Portugal to end Golden Visa, curtail Airbnb rentals to address local housing crisis

Portugal announced on Thursday, February 16, that it will end its controversial Golden Visa programme for new foreign property buyers. The announcement came in wake of housing crisis in Portugal, which is among the poorest countries in Western Europe. Apart from scrapping the Golden Visa scheme, Portugal also announced a ban on new licences for Airbnband other short-term holiday rentals. Foreign real estate buyers, who already have golden visas and want to renew their visas, will now only be eligible for it if their properties are used as their own home, or if these units are placed in the long-term rental market.

The house and rental prices in Portugal have skyrocketed and more than 50 per cent of workers earned less than 1000 euros per month last year. In Lisbon alone, the rent prices jumped a whopping 37 per cent in 2022. Prime Minister Antonio Costa said at a press conference in Lisbon on Thursday following a cabinet meeting that to fight real estate production, Portugal will "eliminate the issuance of new golden visas".

Portugal is a dominantly tourism-dependent economy, and when policies like Golden Visa encourage wealthy foreigners to invest in the country, its locals find it hard to rent or buy a house. Portugal’s 8.3 per cent inflation rate has worsened the problem further.

PM Costa said that the crisis was now affecting all families, not just the most vulnerable. Though it is not clear, when will these measures come into effect. All these measures will cost the Portuguese government at least 900 million euros ($962.19 million) and some of them would be approved next month and others will be voted on by lawmakers.

A new system would be introduced to regulate rent increases, PM Costa added, and the government will offer tax incentives to landlords who convert tourism properties into houses for locals to rent.

New licences for tourism accommodations, like Airbnbs, will be prohibited,though rural areas withless population will be exempted from this measure.

Watch |Portugal considers stopping its 'Golden Visa'

The Social Democrats said the measures were an “attack” on the rights of property owners and businesses.

The State would rent vacant houses direct from landlords for a period of five years and put them on the rental market.

What is the Portugal Golden Visa scheme?

The Portugal Golden Visa is an immigrant investor programme by the government that grants residency in the country to people who invest in properties worth at least 500,000 euros ($532,215) or create 10 jobs in Portugal. The scheme began in 2012 and by May 2020 has been credited with investments of over 6.8 billion euros ($ 7.2 billion) from over 20,000 persons.

New measures and Digital Nomad Visa

Housing groups argue that measures would mean little if the government continued to promote other policies to attract wealthy foreigners like Digital Nomad Visas introduced in October. It allows foreigners with high monthly incomes from remote work to live and work from home in Portugal without paying any local taxes.

How people are reacting to new measures announced by Portugal

At a small housing protest in Lisbon, 23-year-old activist Andreia Galvao accused the government of failing to live up to the promise it made to address the housing crisis in the past.

"The goal was that by 2024 all Portuguese would have access to quality housing, it doesn't look like that will happen," she said. "The situation is dramatic."

The Housing is a right group said the measures do not change the "system in place" in which large real estate investment funds control a significant chunk of the market.

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