Holiday rental sector one of most affected; golden visas set to continue but excludes property investment
To no one’s surprise, the government’s ‘Mais Habitação’ (More Housing) programme was approved in Parliament yesterday afternoon.
The package of measures aimed at tackling Portugal’s housing crisis was approved with votes in favour from the ruling Socialist Party (PS) which holds a parliamentary majority, despite every opposition party voting against it (PSD, Chega, Iniciativa Liberal, PCP and Bloco de Esquerda) or abstaining (Livre and PAN).
The opposition parties brought several of the amendments they had tabled – and which were rejected in the specialty debate – to a vote in the final plenary session, but all were rejected by PS.
PS MP Maria Begonha defended the government’s stance, saying that “between a left-wing perspective in which the entire rental market would have to be controlled” and the perspective of the right, “there is no possible consensus.”
The voting process was watched from the galleries by people linked to the short-term holiday rentals (Alojamento Local, or AL) sector who wore black t-shirts to demonstrate their disapproval of the ‘Mais Habitação’ programme. When MPs got up to vote, the group left parliament stamping their feet as they exited the building, which prompted the speaker of parliament to interrupt the vote until the noise ended.
The ‘Mais Habitação’ package is expected to be submitted for the President of the Republic’s review next week. Marcelo Rebelo de Sousa has a 20-day period to either approve or politically veto the diploma. If he chooses to request preventive review by the Constitutional Court, the period is eight days.
What are some of the main changes?
The ‘More Housing’ programme features several measures which have been presented as a way of combating the country’s housing crisis.
One of the main sectors affected has been the short-term rentals sector (AL), which has been protesting the programme ever since it was first announced. AL property owners believe it will “turn back the clock on 15 years of progress” for the sector.
The AL sector is contesting measures such as the non-issuing of new AL licences until December 31, 2030 for apartments or accommodation units such as hostels within buildings (excluding “low-density” municipalities and parishes) to giving condominiums the power to cancel AL licences granted to apartments.
One of the most controversial measures of the plan, which Prime Minister António Costa has tried to downplay, is “coercive leasing”: which will only apply to apartments which have been considered “derelict” for at least two years. Owners of properties that have been vacant for more than two years and are located outside the interior of the country have 90 days to respond after being notified by the local council to either carry out renovations or make use of the property.
Golden Visas
Also moving forward is the end of the Golden Visa scheme for property investments.
The government is, however, keeping the scheme open for investment in other sectors in an attempt to test whether or not the Golden Visas can ‘survive’ without the property component.
“We wanted to preserve a core of job creation and investment in Portuguese companies that was already part of the current law,” Eurico Brilhante Dias, parliamentary leader for PS, said last month.
“We need to determine if this regime can continue through investments in the productive sector, attracting foreign direct investment, (…) and if it can exist without real estate,” he added.
Contrary to what was reported by CNN yesterday, investments in investment funds will continue providing access to the scheme, as long they are not related to real estate investments, along with several different forms of investment starting at €200,000:
- the creation of at least 10 jobs;
- investment of at least €500,000 in scientific research activities carried out by public or private institutions;
- investment of at least €250,000 in the artistic production, recovery or maintenance of national cultural heritage;
- investment of at least €500,000 in the acquisition of shares in non-real estate investment funds;
- and investment of at least €500,000 for the incorporation of a commercial company with headquarters in Portugal, along with the creation of five permanent jobs, or to reinforce the social capital of a commercial company headquartered in Portugal, already incorporated, with the creation of at least five permanent jobs or maintenance of at least 10 job positions, with a minimum of five permanent employees, and for a minimum period of three years.
The minimum amount investment activity needed for the first three conditions mentioned above may be lower by 20% when the activity is carried out in low-density territories. Furthermore, the investment activities need to be evaluated every two years to assess their impact on the areas of activity in question (scientific, cultural) and promotion of foreign direct investment and job creation.
Regarding these changes, they will not be applied retroactively and the rights of renewal for family reunification and permanent residency applications are safeguarded.
The amendments will come into force the day following its publication in the official State journal Diário da República.
Less foreign investment expected
The exclusion of property from the Golden Visa scheme will lead to a reduction in foreign investment, one specialist has pointed out.
“Throughout the years of this visa’s validity, one of the most appealing means of investment has undoubtedly been property investment,” said lawyer Ricardo Ferreira from law firm Martínez Echevarría & Ferreira Advogados, adding that this largely contributed to the creation of the ‘More Housing’ programme to tackle the housing crisis.
“With the approval of this proposed law through a specialised vote yesterday (July 19), the end of the Golden Visa programme is imminent. This means that it will no longer be possible for investors to acquire residential properties as a means of investment to obtain the Golden Visa. This will certainly reduce foreign investment in Portugal, but there are still other options for acquiring residency,” the lawyer added.
As he explained, the Golden Visa scheme was created in 2012 with the intention of attracting investment from foreign citizens who wished to reside here or allocate a part of their business.
It is available only to citizens outside the European Union and, until now, has allowed them to invest in real estate, art, investment funds, create job positions, transfer capital, or invest in science and technology.
Ferreira added that there is still “a window of opportunity” to submit Golden Visa applications.
“The next step will be promulgation by the President of the Republic, which could happen in the next few weeks. Thus, the exact date for these measures to come into force is still uncertain,” concluded the lawyer.
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