The most recent data on the Portuguese Golden Visa program confirms that the program has been attracting a lot of foreign capital over the last decade. According to globalcitizensolutions.com, more than 16,000 residence permits were granted between October 2012 and April 2022, representing an investment of more than 6 million euros.
And, of this amount, the vast majority – about 90% – went towards the acquisition of real estate, which meant almost 10,000 golden visas being granted in the last 10 years.
But these stats are most certainly referring to the applications submitted until the end of 2021 and that were approved in the meantime. This is because, since the beginning of this year, it wasn’t possible to submit a single gold visa application for foreign real estate investment, until now.
The consequences for the real estate sector of this paralyzation of the Residence Permit for Investment (ARI) system for new gold visa processes were several and were somehow being felt, according to most real estate players specialized in the Portuguese market: they were driving away foreign investors, who started to look for alternatives in neighboring countries.
There were also some recent changes in the law on gold visas. That, in a combination with a restructuring phase of the SEF – the authority responsible for emitting new applications – happened to cause a lot of consternation in real estate investment. Also, in a time of great uncertainties we live in the current economic, social and international political context in Europe and worldwide, namely:
- Rising pre-war construction costs and the effects of the Ukraine war itself;
- The announced risk of a recession period that we may be entering, was pointed out by the G7 Finance Ministers, who were all very concerned about inflation and interest rates.
ARI Platform: new requests for gold visas in Portugal were on hold in the first semester
Since the beginning of 2022, it was not been possible to submit new requests for gold visas on the ARI platform by way of foreign real estate investment, either through the acquisition of real estate or through real estate investment funds. And such a reality covered investments made by citizens of any nationality. It should be noted that last February 26th, the SEF officially suspended the analysis of gold visa processes for Russian citizens, following the war in Ukraine. Such Russian investors were months without a response from national authorities and even consider taking legal action against the Portuguese state.
And there are several concerns that investors have shared with the professionals to whom they entrust the management of the gold visa processes:
- Family reunification: there is a way to obtain a residence permit in Portugal for family members of the resident in the country. But to obtain a residence title for these family members one must contact the SEF by phone and obtain an appointment. In that case, applicants are dependent on SEF’s agenda, which creates uncertainty as to the conclusion of the process.
- Expiration of documents: there are a number of documents that have short validities, of three months, or six months, such as criminal records, birth certificates, or marriage certificates. In addition, the processes to obtain them are normally time-consuming and sometimes also very expensive. And what will happen is that these documents will be expired by the time you submit them on the ARI platform.
- Delays in the submission of gold visas: investments are made with a five-year horizon to be entitled to the program and with the delays in obtaining visas, the investment will already have to be six years
What were the reasons behind the application freeze on SEF’s application form?
The truth is that the SEF has come to public attention in recent years for the wrong reasons. First of all, there have always been problems associated with its functioning and delays in the processes. Then, there was the new law at the beginning of the year and the decision to extinguish the SEF at the end of last year. And, all of this was influencing the blockage in ARI processes by foreign real estate investment.
On the other hand, it should be noted that there has been pressure from the European Union (EU) to standardize the rules for regulating gold visas among all countries that apply for this program.
New golden visa rules paralyzed the ARI system
On January 1, 2022, there were new rules for accessing gold visas in Portugal through real estate investment. This is because the first day of this year marked the moment when the new law came into effect that directly put an end to ARI via real estate investment in the metropolitan areas of Lisbon, Porto, and the coast of the country, with the aim of directing the flow towards the interior.
The issue was that until the beginning of this month, it was not possible to submit any request for gold visas on the ARI platform related to real estate investment. And on the ARI platform, you would have an alert saying that it was not possible to complete the application because the type of investment is awaiting regulation.
Platform back online and accepting requests for new gold visas
After five and a half months of inoperability, the SEF portal is back online and receiving applications for residence permits for investment (ARI), commonly known as gold visas. And the applications have already started coming in, despite the fact that the changes to the ARI law, which came into force earlier this year, are not so friendly to foreign investment. In a process that lacks transparency, the platform was “ordered to reopen” in the middle of last week, and the message “awaiting regulations” that real estate agents and lawyers who deal with these applications had to deal with disappeared.
It remains unclear why, for the last five and a half months, the gold visa processes have been frozen.
The Real Estate Sector and Consulting firms welcomed the news
Investors, promoters, and real estate agents couldn’t be more pleased with the decision to reopen the applications.
Some contacts were being made with the government to unblock the process. Now, there was a clarification from the Presidency of the Council of Ministers and the platform was unblocked, which is very positive for the sector.
Will the Portugal Golden Visa program experience another epic decade?
No one really knows, but everyone in the sector can only hope that the situation in the first semester does not repeat itself again.