Portugal has followed in the footsteps of Ireland in scrapping their golden visa investment scheme.
This comes several months after International Adviser reported that Portugal was set to axe the programme because it had “fulfilled its role”.
The scheme, called Authorisation of Residence for Investment Activity, targets non-EU nationals and allows them to receive residence rights in return for investments in the local property sector or the economy.
The Portuguese prime minister António Costa, said on 16 February said that his government would stop issuing new golden visas in order to “fight against price speculation in real estate”.
Property prices in the country had skyrocketed due to the number of expats buying real estate for second or holiday homes – thus leaving many local residents struggling to find adequate accommodation in big cities like Porto and Lisbon.
Changes had already been introduced as an attempt to mitigate this distortion in January 2022 – since then it has not been possible to apply for a golden visa on properties in Lisbon, Porto and the majority of the Algarve.
In November 2021, Portugal increased the minimum requirements of the golden visa programme. To qualify, people need:
• €1.5m (£1.3m, $1.4m) for capital investments;
• At least €500,000 for investment funds; and
• €500,000 for property investments and €350,000 for urban renovation in qualifying areas.
Since its inception, Portugal attracted €6.5bn in investments by foreign nationals, mainly from China, Brazil and South Africa, with most of the money going into property.
US expats are also among the most attracted to the scheme – leading to global advice firm Blacktower Financial Management launching an American desk specifically targeting those looking to move to Portugal.
End of an era
John Westwood, group chairman at Blacktower Financial Management, said: “It’s certainly the end of an era. The golden visa has been extremely popular and brought a lot of growth to the Portuguese economy over the years. The rising costs of housing and rentals is making it tough for many Portuguese citizens to find affordable housing. Ending the golden visa will hopefully improve this issue in the short term, while giving the government time to create a long-term solution to the problem.”
Jason Porter, business development director at Blevins Franks, said: “The exclusion of Lisbon, Porto, the Algarve and the Silver Coast in 2020 from the property qualification meant golden visa advisers had to look for other solutions. As real estate remained the most popular option, developing rental properties maintained the real estate price pressure, as well increasing the valuation in the geographical areas which continued to qualify.
“There has been an increase in advisers utilising other qualifying areas such as property rental portfolios, a Portuguese Investment Fund or business start-up. Inevitably, these schemes attempt to limit the risk to capital, whilst often providing safe, conservative returns – not what was originally envisaged of the scheme. The Portugal golden visa scheme is a reflection of similar schemes which have come and gone around the world – galloping real estate prices, absentee owners and the resulting outcry eventually outweighs the economic benefits to the point where the politicians act.
Portugal-based Mark Quinn, adviser at The Spectrum IFA Group, added: “Both clients and real estate agents complain that the stock of properties on the market is very small, yet this limited stock is met by an increasing number of potential buyers looking to relocate to Portugal from all over the world.”
He also highlights the option to apply for Non Habitual Residence (NHR), Portugal’s 10 year tax incentivised scheme available to new residents of the country.
“NHR is a status that has to be managed, as the benefits are not necessarily received automatically,” Quinn added. “It is therefore essential to plan properly (and carefully) to optimise the efficiency and value on offer from this scheme.”
EU crackdown and Ireland
Portugal is not the only country to close its ‘golden visa’ scheme, as in the last few days, the Irish government approved the closure of its immigrant investor programme (IIP) to further applications.
But overall, this comes many months after members of the European Parliament (MEPs) overwhelmingly decided to demand a ban on golden passports.
The vote – which saw 595 in favour, 12 against and 74 abstentions – followed commitments by the European Commission, France, Italy, Germany, the UK, Canada and the US to limit wealthy Russians with links to the government from accessing golden passports.
The European Parliament deemed citizenship-by-investment schemes as “objectionable from an ethical, legal and economic point of view and pose several serious security risks”.
There are still a handful of EU countries with golden visa schemes such as Malta, but the European Parliament is continuing to crackdown on the schemes.