Portugal ends ‘golden visas’ to rein in property speculation

PORTUGAL will end its practice of issuing “golden visas” to rich foreign investors, one of several measures announced by Prime Minister Antonio Costa on Thursday (Feb 16) to tackle the lack of affordable housing.

The residence permits that go with the controversial visas will only be renewed if those who bought property in Portugal live there permanently, or rent it out to residents, said Costa.

The golden visa policy was introduced in 2012, when Portugal’s economy was struggling and needed foreign capital. The measure, which has counterparts in several other European countries, has been tweaked several times since then.

But one effect of the policy was to push house prices up, as foreign arrivals bought into the property market. The latest changes are designed to tackle that problem.

Over the last 10 years, rents have risen far more than the rate of inflation, Costa noted.

“Current prices are much too high for the Portuguese market,” he added.

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The measures announced by the socialist government on Thursday are designed to increase the amount of available housing.

Between 2010 and 2022, housing prices in Portugal have shot up by 75 per cent, as indicated by Eurostat, the European Union’s statistics agency. Rents over the same period rose 25 per cent.

The government also noted that there were still 730,000 lodgings lying vacant, or in a state of neglect, across Portugal.

The authorities have already excluded the capital, Lisbon, and the port of Porto from the visa policy, in order to relieve pressure on property prices there.

Over the past 10 years, Portugal has brought in nearly 6.8 billion euros (S$9.7 billion) in exchange for having issued 11,600 residence permits: each candidate had to pay at least 500,000 euros to buy property, invest at least a million euros, or create 10 jobs.

The new government package comes with a 900-million-euro budget, to help families manage their rising rent or mortgage payments, and to provide tax incentives for the long-term rental market.

It will also limit the short-term rental market, including a freeze on any more licences for tourist accommodation in the main cities.

The measures will go out to public consultation, and the government aims to have adopted its policy by Mar 16. AFP