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Foreign investment has enabled the revitalization of many urban areas, but has also resulted in the displacement of their residents.
February 21, 2023
In recent years, Portugal has benefited from being one of the most popular tourist destinations in Europe, offering foreigners one of the most attractive “Golden Visa” programs in the world.
These two aspects were fundamental to help the country recover from the 2008 economic crisis and turned the country into a growth model.
However, some analysts claim that the boom in tourism and the socalled “golden visa” boom for Portugal were important factors that have led to the serious real estate crisis the country is currently facing.
Property prices have risen dramatically, reaching levels unaffordable for the Portuguese themselves.
Therefore, on February 16, the Portuguese Council of Ministers announced the “More Housing” program which includes a series of measures to combat “price speculation in the real estate sector”.
Under the changes, licenses for apartments for tourist use are limited and visas that offered Portuguese residency to people outside the European Union in exchange for buying property, making major investments or creating jobs will no longer be issued the “golden visa” . “.
Portuguese Prime Minister António Costa declared a few months ago that this program “has already fulfilled the function it was supposed to fulfil”.
A solution and a problem
The “Golden Visa” schemes, which have been introduced in several countries to attract foreign investment and are offered across most of Europe, tend to favor wellfunded people who can now access the benefits of a country without being obliged to do so to adopt. as place of residence.
In Portugal, the measure came into force in 2012. Since then, the country has more than $7 billion (ca Commonwealth Service Portuguese borders.
A study by British consulting firm Henley & Partners compared the golden visa programs of more than 40 countries in 2022. Portugal took first place it offered the most benefits to foreign investors.
Chinese citizens used the program the most. They represented almost half of the slightly more than 11,500 residence permits issued.
But these economic benefits are not undisputed. The European Union has tried to restrict these programs due to the risk of them being used for money laundering, tax evasion, terrorist financing, corruption and infiltration into organized crime.
For the European Parliament’s Civil Liberties Committee, these systems are “questionable from an ethical, legal and economic point of view”.
In Portugal, too, many people were against the establishment of the program from the start. They felt that visas pose more disadvantages than advantages for the country particularly due to the impact on the real estate market.
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Visas for foreigners in exchange for investments have been introduced in many countries
The “More Housing” program.
Costa expects the “More Housing” program to be passed in March as his government has an absolute majority in the Portuguese parliament.
According to the program, “golden visas” that have already been issued can only be extended if the persons entitled to work live in the residence, one of their descendants lives there or is offered for longterm rent.
Other measures include a ban on new vacation rental licenses except in rural areas where there is no urban pressure.
Approvals that have already been granted will be reviewed in 2030 and then subjected to a periodic assessment every five years.
The plan also calls for government intervention to impose rent on unoccupied housing.
This was the point that generated the most controversy, due to the role that the state has to play in arranging rents, setting the price and covering unpaid amounts.
Lawyer and politician Luís Marques Mendes was Deputy Minister (Deputy Prime Minister) and Minister for Parliamentary Affairs in Portugal. He spoke out against the measure in his weekly commentary broadcast by Portuguese TV SIC.
For him, “landlords will lose, tenants will lose and lawyers will win”.
Marques Mendes believes that the measure will not be approved so as not to “contaminate” an entire plan that, in his opinion, has positive aspects.
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Chinese investors have been the main beneficiaries of the golden visas in European countries
not the first
The cost of the More Housing program is estimated at approximately US$962 million (approximately R$5 billion).
Portugal is not the first country to abolish its golden visa program. In February 2022, the United Kingdom canceled its program amid the imminent threat of Russia invading Ukraine.
The UK visa program was launched in 2008 and ended as part of a new immigration plan and a crackdown on “illicit finance and fraud”.
Ireland took similar action on 15 February 2023. The country suspended the program for Russian citizens in March last year.
Irish Justice Minister Simon Harris said the visa program was set up in 2012 to “stimulate investment” in the face of “unprecedented economic difficulties”.
Although the plan entails investments of more than US$1.3 billion (approx.
The end of the golden visas may also extend to other countries such as Spain.
A bill abolishing the residency regime for real estate acquisitions has already been submitted to the Spanish Congress.