(MENAFN- Al-Borsa News) Portugal plans to end the government’s golden visa program for new foreign property buyers, as the country seeks to tackle a shortage of affordable housing in one of Western Europe’s poorest economies.
For his part, Prime Minister Antonio Costa said at a press conference in Lisbon on Thursday, after a cabinet meeting, “In a move to counter speculation in the real estate market, Portugal will cancel the granting of new golden visas,” noting that foreign property buyers wishing to renew their existing golden visas They will only be eligible to do so if their property is used as their own home, or if it is offered on the long-term rental market.
Portugal’s golden visas were designed ten years ago for non-EU citizens as part of the government’s efforts to reform the country’s public finances, following a 2011 EU-IMF bailout.
Since then, the country has raised €6.8 billion ($7.3 billion), with 90% of that money going to the real estate market, according to Portugal’s Immigration and Borders Administration.
Wide criticism of the visa program
Chinese nationals held about half of the 11,628 residency permits granted under the program, which is widely popular with American investors.
Golden visa candidates have so far been required to make a real estate investment of at least €350,000, create at least 10 jobs in Portugal, or transfer €1.5m to the country.
Various types of golden visas have been adopted across Europe, and in countries around the world from the United States and Canada to Spain and Greece, and will likely continue until a large group of staunch opponents proves that the costs—high home prices, absent homeowners and allegations of corruption— The benefits outweigh, until politicians abandon them.
Some politicians in Portugal have criticized the programme, claiming that it has caused property prices to skyrocket and has made housing unaffordable for a large number of the population.
EU officials have also cited potential risks of tax evasion and money laundering by international buyers.
Huge rise in house prices
Last November, Costa did signal that his government had stopped awarding golden visas, stating that the program was “no longer justified.”
In 2021, his administration intends to restrict permits and exclude property purchases in cities like Lisbon, where house prices have more than doubled since 2015 to €3,805 per square metre, according to real estate website Idealista.
Paulo Silva, president of Savills, a real estate consultancy in Portugal, said that golden visas helped attract foreign investors to the country when it needed money a decade ago, but today they make up only 3% of real estate deals at most.
Silva added, “It is wrong to hold the golden visas responsible for the rise in real estate prices in the country, because this rise is caused, for the most part, by an imbalance between supply and demand.”
“The end result is that investors withdraw their money and invest it in another country where they can get a golden visa,” he added.
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