Portugal has ended its Golden Visa residency program for property investors. This announcement came just a week after Ireland terminated of its ‘Golden Visa’ Immigrant Investor Program.
Both countries introduced Golden Visas in 2012, as did Spain, as they struggled to recover from the global financial crisis. The aim was to prevent banking collapse by bringing foreign money into their real estate markets.
According to Forbes, the scheme has brought in €6.8 billion direct investment into Portugal since its launch in 2012, with the most of the money going into real estate. The knock on effect of this has been rents and house prices have soared in a country which is among the poorest in Western Europe, where according to Reuters, more than half of workers earn less than €1,000 per month.
Because Portugal’s ‘Golden Visa’ program didn’t require any minimum time to be spent in Portugal, properties were bought and left empty, or just used for 2 or 3 weeks and rented as holiday lets for the rest of the year. This resulted in distortions in both the rental and sale sectors of the property market.
The increase in properties let short term for holidays, reduced the availability of long-term rents, pushing up prices which became unaffordable to locals. In Lisbon, short-term rentals now account for more than 60% of listed properties. Lisbon is the third costliest rental market in Europe after Milan and Paris. Rents increased by 37% in that city in the fourth quarter of 2022 alone.
The ‘golden visa’ investment entry point became the floor price for properties in many parts of Portugal. Sellers priced their properties for wealthy foreign buyers pushing asking prices way beyond what locals could afford.
Aside from upsetting the ordinary Portuguese, ‘Golden Visa’ schemes like those offered by Portugal, Ireland and Spain are seen as a back door entry for nationals of non-EU countries into the EU and also vehicles for money laundering.
The European Parliament announced in March last year (2022) that citizenship by investment programmes (i.e. Golden Visa Schemes) should be gradually removed. This proposal passed with 595 votes to 12. EU pressure has already forced Malta, Cyprus, Latvia, and Bulgaria to scrap their ‘Golden Visa’ residency initiatives, so it is not surprising that Ireland and Portugal followed suit, and maybe is only a matter of time before Spain follows.
The Spanish left-wing party political party, MásPaís this month put forward a bill proposing and end to the property option in the country’s Golden Visa residency program.
So Portugal’s shop is closed, but as things stand Spain’s ‘Golden Visa’ Property Investor Residency remains an option (for now) for those who have €500k to invest in a property.
If you’re interested in obtain a Spanish Golden Visa through property investment, the clock is ticking … the time to act is now.