Portugal decided to mortgage its resident visas to foreign property buyers and now should make good on its promises.
Portugal’s “Golden Visa” program has ground to a virtual standstill, leaving 4,000 international investors who bought into the nation’s property market in exchange for resident permits in bureaucratic limbo.
Applications for the visas, which are dependent on home purchases of at least 500,000 euros ($545,000), are being processed at the rate of two a day, according to Portugal’s Real Estate Professionals and Brokers Association, meaning it will take more than five years to clear the backlog. The program, introduced to boost the property market during the financial crisis, promised a permit 90 days after the submission of all the necessary paperwork.
Almost 80 percent of the 2,788 golden visas issued by Portugal have gone to Chinese nationals, according to the brokers. While Spain and Greece also offer similar property-for- visa-programs, Portugal has been the most successful, with about 1.53 billion euros of home sales since it started in 2012.
“I know hundreds of Chinese like myself that have been waiting for than a year to get a visa to live in Portugal,” said Sharon Chan, who paid 530,000 euros to buy three properties on the outskirts of Lisbon in 2014. The 38-year-old businesswoman from Shanghai and her 5-year-old daughter now have to fly back to China every three months to avoid becoming illegal residents, she said. “It’s a nightmare.”
Portugal’s Ministry of Internal Affairs said Jan. 13 the visa delays were due to several factors, including changes in legislation. The changes took place after a probe into allegations of corruption, influence peddling and money laundering linked to the program prompted 11 people to be detained in November 2014, according to the Portuguese Prosecutor General’s Office. Days later, Internal Administration Minister Miguel Macedo stepped down. He has denied any wrongdoing.
“The Immigration and Borders Service scrupulously ensures the compliance with the law in terms of the issuance of residence permits for investment activities,” said Marilia Neres, a spokeswoman for the immigration service. Asked what was being done to end the visa delays, she said: “The Immigration and Borders Service is adopting reinforcement measures to recover the pending visas.”
Many investors are getting desperate, according to Lily Liu, who leads a group of 251 Chinese home buyers in Portugal whose visa applications have been held up.
Yufan Li arrived in Portugal for the first time in 2014. Three days later, the 61-year-old from China’s eastern Changzhou city bought a 630,000 euro four-bedroom apartment in Quinta da Beloura, a golf resort in the foothills of the Sintra mountains near Lisbon.
Li said she expected to get her visa in a couple of months and began making plans for her family to join her. She bought a 50,000 euro Volvo station wagon and enrolled her 16-year-old daughter and 11-year-old grandson at two international schools, paying about 12,000 euros in advance.
Two years later, Li says she has no idea when she will get a resident permit and most of her family remain in China. She said she can’t drive her Volvo because her license isn’t valid without a resident permit.
“When I first arrived in Portugal my real estate agent told me the mild weather, the good schools and friendly people made this the perfect place to live with my family,” Li said through a translator. “Now I just want to sell my house, go back to China and forget that this ever happened.”
Level Constellation, a Chinese real estate company based in Lisbon, says it may reconsider plans to invest as much as 500 million euros in the local real estate market if delays in the issuance of the so-called golden visas aren’t resolved soon.
“It’s not right to sell an apartment to a Chinese citizen and promise a resident permit when we don’t know if they will be able to get a visa,” said Pedro Vicente, head of Level Constellation in Portugal. “If the delays persist we may switch our investment plans to other cities such as Madrid or Barcelona.”
This article was written by Henrique Almeida from Bloomberg and was legally licensed through the NewsCred publisher network.
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Photo credit: Portugal promised foreign investors residency visa if they bought homes in the country but has been slow in granting the visas. Pictured is a balcony overlooking the Vasco da Gama Bridge in Lisbon. Home Hunting