/
/
Golden Visa for buying a property for rehabilitation in Portugal: find out all about it

6 de September, 2019

Golden Visa for buying a property for rehabilitation in Portugal: find out all about it

Reading: 8 min

Did you know that there is a Golden Visa modality, through the acquisition of property, whose minimum investment value is EUR 350,000?

This is a less well known modality, with the aim of promoting urban rehabilitation, and which can offer a number of benefits to its holder in the face of to the classic real estate investment of 500 thousand euros.

Check out how Golden Visa works for urban rehabilitation, as well as its advantages and disadvantages compared with other Golden Visa modalities.

Golden Visa: benefits and modalities

O Golden Visa (Residence Permit for Investors – ARI), program of better known visas from Portugal, aims to attract investors to the country. In return for the investment made, this Visa offers a series of benefits to its holders, among them:

  • Entry and free transit throughout the European area (Schengen);
  • Possibility of legal residence in Portugal, if the holder wishes;
  • Obligation to spend only one or two weeks a year in Portugal;
  • Possibility of obtaining Portuguese citizenshipafter 5 years of investment;
  • Possibility of extending the benefits to the spouse and dependents.

Investments for Golden Visa purposes can be made through real estate acquisition, capital transfer, investment in small and medium enterprises, job creation, investment in scientific research or artistic production and preservation or conservation of cultural heritage.

Modifications to Golden Visa Portugal rules

In February, the State Budget Law for 2020 was passed, which, from other issues, authorized the Government to proceed with some changes to the regime from Golden Visa.

At the time, it was misrepresented by the media that this Programme would then cease to exist, which is not true.

What happens is that the government now has authorization to change this scheme with specific regard to the following aspects:

  1. Restriction of real estate investments necessary for the granting of Golden Visa to the territories of the interior of the country, Madeira and Azores. The cities of Lisbon and Oporto, as well as the Algarve region, are therefore to be excluded;
  1. Increase in the minimum value of the investments and the number of jobs required to grant Golden Visa. It is therefore expected that the minimum values necessary for investments in general for the granting of this type of visa will be increased.

However, it should be noted that such changes are NOT IN FORCE, since the government has not yet used its legal prerogative. What exists, until the At the moment, it is a legislative authorization for the government to proceed with those amendments, and specify their scope, but without date specific to when this will occur.

Extra officially, the information provided was that these measures would only be implemented in 2021. However, considering the pandemic scenario where the country is involved at the moment, it is speculated that such measures do not even will be implemented next year.

Golden Visa for Real Estate Investment

According to official data from SEF (Serviço de Estrangeiros e Fronteiras de Portugal), between October 2012 and March 2020 Portugal had already emitted more than 8,413 Golden Visas, of which more than 90% were granted by way of the requirement for the acquisition of real estate.

Although real estate investment is the most popular form of investment among investors, what many people don’t know is that there are two distinct ways of investment through the acquisition of real estate for the purpose of obtaining the Golden Visa, with quite different requirements including the amount of investment necessary to be landed in the country.

Classic real estate investment x Real estate investment for rehabilitation

When it was first created, the Golden Visa Program provided only one way to of real estate investment to obtain it: through the acquisition of real estate 500,000 or more.

In this “classical” mode of real estate investment, it does not matter if the investor acquires one or more properties, whether these properties are new, restored or old, or even where this property is located within the cities, what matters is the amount of the investment applied for its acquisition, which must exceed 500 a thousand euros.

However, in 2015 the Portuguese government made an addition to the Foreigner’s Law providing an additional form of real estate investment for the purpose of to obtain Golden Visa, through the:

Acquisition of immovable property, whose construction has been completed by less than 30 years or located in an area of urban rehabilitation and realisation of rehabilitation work on the acquired real estate, for a total amount of 350,000 or more;

To this end, and bearing in mind that this modality demands an “extra effort” for part of the investors with the realization of works on the property they will acquire, the value of the investment is considerably lower, the overall amount necessary (acquisition of the property + works) to be 350 thousand euros.

Therefore, for the purposes of applying for Golden Visa, today the classic mode coexists of real estate investment (worth 500 thousand euros) and the Golden Aims for urban rehabilitation in Portugal, with old properties or located in urban rehabilitation areas, with a minimum value of 350 thousand euros.

* I would like to point out that if the properties in question are acquired in “low-density territories”, according to the legal definition for this purpose, the The value of both types of real estate investment may be reduced still at 20%.

Real Estate Investment Requirements for Rehabilitation

When directed to Golden Visa’s initial application, the main requirements for the type of real estate investment for rehabilitation are:

  • Property requirement: construction completed over 30 years ago or location in Urban Rehabilitation Area – ARU;
  • Rehabilitation requirement: renovation works of the property, proven by contract or request for prior information or respective licensing;
  • Requirement for acquisition: proof of ownership of the property, free of liens and charges;
  • Minimum investment required: EUR 350,000, plus the value of the property and the value of the rehabilitation works.

We also emphasize that it is possible to acquire the property on a co-ownership, provided that the Golden Visa applicant complies with the requirement of minimum investment required for this purpose.

