The long-anticipated changes to Portugal’s Golden Visa programme have now been signed into law and investment will be channelled inland from January 2022.

Greater Lisbon, Porto and most coastal areas of Portugal will no longer be available for investment under Portugal’s revised Golden Visa scheme. Instead, residential property investment will be directed to the less-densely populated interior and the regions of Azores and Madeira.

The changes are scheduled to come into effect on 1 January 2022. After the deadline, the amendment will affect both the EUR 350,000 and EUR 500,000 property investment routes within these areas. Notably, the EUR 350,000 Private Equity Fund investment threshold will be raised to EUR 500,000.

These new rules will help Portugal address two main issues: The redistribution of investment received and the development of the property market in the sparsely populated regions of the country.  The Council’s move is being seen as a positive one for the future of the Golden Visa programme. With the new rules being put in place, an attempt is being made to encourage investment outside of current hotspots, like Lisbon, Porto, the Algarve region, and the Silver Coast.

Investor capital will instead be directed towards Portugal’s less-densely populated interior and the island municipalities of Azores and Madeira. This will help the country gain a more balanced environmental and social dynamic. Investors will still have the opportunity to enjoy the Golden Visa’s long-term benefits while experiencing Portugal’s glorious Mediterranean lifestyle in one of the safest places in all of Europe.

The Portuguese Government is also planning to provide cash incentives to companies and individuals who relocate to the interior of Portugal, in an effort to counter depopulation of interior areas of the country.

This is how the transitional period will affect investments

Thanks to the Covid-19 pandemic and the importance that Golden Visas have had for real estate, the Government opted to create a transitional period for the sector to try to adapt, instead of implementing the change at the beginning of 2021. Due to this, all applications up to 31 December 2021 will still be accepted, and the changes will not affect residents who renew their residence permit cards or join family members in the programme. The deadline is, however, looming and there is a small window of opportunity for those who still want to invest in property in the most sought-after areas such as Lisbon and Porto. It is recommended that you move quickly to conclude your investment and submit your application before the end of the year.

Those considering applying for the visa could invest in the €350,000 Rebello Private Equity Fund and gain great exposure to the Porto real estate market. The fund provides full Golden Visa eligibility for all dependant family members and is an attractive hands-off investment option, with benefits that include:

• Preferred returns of 3% per annum

• No hidden costs

• No transfer duties/taxes

• No tax deductions or other retentions

• Managed by credible partners

So why is the Golden Visa so popular?

The Portuguese Golden Visa programme is a residency-by-investment scheme designed to encourage investment into the country from non-EU citizens. Traditionally, the programme’s real estate option is a popular way to get residency in Portugal. This is because the country is regarded as a prime destination among property investors, with a flourishing real estate market and high rental yields. The route also allows investors to sell a property after a period of time and then recover their investment.

Among the programme’s investment options, the purchase of a Private Equity Fund share at EUR 350,000 has also become an increasingly popular option over the past 2-years.

Since launching in 2012, Portugal’s Golden Visa programme has been one of the world’s most successful residency-by-investment initiatives, mainly because of the minimal residence requirements and flexible path to citizenship. The main benefits of the Golden Visa programme include:

• The right to enter and stay in Portugal with no additional travel visa.

• The right to live and work in Portugal.

• The freedom to travel across the Schengen Area without an additional travel visa.

• The right to benefit from family reunification and add family members to the Golden Visa programme.

• The right to apply for permanent residence or for citizenship after five years.

As of November 2020, 8,782 Golden Visas had been approved through the property route. However, the majority of these were for the urban and coastal areas. Only 761 were in “urban regeneration” classified areas.

The changes will not work retroactively

The Portuguese constitution prevents any judicial updates from working retroactively. Therefore, applicants who have started their application will not be affected. Understandably, the change to the programme has triggered a rush of property buyers and PEF investors wanting to qualify for the residency scheme, with inquiries for residency via property investment and demand for Private Equity Funds up by at least 20%. 

As the new policy will come into effect in less than 10 months, experts anticipate a surge in the number of investors hoping to seize the last opportunity to invest in prime locales of the country or in the PEF at the lower minimum investment threshold. Prospective investors are urged to act quickly in order to get the best available deals and get into the programme before the deadline.

A word of caution though: not all properties or PEFs will qualify an investor so beware of unscrupulous agents and developers who themselves don’t always understand the qualifying requirements.