(Bloomberg) -- Portugal will end its so-called golden visa program for new foreign property buyers as it tries to address the lack of affordable housing in one of Western Europe’s poorest economies.
To fight real estate speculation, Portugal will “eliminate the issuance of new golden visas,” Prime Minister Antonio Costa said at a press conference in Lisbon on Thursday following a cabinet meeting. Foreign real estate buyers who wish to renew their existing golden visas will only be eligible if their properties are used as their own home, or if these units are placed in the long-term rental market, he said.
Portugal’s golden visas were conceived a decade ago for non-European Union nationals as part of an effort to fix the country’s public finances following a 2011 bailout from the EU and International Monetary Fund. Since then, the country has raised €6.8 billion ($7.3 billion), with 90% of that money going into real estate, according to the Portuguese Immigration and Borders Service.
Chinese nationals accounted for almost half of the 11,628 residency permits granted under the program, which has been increasingly popular with U.S. investors. Golden visa candidates have so far been required to carry out a property investment of at least €350,000, or create at least 10 jobs in Portugal, or transfer €1.5 million.
Variations of the golden visa have been adopted across Europe and in countries around the world — from the U.S. and Canada to Spain and Greece. They tend to last until a critical mass of vocal opponents conclude the costs — soaring housing prices, absentee homeowners and allegations of corruption — outweigh the benefits, and politicians drop them.
In Portugal, some politicians have criticized the program for driving up real estate prices and making housing unaffordable for many segments of the population. EU officials have pointed to potential risks of tax evasion and money laundering by international buyers.
Back in November, Premier Costa had already indicated that the government could end the golden visas, saying the program “is no longer justified.” In 2021, his administration began restricting the permits and excluded property purchases in cities like Lisbon, where home prices more than doubled since 2015 to €3,805 per square meter, according to real estate website Idealista.
Paulo Silva, head of real estate consultant Savills in Portugal, said golden visas helped attract foreign investors to the country when it needed the money a decade ago, but today only account for 3% of property deals at most.
“It’s a mistake to blame the golden visas on rising real estate prices as this is mostly due to an imbalance between supply and demand” Silva said. “The end result is that investors will just take their money and invest in another country where they can get a golden visa.”
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