Spain has announced getting rid of the golden visa scheme, which grants residency to wealthy investors through property investment. This move comes in response to the escalating housing prices that have posed challenges for local residents.
Wealthy foreigners may no longer be able to bypass European Union residency laws in Spain.
On Monday 8th April, Prime Minister Pedro Sánchez announced that Spain would be scrapping the “golden visa” scheme to end real estate market speculation and spiking housing prices that have hit major Spanish cities.
The scheme, approved in 2013 by the conservative government of Mariano Joy, allowed investors to obtain Spanish residency by investing in real estate of at least half a million euros. Rajoy sought to boost investment during a time when Spain’s housing market was suffering due to the economic crisis of 2008.
The golden visa served as an access point for non-EU citizens by granting them residency and a work permit if they invested more than 500,000 euros (537,000 dollars) in real estate, financial assets, or business projects in the country. The visas are valid for 5 years and do not require holders to reside in the country for renewal.
The number of permits issued under the golden visa scheme amounted to 6,200 since its implementation, according to Transparency International in 2023. However, official government figures are much higher, claiming that 14,576 golden visas linked to investments in real estate have been granted.
Nearly half of the beneficiaries were Chinese, followed by Russians and Americans. The number of UK nationals benefitting from the program has also surged as they seek to retain EU privileges following Brexit. Madrid has become the “European Miami” for Latin Americans, according to Forbes.
The influx of foreign investment proved beneficial for the Spanish economy, reviving the real estate market. But this influx also brought about adverse effects for locals as the housing market became stressed, especially along the Mediterranean coast and the Balearic Islands.
Mr. Sánchez declared that 94 out of every 100 such visas are linked to real estate. He announced that the Council of Ministers would begin studying a report to modify the law that allows those who invest in housing to obtain a residence visa.
Housing rights for Spaniards are the priority
The abolition of the “golden visa” is part of the socialist government’s wider comprehensive strategy to provide affordable housing for Spaniards. The prime minister explained that the measure aims to ensure that housing remains “a right and not merely a speculative business.”
The effort to ensure affordability and social welfare has led the government to also invest substantially in social rental housing and urban rehabilitation. In April 2023, Spanish lawmakers approved the first housing law since the country’s return to democracy in 1975, aimed at capping soaring rents.
Under the Affordable Rental Housing Plan, the government has increased the planned expenditure of 115 million to 260 million euros in 2023, a historic allocation for housing. “Our goal is clear: to fulfill the constitutional right to decent housing for all,” Sánchez affirmed on Monday.
However, critics warn that eliminating the golden visa scheme will not fix the housing shortage in Spain. According to the property website Idealista, prices will continue to rise regardless of whether foreign nationals are arriving, and the “root problems” of decreasing supply and growing demand for housing need to be addressed.
“European values are not for sale”
Nevertheless, pressure to end schemes that benefit wealthy foreign nationals comes from outside Spain as well.
In 2022, the EU warned against Golden Visa schemes throughout Europe, citing security concerns and a lack of transparency as the visas facilitate tax evasion and fraud. Security risks have escalated in the wake of the Ukraine war as sanctioned Russian nationals can be given easy access to European residency through these programs.
Didier Reynders, the Commissioner for Justice and Consumers, declared: “European values are not for sale. We consider that the sale of citizenship through ‘golden passports’ is illegal under EU law and poses serious risks to our security. It opens the door to corruption, money laundering and tax avoidance.”
Consequently, similar schemes are gradually being phased out across Europe. Spain is following the initiative of Portugal, the Netherlands, and the UK, who all ended their respective golden visa programs in recent years. Greece has also tightened rules, drastically increasing the minimum investment required to obtain visas.
France has never implemented a golden visa scheme, but foreign nationals can achieve residency by obtaining either a self-employed or Tech Visa. Valid for 4 years, the tech visa scheme is open to startup founders, employees, and investors.
