What are the Golden Visa’s legal requirements for the investment through real estate rehabilitation?
As mentioned in my last article, in this fourth article I will analyze the requirements for the acquisition and execution of rehabilitation works on real estate, in the global amount equal or superior to 350 thousand Euros to be eligible, under the Golden Visa program.
Firstly, it will be necessary to define what types of property will be eligible.
Any property regardless of its purpose, whether for housing, commerce or services, whose construction has been completed at least 30 years ago, or that the property is located in an area of urban rehabilitation (even if its construction has been completed less than 30 years ago).
Regulatory Decree no. 9/2018 of 11 September has changed the way the means of proof of compliance with the above-mentioned requirements for the investment to be eligible under the Golden Visa, were drafted.
However, there are some details that sometimes escape investors, and which it is important to point out.
I would say that the two most important details are:
- whether the property is in a rehabilitation area, or its construction was completed at least 30 years ago, in order for it to be eligible the applicant will always have to carry out works on the property;
- for the purposes of the regulatory decree mentioned above, what matters is the date on which the construction of the property were concluded, and not the date on which it was registered in the land register, or that it was registered in terms of tax registry or even when it was acquired for the first time;
There should be no confusion between the requirement and how to prove the requirement. Article 65-D, number 4, paragraph h) of Regulatory Decree 9/2018 of September 11, is quite clear when mentioning that it is necessary to prove the conclusion of the construction of the real estate property or properties at least 30 years ago, regardless of whether or not that situation/fact results from the land registry certificate.
We should not confuse the date of inscription of the property in the tax registry or the date of its registration in the land registry office, the normative clearly and specifically requires proof of the date of conclusion of the construction.
The way to prove the date of the definitive conclusion of the construction will be, in principle, through the property’s use permit, which should clearly and unequivocally mention the date on which the construction work is considered to have been concluded and that the property can be used for the purpose for which it was intended.
In principle, it should be the property’s use permit that will dictate and serve as proof if the construction of the property was completed or not at least 30 years ago, but sometimes that can be mentioned in the land registry certificate.
Concerning the obligation to carry out construction works and rehabilitation of the property, the Regulatory Decree no. 9/2018 of 11 September, amended article 65-D of Regulatory Decree nr. 84/2007, of November 5th, and established that in order to prove that the required rehabilitation works have been carried out, it will be necessary to present:
- Prior communication or ii) licensing request to carry out the urban rehabilitation operation or iii) a construction work contract to carry out rehabilitation works in the properties subject to acquisition, signed with a legal entity that is duly authorized by the Institute of Public Markets, Real Estate and Construction, I. P.
If we make a brief analysis of the legal regime of urban rehabilitation, established by Decree-Law No. 307/2009, of 23 October, both to the definitions of building rehabilitation, as well as to the definition of urban rehabilitation, contained in article 2 of the referred rule, and an analysis of articles 4, 6 and 6-A of the Legal Regime of Urbanization and Building (Decree-Law No. 555/99 of 16 December), we can reach the following conclusions:
- Rehabilitation of buildings – the form of intervention intended to confer adequate performance characteristics and functional, structural and constructive safety to one or more buildings, to the functionally adjacent constructions incorporated in its patio, as well as to the fractions eventually integrated in that building, or to grant them new functional aptitudes, determined according to the options of urban rehabilitation pursued, in order to allow new uses or the same use with higher performance standards, and may comprise one or more urbanistic operations;
- Urban regeneration – is the form of integrated intervention on the existing urban fabric, in which the urban and real estate heritage is maintained, in whole or in substantial part, and modernised through the carrying out of works of remodelling or improvement of urban infrastructure systems, of equipment and of urban or green spaces for collective use, and of works of construction, reconstruction, extension, alteration, conservation or demolition of buildings;
Therefore, the Legal Regime of Urbanization and Building (Decree-Law No. 555/99 of 16 December) will define what type of works will demand a ii) license to carry out works of rehabilitation, the type of works that will only demand a i) prior communication, or the iii) works that will demand no type of previous control, namely the works of little urban relevance.
Taking into account that any of the types of works mentioned in articles 4 to 6-A of Decree-Law No. 555/99 of 16 December correspond to works that can be framed as building rehabilitation works, the type of document proving the execution of the works that is required under Regulatory Decree 9/2018 of 11 September will depend on the degree of intervention in the property that is made.
Therefore, I believe it is more than defensible that, for the purposes of eligibility under the provisions of article 65 D, number 4, paragraph e) of Regulatory Decree 9/2018 of 11 September, it will be sufficient that the investor carries out works that effectively improve the quality of the property, that improve its energy certification, or that benefit its conservation, safety, in relation to its previous state, even if it has already benefited from rehabilitation works.
As an example, the replacement of windows and doors, for options that improve the energy certification of the property, or even the installation of solar panels, replacement of flooring or interior lining, for one that improves the quality of the property, are eligible works, and suffer no more than the addition of the contract to carry out rehabilitation works, provided that, concluded with a legal person that is duly authorized by the Institute of Public Markets, Construction and Real Estate, I.P.
Having said this, and in summary, there is a good investment opportunity in the Golden Visa regime, in the possibility of combining the acquisition of property with remodeling or rehabilitation works, for a total amount equal to or greater than 350 thousand Euros, if simple directives are followed in order to make the investment eligible.
This type of investment may effectively modernize the urban fabric in Portugal, help in the recovery of many aged areas of cities, which have an enormous potential for a more sustainable housing pole in terms of cost, and in turn more profitable.
auctor Pedro Marrana
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more