Portugal ends Golden Visa and curtails short-term rentals

The debate over rising prices and the resulting housing crisis in Portugal finally came to a boiling point when the government of António Costa suddenly came out with a series of largely unexpected and radical measures to combat speculation.

This set of measures, dubbed ‘More Housing’ (Mais Habitação), will be subject to a 30-day public scrutiny period before being re-evaluated by the government. A new Council of Ministers to discuss these proposals has been scheduled for March 16.

There are still a lot of unknowns as several of these measures may turn out to be inapplicable in their current proposed form, or simply rejected. Several groups and associations of property owners have already pushed back against the most drastic proposals, calling some of them unconstitutional.

But here’s what we know so far:

1. Bye bye Golden Visa

Less than 11,000 Golden Visas were granted since the launch of the program in 2012, so Golden Visa investors can hardly be blamed for the lack of housing inventory in Portugal.

Nevertheless, the Prime Minister announced the end of new Golden Visas for habitation purposes, adding that existing Golden Visas will only be renewed if Golden Visa holders’ properties are for their own use or are due to be placed on the long-term rental market.

Whether other categories of Golden Visa (by investing through a fund or setting up a local company for example) will remain open has yet to be explained. 

The autonomous island of Madeira has already indicated that it intended to keep the Golden Visa program going on its territory.

2. Short-term rental market curtailed

The government also proposed a blanket ban on the issuing of new Alojamento Local (AL) short-term licenses (Airbnb licenses), with the exception of rural accommodation in inland municipalities.

What constitutes “inland rural accommodation” has not yet been defined.

Current short-term rental licenses will also be subject to reassessment in 2030, and after that periodically every five years.

The Algarve Association of Hotels and Tourism Developments (AHETA) has called the ban on new AL licenses a “fallacy”, saying that for individual private investors in the vacation rental space who “have put all their financial availability – and many resorted to credit - the rules of the game have been changed in the middle of the championships”.

3. Other measures aimed at improving access to housing 

Those include plans to:

• force owners of vacant homes to place them on the long-term rental market

• create an extraordinary levy on properties that remain in the AL sector, with revenue collected going towards housing policies

• allow properties classified as for commercial uses or services to be used for housing

• simplify licensing procedures, including by giving the licensing responsibility to local councils

• create a capital gains tax exemption for homeowners in Portugal who sell their houses to the state or to local authorities 

• set a price ceiling on new residential rent contracts

• protect tenants from being evicted if they cannot afford to pay their rent

• launch a new 150M euros line of credit for municipalities to be able to undertake work on vacant residential properties