Spain is getting rid of its controversial “golden visa” scheme, which gave residency to foreigners who invested significant sums in Spanish real estate.
The move aims to ease housing shortages and make homes more affordable for local residents.
End of path to residency after a decade
The Spanish government has started phasing out its golden visa scheme, which launched in 2013.
Under this program, non-European Union (EU) citizens could obtain residency by purchasing property worth at least €500,000 without a mortgage.
Between 2013 and November 2022, Spain issued around 5,000 of these visas. Chinese nationals topped the list of recipients, followed by Russian investors who poured over €3.4 billion into Spanish real estate.
Yet, Prime Minister Pedro Sánchez made it clear on April 8th that this scheme is coming to an end. He pointed out that a whopping 94% of these golden visas were tied to real estate in major cities struggling with housing shortages.
“It’s almost impossible to find decent housing for those who already live, work and pay taxes there,” Sánchez said of areas like Madrid and Barcelona.
Affordable housing crisis prompts overhaul
Spain’s left-wing coalition cited affordable housing as a key reason behind scrapping the golden visa path for property investors.
The prime minister stressed that guaranteeing “housing is a right instead of a speculative business” as a goal.
Spanish authorities argued that the program benefited wealthy foreigners over local residents struggling with soaring home costs.
Last year, rental caps were imposed in areas with spiraling prices like the Balearic island chain. However, allies demanded further action to ease the affordable housing crisis.
Other EU nations rethink similar schemes
Spain is not the only country making changes to its golden visa programs. Nearby Portugal, facing similar housing shortages, removed real estate from its investor immigration scheme last year.
The European Commission has urged cracking down on such programs over transparency and security concerns, especially after Russia’s invasion of Ukraine.
Skepticism on scrapping golden visas
While celebrated by advocates for affordable housing, the decision to scrap Spain’s golden visa program has raised doubts about its effects.
Real estate experts point out that international property investors actually had a small impact on Spain’s housing market. Less than 0.1% of the 4.5 million Spanish homes sold since 2013 were linked to golden visas.
Francisco Iñareta, from the property website Idealista, stated the problem does not stem from the golden visa, but rather from the increasing shortage of available homes and the rapid growth in demand.
Some argue that axing paths like the golden visa will deter foreign investment that Spain needs for new residential construction to boost supply and ease prices.
Shifting stance on residency-by-investment immigration schemes
Spain scrapping its golden visa reflects a wider EU trend. Many nations are revising or eliminating residency-by-investment schemes that previously offered permanent residency paths.
Critics argue that these programs lack transparency around applicants’ funds. There are also security concerns over screening individuals obtaining long-term residency through investments.
The EU increasingly favors more temporary and heavily vetted approaches over outright selling residency. However, details vary as immigration policies remain under national control.
An overhaul reflecting broader shifts
Although seen as a step toward safeguarding local housing accessibility, getting rid of Spain’s golden visa program might not have a significant effect unless there is an increase in the country’s housing supply.
This change mirrors larger trends across Europe, where there is a move away from residency-by-investment schemes due to concerns about transparency and security.