The Spanish government has initiated the process to discontinue the controversial “golden visa” scheme, which has offered foreign investors a fast track to residency since 2013.
The move, announced at a recent Cabinet meeting, signals the end of visas being awarded in return for property investments of €500,000 (AUD$740,000) or more.
The scheme, introduced under the conservative leadership of Mariano Rajoy, aimed to attract crucial foreign investment following the eurozone crisis that severely impacted Spain’s real estate sector.
Since its inception, the scheme has issued about 6200 visas for property investment, according to the organisation Transparency International, although the BBC says other sources put the number higher.
The program has predominantly benefited Chinese nationals, who account for nearly half of the recipients, followed by Russians, Iranians, Americans, and British citizens.
Despite the option to gain residency through investing €2m (AUD$2.9 million) in state bonds or in Spanish startups, a mere 6 per cent of the visas were allocated for non-property investments, according to official statements.
Prime Minister Pedro Sánchez underscored the government’s rationale for scrapping the scheme, emphasising the need to ensure housing as a fundamental right, not a commodity for speculative business.
The majority of visas were linked to property purchases in regions already facing housing market pressures, such as Madrid, Barcelona, and the Balearic Islands, complicating the search for affordable housing for local residents.
This decision aligns with the housing law introduced last year, which seeks to cap rental increases in high-demand areas.
Despite these measures, critics argue that ending the “golden visa” will not address the core issues plaguing Spain’s housing market, pointing to a growing demand and a shortage of supply as the real challenges.
Francisco Iñareta from the Idealista property portal highlights these concerns, suggested the problem transcends the golden visa scheme.
“The problem with housing in Spain, both in terms of sales and rental, is not caused by the Golden Visa, but rather by the increasing lack of supply [of housing] and the accelerating growth in demand,” he told BBC.
The move also comes amidst broader international scrutiny over such schemes, with the European Commission urging EU countries to reconsider them, particularly in light of security risks highlighted by Russia’s actions in Ukraine.
This trend has seen the UK and Ireland terminating their respective schemes, while Portugal has revised its policy to exclude property purchases as a basis for residency.
