Golden-visa Holders Take Portugal to Court After Years-long Delays and New Citizenship Rules

Real estate Portugal: investors trapped between slow bureaucracy and rule changes

Real estate Portugal investors who bought property to secure residence rights are at the centre of a growing legal and political dispute. What began as an investment-for-residency scheme has turned into a multi-year wait, legal challenges and a scramble for clarity. For buyers and investors, the immediate questions are practical: how long until I can travel freely, extract my capital or apply for citizenship, and what are the legal remedies if the state breaks its own deadlines?

Quick summary for investors

• The Portuguese golden visa requires minimum investments starting at €250,000 in some categories.
• By law, initial residence permits should be processed in 90 days; today those permits often take nearly five years.
• The government has extended the naturalization waiting period for most non-EU nationals from 5 to 10 years. That change affects investors who had planned to apply for Portuguese citizenship after five years.
• An estimated 12,000 golden-visa applicants are in the same position, and petitions and lawsuits are being prepared.

These are not abstract numbers. Families, small-business owners and professionals who invested in Portuguese property are stuck. We examine why, who is affected, the legal arguments, market consequences and practical steps buyers should take now.

How Portugal’s golden visa evolved and why it mattered

Portugal launched its golden visa programme in 2012 to attract foreign capital. In theory the scheme channels investment into areas of need and stimulates construction. In practice, much of the money flowed into residential real estate in Lisbon, Porto, the Algarve and attractive towns such as Sintra and Évora.

Key characteristics of the programme that matter to property buyers and investors:

• Minimum investments varied by route; one commonly used route required €250,000. Other routes in Europe run from €50,000 to €500,000 depending on the country and mechanism.
• Initial approval gives a temporary residence permit, followed by eligibility for permanent residence and, later, citizenship.
• Golden-visa investors typically cannot repatriate some forms of investment until they meet residency requirements, which creates a liquidity constraint for many.

The scheme was controversial from the start. Critics cited the risk of attracting applicants with dubious backgrounds and blamed the programme for contributing to rising housing costs in major cities. Supporters argued it brought useful foreign capital. The controversy increased scrutiny and, ultimately, regulatory change.

What changed: delays, a new naturalization timeline and political fallout

Two separate but related problems have combined to create the current crisis for investors: administrative delays in issuing permits and a change to naturalization rules.

Administrative delays

• By law, golden-visa applications should be processed within 90 days. In reality, the processing time for the initial temporary residence permit now averages almost five years, according to immigration lawyers advising applicants.
• That delay prevents investors from obtaining the permanent residence status they expected after five years, because the clock for permanent status starts when the initial permit is granted.
• The government acknowledges delays and says it inherited a backlog of more than one million unprocessed visa applications from the previous administration; it claims to have cleared 98% of that backlog and is focusing on golden-visa files.

Naturalization rule change

• The centre-right government, with support from the right-wing Chega party, extended the waiting period for naturalization for citizens of most non-EU countries from 5 to 10 years. Government officials say this change does not alter the five-year path to permanent residence, only the period before citizenship application.
• Investors who expected to be able to apply for citizenship after five years now face a longer timeline for passport rights.

The combination is politically combustible: investors say they were sold a timeline that no longer exists, while the state says it can change naturalization law and is prioritising limited administrative resources.

Who is affected and why investors are suing

The human stories underline the stakes.

• American investor Luke Strzegowski invested €350,000 in a home near Sintra with his family and expected to get the initial permit in 90 days and permanent status five years later. He is still waiting for an initial permit after four years and says the delay prevents him from travelling for work and planning his children’s education.
• American investor Servet Tasman invested €350,000 in two houses in Évora at the end of 2021. He calculated that the new rules pushed his citizenship date from 2028 to 2037.

Immigration lawyers and agencies say around 12,000 golden-visa applicants now face similar uncertainty. A petition with more than 500 signatures has been collected from affected applicants, and a larger petition, signed by 1,200 applicants, has been submitted to Portugal’s Justice Ombudsperson.

Planned legal action includes:

• A class action before the administrative court.
• Individual civil claims seeking damages for losses of opportunity and liquidity constraints.
• The possibility of appeals to European or international institutions if domestic remedies fail.

Legal arguments being prepared hinge on two claims:

1. The state violated its statutory obligation by failing to process initial golden-visa applications within 90 days.
2. Applicants were misled by government materials and marketing that suggested a five-year path to citizenship, creating a legitimate expectation that the state should honour.

The government counters that it has the legislative right to change naturalization timelines and that the permanent residence rule remains unchanged. The conflict between statutory processing deadlines and practical administrative capacity is central to the legal debate.

Financial and practical consequences for property buyers

The delays and rule changes create several concrete risks for investors in Portuguese real estate.

• Liquidity lock-up: many investors cannot sell or move funds out of Portugal until they achieve permanent resident status under the golden visa rules. Delays can trap capital for years.
• Opportunity cost: longer waits mean lost business or employment opportunities tied to free movement in the EU.
• Market exposure: investors remain exposed to local property-market risk — price declines, maintenance costs, taxes and regulatory shifts — without the mobility or legal status they expected.
• Legal costs and uncertainty: mounting litigation can be expensive and, as Portugal’s courts are slow, resolutions may arrive after the new timelines have already elapsed.

We have seen the pattern before in other investor-based residency schemes: a policy change can convert what appeared to be a secure regulatory environment into an uncertain one. For people who invested their life savings in property — as Luke Strzegowski said, “it was all we had” — that uncertainty is existential.

What this means for the Portuguese property market

For buyers and investors focused on property Portugal, the unfolding dispute could have mixed market effects.

Potential downward pressure on high-end demand

• If confidence in the golden-visa route declines, foreign demand for luxury and second-home properties may cool, particularly from non-EU buyers who sought residency or citizenship benefits.

Pressure on prices in overheated segments

• The golden-visa programme had channelled capital into prime-city and coastal residential markets, and reduced demand could ease some upward pressure on prices in those segments.

Countervailing forces

• Portugal remains attractive for lifestyle, climate, tax regimes and business reasons. Buyers uninterested in residency benefits could still purchase for lifestyle or rental yield.
• Domestic buyers and EU investors may step into any temporary gap in demand.

We should be clear: the immediate effect will be most visible in transactions explicitly tied to residency outcomes. Broader market trends will depend on macroeconomic factors, tourism recovery and domestic housing policy.

Government response and political context

Rui Armindo de Freitas, the secretary of state responsible for immigration, accepts the existence of delays but says the government is working through inherited backlogs and has prioritised clearing files. His official positions include:

• The naturalization-law change aligns Portugal with other European states and concerns citizenship, not the golden-visa programme itself.
• Permanent residence eligibility remains at five years for golden-visa holders.

Critics point to a communication failure.