This Thursday, February 16th, 2023, during the briefing after the Council of Ministers meeting, the Prime Minister of Portugal, António Costa, announced a series of measures to combat housing real estate speculation. Included in these measures was a statement to end the “granting of new golden visas.”
Did the Portuguese Government Announce the End of the Golden Visa?
The government did not pass a law terminating the Golden Visa, but the Prime Minister did state his intent to cancel the program and not take new applications.
The issue Portugal faces is increased house prices and the amount of housing being bought and used for short-term rental. Golden Visa investors have been part of that trend, but the property funds and hotel renovation funds that LCR works with are not part of the industry buying apartments to rent on Airbnb and Vrbo.
Following yesterday’s announcement from Portugal’s Prime Minister (link to the video, in Portuguese), LCR contacted our development partners, fund managers, and immigration attorney partners (such as Prime Legal) to understand the context better. There is no doubt this is an evolving situation; we will publish updates as details emerge.
When does LCR think the new measures will take effect?
Any changes to the program need to pass the Assembly of the Republic. To change an existing law, the government must write its proposal and present it for voting. The debate in the Assembly is scheduled for March 16. If passed, the President has two weeks to act on it. If signed, it will be published as law in Diário de República and become law. All laws have a minimum three-month delay before coming into effect, although this can be set to be longer by the government.
What will happen with non-residential investments?
Still to be clarified. In general, the majority of Portuguese Golden Visa investors buy property directly to either live in, or rent until they want to move to Portugal.
Other qualifying investments, such as hotel renovation, private equity property funds, or cultural projects, may continue, but they will not if the entire program is terminated.
It is clear the Prime Minister is under pressure from his constituencies because of housing prices in Lisbon and Porto, particularly. During the next month, there will be debate about how the program should be changed or if it should be terminated.
Is my investment safe?
This level of detail was not discussed at all yesterday. Generally, each project or fund is a commercial investment and is independent of changes in immigration law, we await for further clarification. Demand for hotels and property in Portugal remains very high. Most of the hotel renovation projects we have evaluated have been fully subscribed, which means they have the capital to complete the project and open the hotel. Property funds are diversified across multiple sectors, including increasing the stock of housing, which is in high demand.
If I have my application sent to SEF, what does LCR think will happen regarding renewals?
Yesterday, the Prime Minister said the Golden Visa renewals for real estate investors might be subject to conditions such as if the property is intended for a primary residence or long-term rentals in contrast to being used for short-term rental.
Property fund investments and hotel renovation do not take property out of the market. That said, until there is a written proposal for us to evaluate, it is impossible to know for certain. In general, when programs change, existing applications are honored. In Portugal, when the law changed in Jan 2022 to exclude residential property purchases in Lisbon, Porto and the Algarve, existing applications were honored, and investors had their applications renewed.
Can I still apply?
The existing law is still current. Until new laws are passed, the program is open, and LCR believes applications under the existing law will be honored going forward, as we have seen in the past and with other programs around the world. The application process takes time, and funds are not committed until the last step after opening a Portuguese bank account. This means if the law changes, investors have time to change direction.
The main objective of the announcement was addressing issues with Portuguese housing, and the Golden Visa was only mentioned amongst other (more significant) measures. Only a few points were explicitly addressed and without much detail.
Until an official proposal is presented to the Portuguese Parliament, it is difficult to share more details on what and how the program will change. Most importantly, until a new law is voted on and signed, which could include amendments or the program’s termination, the Golden Visa remains current without any changes. Again, the debate in the Assembly is scheduled for March 16, 2023.