Developers find loopholes to Golden Visa restrictions
Property developers have found a creative way to get round restrictions on Golden Visas which will come into force next year.
From 1 January, Golden Visa applicants will be unable to apply through the option of purchasing a property in Lisbon, Porto, parts of the Algarve, or the coastal areas of the country.
And these are precisely the areas where investors want to buy. The Government changed the programme because it wants to channel investment away from the two main cites to the interior of the county.
Although it is still possible to acquire an office in Lisbon or Porto, developers have found a way to get round the restrictions via investment funds.
“People have adapted their way of investing and doing it through investment funds”, says Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors (APPII).
“There have been many developers who have created private equity investment funds which allow investors to continue to invest wherever they like,” he continues.
These investment funds include property portfolios, which means that an overseas investor can subscribe to not shares in these funds with a minimum investment of €500,000, and get a Golden Visa.
The law had always allowed an investor to obtain a Golden Visa through an investment fund, but the preferred option has always been a direct property purchase. Even with the changes to the Golden Visa regime, investing in funds is still allowed, although the investment amount has gone from €350,000 to €500,000.
Hugo Santos Ferreira says the disadvantage is that the investor is not buying a property outright but rather a participation unit in the fund, but the investor is an owner of a property.”
Another way is buying tourism apartments as an investment, and spending two or three weeks a year in the property while renting it out the rest of the time to tourists.
Despite the alternatives, which are “still a little complicated” Hugo Santos Ferreira says ideally the Government should keep things as they are and let common sense prevail since the Golden Visa Regime has been “one of the main overseas investment attraction instruments in Portugal.”