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Prime Minister Pedro Sanchez has announced that Spain will be discontinuing its "golden visa" program, which grants residency rights to foreigners making significant investments in Spanish real estate. Sanchez emphasised that terminating the program is essential to ensure that affordable housing becomes a right rather than a speculative business.
Under the current scheme, non-EU citizens who invest a minimum of 500,000 euros in Spanish real estate without taking out a mortgage are eligible for a special permit, allowing them to reside and work in Spain for three years. However, Sanchez noted that the majority of these visas, specifically 94 out of every 100, are tied to real estate investment. This trend is particularly pronounced in major cities with highly stressed housing markets, making it challenging for existing residents to find decent housing.
The decision to end the program follows a review of a report submitted by the Housing Ministry, and the government plans to initiate the process during a cabinet meeting. Despite issuing nearly 5,000 permits through the golden visa scheme from 2013 until November 2022, government data indicates that the impact on the property market has been minimal, with less than 0.1% of homes sold during that period purchased through the program.
Chinese investors lead the list of beneficiaries, followed by Russians who have invested over 3.4 billion euros, according to a 2023 Transparency International report. Concerns have been raised about whether authorities have adequately scrutinised the source of these funds.
The impact on the property market is expected to be minimal because only a tiny fraction, less than 0.1%, of the 4.5 million homes sold during that time were bought through the scheme, as reported by the property website Idealista.
Francisco Inareta, spokesperson for property website Idealista, pointed out that Spain's housing issue is primarily due to insufficient supply and increased demand, rather than the golden visa scheme. Inareta criticised the government's focus on international buyers instead of addressing the need for more available homes, calling it a misdiagnosis.
Meanwhile, neighbouring Portugal has revamped its own golden visa program by excluding real estate investment as an option to tackle its housing crisis. Instead, foreigners seeking residency rights can now invest in investment funds. The European Commission has long advocated for an end to such programs, citing security risks.
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