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09 October, 2020

The Government of Portugal may prohibit investors from buying a property in Lisbon and Porto

The Portuguese Parliament approved the development of changes to the residence permit programme for investment. The government of the country should submit the draft law with amendments by December 31, 2020.

Residence permit for Portugal for real estate investments: possible changes in the programme
Photo: Adobe Stock

The Government of Portugal has not yet published a draft law amending its investment programme. However, there have been increasing reports in the major Portuguese media that the Government will discuss changes in the formation of the national budget for 2021. The Government does not specify the time frame for discussing the budget. Last year, the draft budget for 2020 was presented to Parliament on 16 December.

In June 2020, it was reported in the media that the Government would submit a draft law with amendments by 31 December. If approved by Parliament, the amendments may come into force in early 2021.

A new wave of change reports may therefore mean that the draft law will indeed appear and the terms of the programme will change.

The terms and conditions of Portugal's residence permit programme for investment are to be tightened

Change initiator 一 Socialist Party of Portugal. At the beginning of 2020, the party proposed to tighten the programme in order to redistribute foreign investment in more important areas for the country's economy.

4 main programme changes proposed by the Socialist Party:

  1. Increase the minimum investment amount. The investor now needs to invest from 250 000 € to take part in the programme. How much the minimum threshold can increase and for which options 一 is not specified.
  2. For the option to invest in real estate 一 limit the list of cities and regions in which the investor can buy objects for participation in the programme. First of all, exclude from the list Lisbon and the Port, which are currently in maximum demand by investors.
  3. If the change is accepted, investors will only be able to buy objects that are located in continental Portugal, Madeira or the Azores.For the option to invest in the business 一, increase the number of jobs that need to be created in Portugal to obtain a residence permit. The option now sets a quota of 10 new jobs, the extent to which this value will increase is not yet known.
  4. To develop changes that will help to attract investment in regions with low population density, i.e. where less than 100 inhabitants live per 1

In general, the Government wants to make conditions for less popular investment options more attractive. These options include buying property for restoration, sponsoring cultural heritage restoration projects, investing in production and creating jobs in the country.

The measures will help to reduce the burden on the real estate market in large cities and resort areas, and stabilise price growth. The deputies also expect to redirect the flow of investments to less developed regions and industries of the country.

Who will be affected by the programme change

The new conditions will only apply to applications that are submitted after the innovations have officially entered into force. If an investor has applied before the publication of the changes, they will be able to participate in the programme according to the old rules.

At the same time, investors will have the opportunity to invest in business and open companies in large cities.

The Government of Portugal will have to establish the boundaries of the regions in which it is not possible to buy property to participate in the programme. Outside these boundaries, there may be suburbs that are still of interest to investors.

We recommend that applications for participation in the residence permit programme should be submitted now while the Government is drawing up a list of amendments. In this way, the investor will be able to obtain official status in the European Union on current conditions and with a guaranteed prospect of acquiring citizenship in 5 years.

Opinions on what consequences will arise from changes in the programme

Ana Catarina Méndez, leader of the Socialist Party of Portugal, said that the change in the programme will help to distribute investments more evenly among the country's regions.

The government believes that the interest of foreign investors is the main reason for the sharp rise in housing prices in megacities and resort areas. According to the results of the 3rd quarter of 2019, the housing price index in Portugal increased by 10.3% compared to 2018.

Portuguese developers believe that for price leveling it is not enough to impose restrictions on the purchase of real estate in resorts and megacities. In their view, it is necessary to create more favorable conditions for investment in continental regions. They also suggest simplifying procedures for approval of construction projects: the process now takes about a year.

Immigrant Invest predicts that changes in the conditions of the programme will lead to a sharp rise in prices in areas that will find themselves near the borders of forbidden regions, such as the suburbs of Lisbon and Cascais.

From October 2012 to December 2019, 8207 applicants were granted resident status for investments, 7735 of them participated in the programme through the purchase of real estate. In 2020, 65% of investors chose the option of investing in real estate. More details about the statistics for January-July 2020 we told in the material "Residence permit of Portugal: statistics for 7 months of 2020".

In our opinion, this is the most appropriate time to participate in the programme. The current rules allow investment in property in Lisbon and Porto from €500,000 or more. At the same time, housing prices have temporarily fallen amid the crisis and closed borders, so you can buy the best property at a lower cost.

Current residence permit terms for Portugal for investments

The Portugal residence permit programme now offers investors a large list of investment options to choose from.

7 investment options for participation in the programme:

  1. Purchase of residential and/or commercial real estate from € 500 000. Another option is to buy a property of cultural and historical importance older than 30 years under restoration. In this case, the minimum investment amount is 350 000 €. If an investor buys property in regions with low population density, they can participate in the programme at a reduced rate. The minimum investment amount for such transactions is reduced by 20% to 400 000 € and 280 000 € respectively.
  2. Transfer of capital to the country from € 1 million - for example, when buying shares in Portuguese companies.
  3. Creation of at least 10 jobs. To do this, you must open a company in Portugal. As proof, the investor submits to the Programme Department employment contracts that have been concluded between the investor's company and residents of the country.
  4. Investments in new or existing Portuguese companies start at 350 000 €. The main condition is to keep or create 5 jobs.
  5. Purchase of investment or venture fund units from 500 000 €.
  6. Investments in research and development activities from 350 000
  7. Investments in projects to preserve and restore the country's cultural heritage. The minimum investment amount is 250 000 €.

Immigrant Invest - licensed agent for the Portugal residence permit programme for investment. We cooperate with the leading real estate agencies of Portugal and provide full support for the program participants at all stages.

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The Government of Portugal may prohibit investors from buying a property in Lisbon and Porto