Portugal Golden Visa property investment market – your guide

Are you thinking about relocating to Portugal? One of the best ways to become a citizen in Portugal without waiting for too long is investing in real estate through the golden visa program. Over the past decade, the Portugal golden visa program has grown to become one of Europe’s most preferred residency programs. At the beginning of 2020, the program was projected to surpass the €5 billion mark. This made Portugal immigration by investment one of the most popular programs in the world.

Here is everything you need to know about real estate investment in Portugal through the golden visa programs.

The Portugal golden visa program

While Portugal is famous for its port wine and great weather, real estate investors like Portugal for its golden visa program. As a member state of the EU, Portugal offers high living standards in healthcare, work infrastructure, climate, safety, stability, and education. These are the reasons that make people from all over the world want to live in Portugal.

If you are looking for a European country to settle in and become a citizen in less than 10 years, Portugal should be on your list. The golden visa for investors program in Portugal is an open door invitation to anyone willing to invest in the country.

This visa is a fast-tracking residence by investment opportunity for non-EU/EEA citizens. By investing in houses for sale in Portugal, you immediately qualify for a Portuguese residence permit and citizenship when you sustain the investment for 5 years.

Documents requirements for the Portugal gold visa application

  • Portugal Golden Visa application form
  • Proof of Health Insurance in Portugal
  • Deed or contract of the purchased property or signed promissory contract with evidence of the deposit payment
  • Evidence of good standing with the Portuguese Tax and Customs Authority and Social Security system issued 45 days before your online application
  • Copy of a valid passport and travel documents
  • A completed form authorizing SEF to get an extract of your Portuguese criminal records
  • Declaration from your bank in Portugal confirming the transfer of funds
  • A receipt proof of payment of the application processing fee
  • Certified copy of the criminal certificate or a Police clearance letter from your country of origin
  • Declaration from you confirming compliance with the investment requirements

The police clearance letters or certificates of criminal records must not be less than 90 days old at the time of submitting your application, and 180 days for other documents.

The benefits of the Portugal golden visa

Right to travel

There are numerous benefits associated with the golden visa Portugal program. The right to travel is one of the best benefits. In 2020, a Portugal passport holder can travel to 185 countries visa-free. This makes the Portuguese visa the 6th most powerful visa in the world.

When you first invest in Portugal real estate through the golden visa program, you will get a residence permit and qualify for full citizenship after five years of investing since Portugal’s naturalization timeline is one of the shortest in Europe.

With a Portugal golden visa, you will be able to enjoy visa-free travels to many countries around the world, including the Schengen area. With a residence permit, you can qualify for most visas to other parts of the world. This is one of the best privileges you enjoy as a golden visa investor in Portugal. It is especially ideal if you come from a country with limited travel privileges.

Right to work in Portugal

Besides getting more traveling privileges, a golden visa to Portugal also allows you to work in Portugal legally. As an EU resident, you can live or work in any other EU/EAA countries. This way, you can work anywhere in the EU/EAA area as you wait for your naturalization process to begin for your Portuguese citizenship.

Access to Portugal’s real estate

The Portugal real estate market has been rated as one of Europe’s most secure and attractive investments. Unlike other neighboring countries where the real estate market was affected by the recession, Portugal enjoys constitutional property protection since 1974 that protects investors. Because of the reserved nature of the Portugal real estate market, numerous tourist destinations still offer property for sale.

Portugal real estate market is also cheap when compared to other European countries. It is the best place to look if you are looking for European investment opportunities in a place with a warm climate.

Tax saving benefits

Through the Portuguese golden visa program, you can establish a non-habitual residence and tap into the program’s tax-saving benefits. This is one of the best programs in terms of tax saving in Western Europe.

As a golden visa Portugal holder, you will not need to pay extra tax for the income earned outside Portugal. You can also opt to register as a fiscal Portugal resident. This option allows you to directly benefit from the Non-Habitual Tax (NHR) Regime. This generous tax program offers numerous benefits related to global income, including tax-free incentives on different work categories for up to ten years.

Types of payments that qualify under this program include:

  • Real estate income
  • Capital gains from the disposal of real estate
  • Dividends
  • Occupational pensions
  • Royalties
  • Self-employment and Business profits derived from eligible occupations

While working in Portugal, all income sources are charged at a flat rate of 20% over the first ten years. You can also pass on your wealth to your dependent or spouse without paying gifts or inheritance tax.

Stay requirements for the golden investment visa

When you qualify for the golden visa program in Portugal, you will be required to spend at least 14 days in Portugal in the first 2 years of buying property. This time does not have to be consecutive. After the first year, the minimum stay requirement is 14 days for each subsequent 2 years.

The Portuguese immigration agency may require proof that you comply with these minimum requirements when applying for your visa renewal. This can be passport stamps, proof of stay, or flight tickets. Your qualification for citizenship after 5 years is not affected by the time spent in Portugal under the golden visa program provides you comply with the minimum stay requirements.

Getting the Portugal gold visa

Upon meeting the investment requirements for the golden visa to Portugal, you will need to make an application in consultation with a gold visa lawyer or consultant. This will ensure you prepare all the required documentation to qualify for the program.

To qualify for the program, the visa requirements include:

  • You must be a non-EU, non-Swiss, and non-EEA citizen
  • You should be ready to invest a minimum of €350,000 in either real estate of funds
  • You should not have a criminal record
  • You should be able to spend a minimum of 7 days a year in Portugal for the first year and 14 days for the subsequent 2-year periods.

