investments?
- When will the changes take effect?
- Will there be some transition period during which one could still apply?
- What about renewal conditions of other Golden Visa categories, such as investment funds (not related to real estate) and the Cultural GV program?
We have no answers to any of these questions. However, considering that it is the housing affordability issue that they are trying to address, we hope that investment categories unrelated to real estate will not be affected.
But again, we are just speculating at this point.
And here is what our legal contacts on the ground had to add:
“The measures/alterations cannot take immediate effect. There will still be a public discussion first. And on March 16, the government will meet again to make final resolutions.
Then, a bill will have to be drafted and approved by Parliament and the President of the Republic with a specified deadline for the eventual new law to be put into force.”
As you can see, there is very little concrete information available at this time. Everything will depend on the text of the final (and still non-existent) legislation.
What is clear is that the government is serious about scrapping all real estate-related Golden Visa categories sometime this year. And they are likely to achieve this as the ruling party has the majority in the Portuguese parliament.
But how and when it will be done remains uncertain.
Overall, we see this development as a symbolic PR move to appease Portugal’s political left:
Golden Visa property sales constitute only a tiny fraction of all residential property sales, and have no longer had any meaningful impact on residential demand in Lisbon and Porto since the implementation of the 2022 program restrictions.
This suggests that the real problem here is the lack of supply of available properties; the Golden Visa program is just a convenient scapegoat.
Official comments regarding “property speculation”, too, are likely overblown; cities like Lisbon and Porto have had large numbers of empty apartments for decades – mostly because their owners left Portugal in search of higher wages…
The government is trying to tackle these issues as well. In the same press conference, among many other things, the government announced tax cuts for those who rent out their properties for the first time or move their properties from short-term rental (i.e., Airbnb) into the long-term rental market.
Also, obtaining a short-term rental license will soon become much more difficult outside of rural areas.
Bottom line, if you are considering applying for a Portuguese Golden Visa or are already in the process, make sure to get in touch with your Portuguese legal advisor handling your application.
They will be able to comment on the best steps to take based on the most current assessment of the changing legal framework.
This is a developing story, and we'll keep updating our Sovereign Confidential members as and when more reliable information becomes available.
