- Writing
- BBC News World
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Foreign investment has allowed the gentrification of many areas, but also the displacement of its residents.
Portugal has benefited in recent years from being one of the leading tourist destinations in Europe and from offering one of the most attractive “golden visa” programs in the world.
Both aspects have been key in the model that helped its recovery after the 2008 economic crisis and made it a model of growth.
However, the tourist boom and the boom of the call Gold visa have a fundamental role in the severe real estate crisis that the country currently suffers, according to several analysts.
Home prices have risen drastically to levels that are unaffordable for the Portuguese themselves.
Hence, last week the Council of Ministers announced a series of measures within the “More housing” program to fight “against price speculation in the real estate sector”.
Among the changes are limited apartment licenses for tourist use and an end to visas that offered Portuguese residence to people who were not from the European Union in exchange for the purchase of real estate, a strong investment or job creation.
A program that, according to what Prime Minister Antonio Costa himself said a few months ago, “already fulfilled the function it had to fulfill.”
One solution, one problem
Used around the world to attract foreign investment and offered in most of Europe, “golden visa” programs tend to favor people with a lot of capital, who then have access to the benefits of a country without the obligation to live in it. he.
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The resource of gold visas in exchange for investment has been used by many countries around the world.
The measure entered into force in Portugal in 2012 and since then the country has raised more than US$7 billion, money that has been allocated 90% to the real estate sector, according to the Portuguese Immigration and Borders Service.
In a 2022 study by the British consultancy Henley & Partners, which compared the golden visa programs of more than forty countries, Portugal came first as the one that offered the most facilities to foreign investors.
This was mainly used by Chinese citizens who accounted for nearly half of the just over 11,500 permits of residence that were approved.
But this economic benefit has not been without controversy.
The European Union has tried to restrict these programs due to the risk that they are used for money laundering, tax evasion, financing of terrorism, corruption and the infiltration of organized crime.
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The Prime Minister of Portugal, the socialist Antonio Costa, recognized that the golden visa had already fulfilled its function.
For the Commission of Civil Liberties of the European Parliament it is about systems that are “objectionable from an ethical, legal and economic point of view”.
In Portugal, for its part, there are many voices that from the beginning were against its implementation considering that it offers more disadvantages than benefits.
Especially for its effects on the real estate market.
The “More Housing” program
Other measures included in the “More housing” program, which the prime minister trusts will be approved next month thanks to the absolute majority his government has in parliament, is the ban on new licenses for vacation rentals, unless that are issued in rural places without urban problems.
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Licenses for tourist housing will only be allowed in rural areas.
Regarding the licenses already granted, these will be reviewed in 2030 and then undergo periodic evaluations every five years.
Regarding visas that have already been granted, they can only be renewed if those who obtained it for the purchase of a home live in itif one of your descendants lives there or if it is offered on the long-term rental market.
There is also the plan to force the rental of unoccupied homes through the intervention of the State.
This option is the one that has generated the most controversy due to the role that the State will play in the mediation of rents, setting the price and taking care of unpaid rents.
Luis Marques Mendes, a lawyer and politician who was Deputy Prime Minister of Portugal and Minister of Parliamentary Affairs, spoke out against this measure in his space at the Independent Communication Society.
“The owners will lose, the tenants will lose and the lawyers will win,” said Marques Mendes, who believes that the measure will not prosper so as not to “contaminate” a general plan that he considers has positive things.
not the first
The “More Housing” program is estimated to cost some US$962 million for Portugal, which is not the first country to abolish its golden visa scheme.
One year ago, in February 2022, and faced with the imminent threat of Russia to invade Ukraine, UK abolished it as part of a crackdown “against illicit financing and fraud.”
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Chinese investors have been the main beneficiaries of gold visas in Europe.
The program had been established in 2008 and its end was announced as part of a new immigration plan.
Something similar to what happened last week in irelanda country that since March had already suspended the plan for Russian citizens.
Justice Minister Simon Harris explained that when the program was set up in 2012 it was to “stimulate investment” in the face of “unprecedented economic difficulties”.
And that despite having generated more than US$1.3 billion in investment, they had been thinking about eliminating it for some time.
The end of golden visas could also be extended to other countries, like Spainwhere a bill has already been presented in Congress to eliminate the residency regime for property purchase.
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