Main advantages of real estate investment for rehabilitation

With this mode of Golden Visa, Portugal aims to continue attracting investors to the country’s real estate market, but directing them to that promote the restoration of old properties or located in areas strategies for the rehabilitation of cities, making private initiative collaborate with the State in improving housing conditions in cities.

For investors, in addition to all the advantages of obtaining the Golden Visa, as the possibility of legal residence and the portuguese citizenship after 5 years of maintenance of the investment, this type of rehabilitation presents as main benefit its reduced value compared to most others eligible investments for this Visa Program.

For example, for classical real estate investment (‘500,000) or for capital transfer (EUR 1 million), the minimum amount needed for investment in urban regeneration is significantly lower (‘350,000).

Attention:

To make it clear, the purchase price of the property for rehabilitation can 300,000 provided that the value of the works to be carried out reaches 50 thousand euros, making a total investment of 350 thousand euros.

Or, you can buy 2 properties of 150 thousand euros each, remembering that they have to be located in ARU or have been built more of 30 years, and carry out restoration works on these properties that exceed 50 thousand, making up the minimum amount of 350 thousand required.

Therefore, in this mode of Golden Visa the value of the acquisition of the property itself may be less than EUR 350 000.

See also the possibility of obtaining Golden Visa through Investment Funds.

Main challenges of real estate investment for rehabilitation

If, on the one hand, the value of the investment required has been reduced considerably in the case of purchase of real estate for rehabilitation, on the other hand we cannot deny that this mode of Golden Visa requires an “extra effort” on the part of of the investor to meet the other requirements necessary for this effect.

Property Requirements

The first challenge is the search and selection of a property of interest to the investor, whose construction has been completed more than 30 years ago or who is located in the Urban Rehabilitation Area – ARU.

In Portugal, ARUs are areas territorially delimited by municipalities which are find themselves in a situation of insufficiency, degradation or obsolescence and that justify an operation of “urban rehabilitation”, led by its own initiatives State.

This factor alone already limits the investor’s freedom to choose to invest in acquisition of any type of property available in Portugal for Golden Visa.

Rehabilitation Requirement

The second challenge is to carry out restoration work on the property that comes to acquire. Usually, this step involves a prior licensing process of the works, the hiring of professionals for this purpose (contractors, architects, engineers), and their follow-up.

Therefore, in this case, the investor cannot simply acquire a property ready and finished, with the completion of the additional stage of work being compulsory in this property.

Key in Hand Solution: yes, it exists!

Don’t let the challenges discourage you, as they currently exist on the market Key in hand” solutions, i.e. specifically aimed at people who wish to obtain Golden Visa through real estate investment to rehabilitation, without having to worry about works or the search for the real estate.

In this sense, the interested parties can already acquire a pre-selected property, which meet the legal requirements of construction time or its location, together with a “pre approved” licensing and contracting project for the effect.

These products can be from residential real estate, buildings already planned for season rental for tourists, or options for purchasing fractions inside a hotel pool in a property to be restored.

Another very attractive point is that some of these “packages” still include the property management service, i.e. the hired company may stay responsible for renting your property or fraction to third parties, which may generate to the investor a monthly or annual income deriving from its exploitation, income This may or may not be guaranteed depending on the product.

Finally, there are also companies in the market that ensure the “buyback” of the property sold to the client, after 5 years of maintenance of the investment necessary for your application for Portuguese citizenship under Golden Visa.

Despite the various “turnkey” options available on the market, it is very important to verify the legal feasibility of these products for the application of Golden Visa, the reliability of the promoting companies, as well as being attentive to the profitability and conditions offered for the operation of your property, in order to to ensure that you are making a safe, credible and profitable investment.

If you are in doubt whether the best way for you to live in Portugal is through Golden Visa or D7 Visa in Portugal, this article explains the main differences and advantages of each.

*This article is merely informative, not intended to exhaust the subject and cannot be used as an exclusive source for decision making on the subject..

Author: Roberta Fraser
Citizenship & Immigration

Facebook
LinkedIn
WhatsApp
Telegram

Author:

Atlantic Bridge

You may also like:

Portuguese property market in 2019: understand the valuation in the country

Author:

Atlantic Bridge

Reading: 5 min

16 de April, 2019

Moving to Portugal with Children: Advantages and Disadvantages

I came to Portugal almost a decade ago. Today I am asked how my experience was. What are the advantages of moving to Portugal with children?

Author:

Atlantic Bridge

Reading: 7 min

2 de January, 2023

Brazilian Driving License Becomes Valid in Portugal

Author:

Atlantic Bridge

Reading: 2 min

14 de July, 2022

Living in Portugal with European Citizenship: Step-by-step

Author:

Atlantic Bridge

Reading: 5 min

13 de February, 2019

Non-Habitual Resident (NHR) status end in Portugal in 2024

The Non-Habitual Resident (NHR) Status is ending in Portugal. See how this could impact you and how to take advantage of the regime's benefits.

Author:

Atlantic Bridge

Reading: 10 min

8 de January, 2024

Estudantes de medicina

How to Study Medicine in Portugal

Discover how it's possible to study medicine in Portugal as a foreigner. Who can apply and how to streamline the admission process.

Silvia Resende

Author:

Silvia Resende

Reading: 8 min

2 de May, 2024