Why Spain is Ditching the Golden Visa & When?

Why is Spain discontinuing the golden visa program?

Spain's decision to eliminate its golden visa scheme has stirred discussion about the impacted nationalities, the anticipated termination timeline, and whether this measure will mitigate rent and housing price surges.

Long-speculated alterations to regulations and restrictions finally materialised when Prime Minister Pedro Sánchez announced the complete cessation of Spain’s golden visa (visado de oro) program, following in the footsteps of neighboring countries like Portugal, Greece, Ireland, and the Netherlands.

“We are initiating the process to abolish the issuance of the so-called golden visa, which grants Spanish residency upon an investment of more than half a million euros in real estate,” Sánchez disclosed during a press briefing in Seville.

The visa, inaugurated in 2013 by the erstwhile center-right Partido Popular administration, has been widely criticized for exacerbating property price inflation and effectively offering Spanish residency to affluent individuals.

According to Sánchez, a staggering 94 out of every 100 golden visas issued were tied to property acquisitions in bustling provincial capitals such as Barcelona, Madrid, Málaga, Alicante, Valencia, or Palma de Mallorca, where real estate prices and rents have surged significantly.

What was the essence of Spain’s golden visa program?

The golden visa provided non-EU nationals the opportunity to secure Spanish residency upon purchasing property worth €500,000.

Additionally, access to the golden visa was extended to those investing €1 million in Spanish company shares, €2 million in government bonds, or transferring €1 million to a Spanish bank account.

Consequently, Spain’s golden visa earned a reputation as one of the ‘easiest’ avenues for third-country nationals to obtain Spanish residency, provided they possessed sufficient wealth.

What prompted its introduction?

In the aftermath of the financial crisis and the bursting of the property bubble, the golden visa was conceived to attract foreign investment into the Spanish market, aiming to stimulate its recovery.

The initiative was spearheaded by the right-wing Popular Party government under then-Prime Minister Mariano Rajoy in 2013.

How many golden visas were issued?

Conflicting reports exist regarding the total number of golden visas issued over the years. While the Spanish government suggests “about 10,000,” various Spanish media outlets report approximately 5,000 visas granted since its inception.

However, according to El País, government data indicates that between 2013 and 2022, nearly 11,500 golden visas were issued across all investment categories, with 10,800 (93.9 percent) attributed to property purchases.

Which nationalities predominantly benefited from the golden visa?

The Chinese claimed the lion’s share, with 2,712 visas granted since 2019, with 99.33 percent procured through property acquisitions. Russians followed suit, receiving 1,159 visas, 94.65 percent of which were via property purchases.

Other beneficiaries included Iranians (203 visas, 99.01 percent through property), Americans (179 visas, 94.97 percent through property), individuals from the UK (177 visas, 93.78 percent through property), among others.

When is the golden visa deadline for Spain?

While Sánchez’s announcement implies a definitive end, the removal of the golden visa scheme necessitates discussion and approval across various governmental bodies.

On Tuesday, April 9th, 2024, the Spanish Cabinet will review a report submitted by Minister of Housing and Urban Agenda Isabel Rodríguez, addressing the golden visa issue.

Since the plan entails eliminating the visa scheme rather than the entire law supporting international entrepreneurship, the amendment may encounter less legislative hurdles in the Parliament and Senate.

With left-wing parties commanding a congressional majority and right-wing parties like PP and Vox, exerting influence in the Senate, it’s likely that the golden visa will be abolished from Spanish law before summer, if not sooner.

Will scrapping the golden visa significantly impact Spain?

In reality, probably not, neither in terms of foreign property purchases nor overall market prices. The Spanish government granted only 451 golden visas to foreigners through real estate investment in 2022, nearly 50 percent less than the previous year, constituting a mere 0.7 percent of total non-resident purchases.

Moreover, the number of property acquisitions via the golden visa scheme has dwindled over the years, and the proportion remains negligible compared to total non-resident property transactions.

Despite this, the decision to scrap the scheme seems more politically motivated, driven by mounting public discontent over property market dynamics, exacerbated by the pandemic.

A surge in anti-tourism sentiments, occasionally morphing into anti-wealthy foreigner sentiments, reflects growing frustrations among Spaniards regarding housing affordability and accessibility.

However, given the scant number of properties sold via the golden visa program and the substantial €500,000 threshold, its abolition is unlikely to mitigate escalating rental costs. Moreover, it’s improbable that many young Spaniards, disproportionately affected by rising rents, would have considered purchasing properties priced at €500,000.

Thus, the decision appears to be a political maneuver aimed at assuaging public grievances concerning the property market, rather than a substantive solution to the underlying issues.

Additionally, it underscores internal political dynamics within the Spanish government coalition, with left-wing factions advocating for the abolition or stringent restrictions on the golden visa scheme.