The processing time for the gold visa is relatively easy and quick. Once the residence permit is issued, you will need to renew it every 2 years before becoming a citizen. After 5 years, you can request for permanent residency and citizenship.

Portugal golden visa Real estate investment

For you to get Portugal citizenship through investment, you first need to secure a residency permit. By law, you are required to invest at least €350000 in property or assets. The real estate market is the best investment option for the golden visa program. Through the program, you can choose to purchase property in Portugal as an individual or through co-ownership. The investment variation depends on the purchasing requirements in the golden visa program. The rules require you to purchase property of specified ages and in specified areas like low-density areas, beautification areas, and rehabilitation areas.

Through the golden visa programs, you can purchase commercial, residential, and agricultural property, among other property types. You are also allowed to invest in multiple properties.

Investing in the Portugal real estate market

In 2019, Lisbon was named as the most promising property market in Europe. Factors like strong leadership and high quality of life made Lisbon the best contender for the title. If you are interested in investing in property in Portugal, you should consider Lisbon real estate.

The Portuguese economy is growing

Each year, the economy is Portugal improves. In 2018 alone, the economy grew by 2.2% with strong general upward trends in previous years: 2.8% in 2017, 1.6% in 2016, 1.8% in 2015 and 0.9% in 2014, and a 2% increase in 2019. This shows that the Portugal economy has the potential for growth in the coming years.

The bank of Portugal has predicted a continuous upward trend and an expected growth of up to 1.7% by the end of 2020.

The real estate market is booming

There real estate market in Portugal is expected to remain active over the coming years. This is due to new employment opportunities, increased property demand by foreigners, and higher pays. According to statistics, the Portuguese HPU grew from 132.34 points in Q4 2018 to 137.14 points in Q1 2019. An HPU increase of 19% is projected between 2019-2021.

Lisbon’s property rates are on an uphill trend, with an estimated growth of up to 20% in recent years. This promises huge returns on investment over a short period of investing. Presently, Lisbon enjoys one of the highest yields ranging from 4.5% to 6.7% depending on asset location. Generally, rental property close to the city center is more expensive.

Property prices in Portugal had increased by 7.7% by November 2019. According to the Instituto Nacional de Estatistica, this placed the average price €1,312 (US$1,461) per square meter. In the Lisbon area, the price pf property increased by 9.5% in November 2019, making it €1,631 (US$1,816) per square meter.

In 23 of the total 24 urban areas in Portugal, there was a rise in house price by November 2019:

  • Sintra recorded the highest increase of 18.3%
  • Gondomar (16.7%)
  • Vila Franca de Xira (15.5%)
  • Vila Nova de Gaia (15.3%)
  • Amadora (14.8%)
  • Matosinhos (13.8%)
  • Braga (12.7%)
  • Funchal (11.3%)
  • Almada (11.2%)
  • Odivelas (10.5%)
  • Seixal (10.4%)
  • Maia (10%).
  • Vila Nova de Famalicão (9.8%)
  • Coimbra (9.2%)
  • Guimarães (8.5%)
  • Setúbal (7.8%)
  • Barcelos (6.6%)
  • Oeiras (6.3%)
  • Loures (6.1%).

There was a modest increase in house price in areas such as Porto (3.3%), Cascais (5.6%), Santa Maria da Feira (4.5%), and Lisboa (0.5%).

Going by property types, the price for flats rose by 9.8% in November 2019, putting it as an average of €1,402 (US$1,561) per square meter. Villas process increased by 4.2% by November 2019, placing it at an average of €1,162 (US$1,294) per square meter.

This goes to show that demand for real estate in Portugal remains healthy, with the total value of housing rising by 4.3% in the first quarter of 2019.

Rental yields in Portugal

The rental yield in Lisbon apartments ranges from 5.4% to 6.2%, while the market prices remain reasonable. The real estate prices in Lisbon are amongst the lowest in Europe. You can expect to pay:

  • EUR 200,000 for 85 square meters.
  • EUR 300,000 for 120 square meters.
  • EUR 840,000 for 250 square meters.

If you are buying rental property in the Lisbon real estate market, you can expect a yield of between 4.5% and 6.7%. These are considered attractive yields for property in the capital.

Real estate taxes

In Portugal, the taxes range from moderate to high. The net rental income is taxed at a 28% flat rate, with the deductibles including maintenance costs, repairs, and local taxes.

Buying rental or personal property in Portugal

Property buying is viable to anyone with a Portugal gold visa. You can purchase personal property if you plan to settle in Portugal eventually. Buying a home in Portugal will require consistent cleaning and maintenance, and it does not make you money.

The other option is investing in rental property through the Portugal gold visa program. This will ensure that you can rent out your real estate at times you are not in Portugal. The most obvious benefit of rental property is the ability to generate an income from your investment. Most people visiting Portugal prefer to rent Airbnb’s, making it a lucrative investment in Portugal.

Landlords and tenants guide

The law in Portugal is largely pro-tenant despite substantial amendments to the urban lease act. The rental amount can be agreed between the parties, except in low-cost housing. The rent reviews are also freely reviewed annually. The property owner and tenant can come up with a fixed-term contract with a minimum initial term of not less than 5 years. The contract can include for three years consecutively. In the absence of a fixed-term contract, the leasing agreement is considered open-ended or tenancy for life agreements.  

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