“Many nations and urban areas face the challenge of designing policies that ensure that the local population benefits from a potentially large influx of foreign residents”, reveals the study “Remote work, foreign residents and the future of global cities”, signed by João Guerreiro, Sérgio Rebelo, and Pedro Teles, and reported by Público.

According to economists, “restricting the purchase of properties by foreigners or imposing taxes on these purchases is not ideal.” To solve the problem, they propose an approach that “involves internalising externalities by implementing transfers to local individuals, based on their residential and professional locations”.

The researchers argue that new foreign residents represent capital gains – “which result from the sale of houses and land at higher prices to foreigners”; and simultaneously costs arising from the displacement of former residents to the outskirts, as well as the loss of authenticity in cities.

They believe, however, that these costs can be neutralised. One way to correct these adverse effects is to “subsidise former residents according to their location, counteracting relocation to the outskirts”, says João Guerreiro, speaking to the newspaper.

Furthermore, they defend direct taxation instead of increased taxation on the sale and purchase of houses.

“Policies that restrict the purchase of houses by new residents or that increase their taxes do not for allow taking advantage of the capital gains from the entry of these new residents and are, therefore, inefficient from the point of view of the country as a whole”, they emphasise.