The long-anticipated changes to Portugal’s Golden Visa programme have been signed into law, and from 2022, foreign property investments will be channelled towards inland and island areas. Andrew Rissik, director at Sable International, explains the changes.
South Africans looking to take up the Golden Visa opportunity as a property investment with a view to residency, should note that from next year, the greater Lisbon, Porto and most coastal areas will no longer be available for investment under Portugal’s revised Golden Visa scheme. Instead, residential property investment will be directed to less densely populated interior regions, the 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.
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The new rules will help Portugal address two issues: the redistribution of investment received and the development of the property market in 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 the depopulation of interior areas of the country.
How the transitional period will affect investment
Due to the 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.
As such, 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.
Although the deadline is looming, there is a small window of opportunity for those who still want to secure property investment in the most sought-after areas such as Lisbon and Porto.
Those considering applying for the visa could also invest in a fund such as the €350,000 Rebello Private Equity Fund and gain better 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, and no tax deductions or other retentions.
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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, especially for South Africans. 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 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 last 2-years. Sable International has already assisted more than 30 families in this regard.
Since launching in 2012, Portugal’s Golden Visa programme has been one of the world’s most successful residency-by-investment initiatives, largely due to 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 Private Equity Fund (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%. Through our experienced on-the-ground support staff and property specialist we are still able to present great investment opportunities and assist you with your property or PEF investment remotely.
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.
It is important to note that not all properties or PEFs will qualify an investor, so prospective investors need to be beware of unscrupulous agents and developers who themselves don’t always understand the qualifying requirements.
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