LISBON - Portugal has announced the closure of its much sought after Golden Visa program besides placing a ban on new licenses for Airbnbs and other short-term holiday rentals.

Portugal is amongst the poorest countries of Western Europe and the rental prices have increased manifold in recent years, leaving locals with fewer options to rent property on top of 8.3% inflation rate.

Prime Minister Antonio Costa said the crisis was now affecting all families. Portugal is now envisioning a mechanism to regulate rent increases and will offer tax incentives to landlords who convert tourism properties into houses for locals to rent.

On the other hand, Left Bloc party MP Mariana Mortagua took aim at the measures and said tax breaks were being given to landlords who have already benefited from (housing) speculation. As part of the announcements, Airbnb licenses will be awarded only in less populated rural areas.

The Prime Minister elaborated that the state would rent vacant houses direct from landlords for a period of five years and put them on the rental market.

The announcements have left the foreign investors in shock as Portugal's Golden Visa attracted wealthy individuals from across the world as it offered EU passports to non-EU nationals but all of this led to increase in house prices and rents; the Golden Visa scheme attracted 6.8 billion euros in investment since its launch in 2012 but the domestic market seems to have changed the minds of decision makers.

Despite the closure of Golden Visa, observers say that programs like Digital Nomad Visa also contribute to increase in rents.

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