Is This the End of Portugal’s Golden Visa? 

You Still Have a Limited Window to Get One… If You Move Fast.

In the early 2010s, Portugal had a big problem. 

In the prior decade, Portuguese banks had loaded up on complex securities backed by U.S. mortgage bonds. They provided great returns and were rated AAA, the highest possible credit rating. European wholesale banks considered them excellent collateral and lent Portuguese banks billions against them. The banks then recycled that money into mortgage loans to Portuguese homeowners. 

But as it turns out, those U.S. mortgage-backed securities were practically worthless (these are the financial instruments that helped cause the global financial crisis).  

The subprime borrowers couldn’t afford the payments when interest rates reset in 2007-2008. That meant the collateral Portuguese banks had used to raise funds to lend into the Portuguese market was also worthless. The banks were insolvent. 

The resulting global financial crisis meant many Portuguese homeowners couldn’t afford to service their mortgages. And since Portuguese banks were technically insolvent, they couldn’t make new loans to potential buyers. Housing prices collapsed. 

Since Portugal is part of the eurozone, it didn’t have an independent central bank that could pump money into the system to prop it up, as the Federal Reserve had done in the U.S. So, the Portuguese government decided to approach the crisis from a different direction.  

In 2012, the government announced a residential Golden Visa program.  

By buying a property worth at least €250,000, foreigners could get a long-term residence permit. They only had to spend a week or so in Portugal every year, so they were also free to rent out those properties for income.  

Best of all, as legal residents of Portugal, Golden Visa holders were free to take advantage of the freedom of movement, commerce, and residence in the European Union. 

Over the next decade, Golden Visa applicants bought thousands of Portuguese properties, primarily in the main cities and the beautiful southern Algarve coast.  

A decade later, the financial crisis was long over. Portuguese property prices had more than doubled since 2012. With so many properties used as Airbnbs, long-term rentals in places like Lisbon increased by double digits every quarter. That meant Portuguese locals couldn’t afford a place to live.  

So, in late 2022, the government announced it was planning to cut the residential option for its Golden Visa program. Since then, Ireland, Greece, and Spain have all announced similar “reforms.” 

What are we to make of this? Here’s my take: 

1. Residential Golden Visas were designed to boost property valuations. That goal has been met. Unlike passports for sale from some countries, Golden Visas were never intended as a financial end in themselves.  

2. Residential Golden Visas didn’t require visa holders to live in the country. That meant the only benefit to the host country could come from higher property market valuations. Other than money to purchase properties, the visas didn’t lead to an influx of foreign income and an increase in local spending by foreigners. Yet it’s precisely that kind of spending that produces the widespread economic growth that would appeal to voters. 

3. The countries issuing Golden Visas have aging populations. The ratio of working people to pensioners is declining, putting pressure on their national finances. Long-term visas that require applicants to live in the country—especially if they’re bringing income into the country from abroad—address that problem directly.  

4. Unlike residential Golden Visas, therefore, we can expect digital nomad, independent means, and retiree visas to continue and thrive in the decades ahead. That’s precisely what we’re seeing. Portugal, for example, has made it clear that it intends to focus on these visa categories going forward. 

5. Nothing stops the recipient of another type of long-term visa from acquiring property. (For that matter, nothing stops one from acquiring residential property with or without a visa.) The key difference is that the buyer is expected to live in the property or rent it out long-term. 

6. You still have time to get a residential Golden Visa in Portugal… and there’s nothing wrong with doing so. The reforms to the program are still being discussed, so there’s a limited window to act. And these visas still offer the fastest and easiest pathways into permanent EU residency. But you need to move quickly. (I’m participating in an event soon to explain how to get one of Europe’s Golden Visas before they disappear… check your email on Monday for more details.) 

From the perspective of a potential applicant for a residential or non-residential Golden Visa—perhaps yourself—the most important thing is to understand the changing environment and to take advantage of it accordingly.