Rule changes and restrictions had been rumoured for some time, but on Monday Spain's Prime Minister Pedro Sánchez shocked many and announced plans to scrap Spain’s golden visa (visado de oro) altogether.
In the face of a housing crisis affecting millions of Spaniards but which has seen foreigners buy up homes in record numbers, Sánchez announced the plans and followed the example of Iberian neighbours Portugal in ditching the visa scheme altogether, as well as Greece, Ireland and the Netherlands.
READ ALSO: Spain to scrap golden visa for wealthy foreigners
"We are going to begin the procedure to eliminate the granting of the so-called golden visa, which allows access to Spanish residency when more than half a million euros are invested in real estate,” Sánchez told journalists in Seville on Monday.
The visa, first introduced in 2013 by the then centre-right Partido Popular government, has long been blamed for contributing to house price inflation and essentially selling Spanish residency to the wealthy.
According to Sánchez, 94 in every 100 golden visas issued were linked to properties bought in popular provincial capitals such as Barcelona, Madrid, Málaga, Alicante, Valencia or Palma de Mallorca where property prices and rents have all risen exponentially.
What was Spain's golden visa?
The golden visa allowed non-EU nationals to gain Spanish residency if they bought property worth €500,000.
Access to the golden visa was also open to those who invested €1 million in shares in Spanish companies, or €2 million in government bonds, or transferred €1 million to a Spanish bank account.
Therefore, Spain’s golden visa has come to be known as one of the ‘easiest’ ways of gaining Spanish residency as a third country national, for those wealthy enough.
Why was it introduced?
Following the financial crisis and bursting of the property bubble, the rationale behind the golden visa was to entice foreign investment into the Spanish market to help reinvigorate it.
It was the right-wing Popular Party government of then-Prime Minister Mariano Rajoy which implemented the golden visa law in 2013.
How many golden visas were issued?
There's some conflicting information about the total number of golden visas issued over the years. The Spanish government has indicated there were "about 10,000″ but several Spanish media outlets are also reporting that since around 5,000 golden visas have been granted in Spain in the last two years alone.
However, El País reports that based on government data, between 2013 and 2022 almost 11,500 golden visas were issued for all types of investment via the visa scheme (shares, government bonds, property purchases) and of these, 10,800 (93.9 percent) were for property purchases.
Spain's Housing Minister Isabel Rodríguez finally clarified the exact number during a press conference on Tuesday: 14,576 golden visas have been granted since 2013.
READ MORE: Spain says alarm was raised over golden visas when 'numbers doubled'
Which nationalities benefited most from the golden visa?
According to Foreign Ministry figures cited in a report on golden visas by Transparency International, the Chinese benefited most, with a total of 2,712 visas issued since 2019 . Of these, 99.33 percent were via property purchases. Russians were the second most common recipients of golden visa, with a total of 1,159 visas, 94.65 percent of which were via property acquisitions.
The list continued with Iranians next (203 visas and 99.01 percent for the purchase of homes), Americans (179 visas/94.97 percent through property) people from the UK (177 visas/93.78 percent through property), Egypt (143 visas), Ukraine (143 visas), the Philippines (122 visas), Mexico (114 visas), Venezuela (98 visas) and Saudi Arabia (89 visas).
However, since Rodríguez cited a new and considerably higher number of golden visas issued in 2022 and 2023 (2,017 and 3,272 respectively), the nationality figures above still need to be updated by Spain's Foreign Ministry to be current.
When is the deadline for Spain's golden visa?
Although Sánchez’s words would suggest it’s a done deal, the removal of the golden visa scheme still has to be discussed and approved in the different governmental departments.
On Tuesday April 9th 2024, the Spanish Cabinet studied a report raised by the Minister of Housing and Urban Agenda Isabel Rodríguez on the subject of the golden visa cancelled and ratified its amendment.
The golden visa scheme is part of Law 14/2013 in support of international entrepreneurship.
According to Spanish daily El Periódico de España, the intention of Spain's Housing Minister is to cancel the golden visa scheme as quickly as possible and to fast-track this process by attaching the legal amendment to another law, the upcoming modification of the Spanish Land Law (Ley de Suelo) which has already overcome some legal hurdles.
Left-wing parties have a parliamentary majority but right-wing parties PP and Vox, with more clout in the Senate, have reacted to the news of the end of the golden visa scheme by calling it a "smokescreen".
Given that legislative processes in the Senate take a maximum of two months, it looks likely that the golden visa will be taken out of Spanish law before the summer, if not sooner. However, the removal of this visa scheme is not 100 percent guaranteed yet.
Will scrapping the golden make a big difference to Spain?
In reality probably not, neither in terms of the number of foreigners buying property in Spain or market prices overall. The Spanish government granted only 451 golden visas to foreigners via real estate investment in 2022. That figure is almost 50 percent less than the previous year and represents just 0.7 percent of total purchases by non-residents.
In fact, the number had been falling for years and the number of property purchases via the golden visa scheme is very low compared to the total number of homes purchased by non-resident foreigners.
According to data from Spain's General Council of Notaries, over half of the foreigners who bought property in Spain in 2022 were residents, and among those that are non-residents, EU citizens are by far the largest group.
Then why has it been scrapped?
The Spanish press had reported possible restrictions on the golden visa for some time.
Real estate experts and lawmakers alike believe that the €500,000 threshold is now insufficient, especially in Spain’s main cities, where many homes cost this amount, and therefore half a million can no longer be considered a price tag for luxury properties. Furthermore, they believe that these visas contributed, in part, to putting up prices and kicking residents out of their neighbourhoods.
However, to scrap it entirely was a surprise move by the government, and one that can only really be understood in terms of politics. Property prices, both to buy and rent, have become an increasingly politically charged issue in Spain in recent years, particularly after the pandemic.
A growing number of Spaniards blame short-term holiday lets and an influx of wealthy remote workers and digital nomads for pricing them out of their own neighbourhoods. In some parts of the country, anti-tourist sentiments (at times veering towards anti-wealthy foreigner sentiments) seems to be on the up.
READ ALSO: Why does hatred of tourists in Spain appear to be on the rise?
However, with so few properties actually sold via the golden visa scheme, plus the high €500,000 threshold, it means it is unlikely to do anything to stop the spiralling rental costs. It is also improbable that many Spaniards aged 35 or under, the group most disproportionately impacted by rising rents, would have ever bought property for €500,000.
In that way, this decision seems more like a political step to quell frustrations among Spaniards about the property market more widely, that is to say, the government felt the political pressure to be seen to be doing something about the problem, not that it will do anything to solve the problem.
It also speaks to internal political pressures within the Spanish government coalition. Far-left junior partner Sumar had been pressuring the Socialists (PSOE) for this, or restrictions on the golden visa scheme at the very least, for some time.
Upon hearing the news, Culture Minister Ernest Urtasun, a Sumar member, referred to the Spanish golden visa as a "European disgrace", adding that "it cannot be that someone is given a residence permit for the fact of being rich; this is creating first and second-class citizens."
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