Portugal has been a very attractive destination for digital nomads, remote workers and location-independent entrepreneurs for a number of years. For many, the change of direction that the Portuguese decision-makers have made from early 2023 with regards to short term apartment rentals may have caught digital nomads by surprise.
In fact, after feeling welcome in Portugal thanks to a series of incentives to encourage foreign investment into the country, the announcement of a housing policy in response to the lack of available dwellings for locals signalled a U-turn from a previous vision of integrating international communities into the fabric of Portuguese society.
Portugal Ends ‘Golden Visa’ in 2023
The so-called ‘Golden Visa’ was first introduced in 2012 as a way to incentivise foreign investors to bring their wealth into Portugal.
In a nutshell, the programme aimed at:
- fast-tracking non-EU citizens into acquiring permanent residency and citizenship of any EU country
- in Portugal, the Golden Visa would enable non-EU persons to acquire Portuguese citizenship in five years.
The key requirement that applicants needed to meet included the choice of one from this following list:
- purchasing a flat our house spending at least euro 400k (in low-density areas) or euro 500k (in urban areas) or euro 350k in a regeneration area;
- investing at least euro 350k in the Portuguese stock market;
- transferring at least one million euro into a Portuguese bank account.
- buying company shares for a minimum value of one million euro or investing at least one million euro in a Portuguese company;
- creating at least ten Portuguese jobs for locals;
- investing a minimum of euro 350k to either create a company in Portugal to generate at least five jobs or investing that same amount into science or technology research;
- supporting the arts or national heritage with a minimum investment of euro 250k.
Of course, by acquiring Portuguese citizenship, foreign investors could also access the whole EU market and enjoy the benefits of free movement in all EU countries. Benefits included also full access to the public health service and education in Portugal. A Portuguese passport allows the holder to travel visa-free in about 150 countries. All of these factors, combined with Portugal’s low cost of living and availability of short term accommodation, made the country a great place to “set up camp” for many expats.
Portugal gained 6 billion euro in investments as part of this deal.
Portugal’s Housing Crisis
Alongside Ireland, Portugal has been experiencing a shortage of houses for their nationals, fuelled by a higher demand for flats and houses from foreign investors moving into the country and real estate investors and landlords rising rent prices.
According to the Financial Times, the ‘Golden Visa’ scheme was founded to address the worldwide financial crisis of 2008 and the re-building of national economies. Foreign cash injections were one of the ways to tackle the crisis, with Chinese investors in particular eyeing the opportunity to enter the EU market.
Local Portuguese people over the years found it increasingly difficult to find a place to rent, especially in larger cities such as Lisbon, which tend to attract more international visitors. With short term accommodation becoming more lucrative, many apartments that were previously available for long term rental contracts were diverted to meet the demand of international investors.
Investors purchased houses and apartments as either second homes or rental properties. The housing stock became scarse as a result, leaving Portuguese families and individuals without much choice for places to live.
Since 2020 it has been more difficult to buy properties in Lisbon and Porto for foreign investors. From 2023 no new licences are granted for AirbnB rentals and other short term rentals including holiday apartments in urban areas (exceptions are applied for remote rural areas requiring investment).
Moving forward, the Portuguese government aims to offer more public and private housing to their national citizens.