An IMGW News Report
In a bid to ‘curb money laundering and alleviate inflationary pressures,’ Spain has vowed to discontinue its ‘golden visa’ scheme. Introduced in 2013 during economic turmoil, the program offered residency rights to affluent foreign investors in exchange for real estate investments. However, its closure signifies a broader shift in policy, prioritizing housing accessibility over speculative gains. While some commentators view this as a populist move, others see it as a bold departure from previous policies.
“Critics argue that the golden visa scheme is not the root cause of Spain’s housing woes. Experts contend that the housing crisis stems from supply-demand imbalances rather than foreign investments.”
The decision, sanctioned by Spain’s cabinet, marks the culmination of concerns raised by critics regarding the scheme’s adverse effects. Critics argue that the program exacerbates inflation and serves as a conduit for illicit funds to enter the economy. Prime Minister Pedro Sanchez emphasized safeguarding housing as a fundamental right, underscoring the government’s commitment to combatting speculative practices.
Over the past decade, the golden visa initiative has granted residency permits to over 14,000 individuals, predominantly hailing from China and Russia. Additionally, citizens from the United Kingdom, the United States, Iran, and Venezuela have availed themselves of this opportunity to secure a foothold in Spain’s property market. However, despite its popularity among foreign investors, the scheme’s impact on the broader property market remains negligible, with less than 0.1% of total home sales attributed to it, according to Idealista.
Spain’s move to terminate the golden visa program aligns with recent reforms undertaken by neighbouring Portugal. While grappling with its housing crisis, Portugal has revised its visa scheme, excluding real estate investments, while offering residency rights through alternative avenues such as investment funds. These policy adjustments reflect a collective recognition among European nations of the need to recalibrate their immigration frameworks to address pressing socio-economic challenges.
The European Commission has long advocated for abolishing such visa schemes, citing security risks and the lack of genuine ties between beneficiaries and their host countries. Sanchez echoed these sentiments, emphasising the disproportionate focus on real estate investments in major cities, exacerbating housing shortages for residents.
Despite assertions, critics argue that the golden visa scheme is not the root cause of Spain’s housing woes. Experts contend that the housing crisis stems from supply-demand imbalances rather than foreign investments. Many suggest that the government’s decision may miss the mark by targeting international buyers instead of addressing underlying structural deficiencies in the housing market.
Ultimately, the detonation of the housing crisis and widespread protests compelled Spain to terminate its program. Although the restoration of normalcy in the housing market remains uncertain, policymakers are finally disavowing the scheme. “This model is not aligned with our country’s vision,” stated Spain’s Sánchez recently. “We will enact measures to ensure that housing is a fundamental right, not a vehicle for speculative endeavors.”
Political commentators in Spain note that with the European Members of Parliament (MEPs) elections approaching, the Spanish government is cautiously maneuvering to appease its many critics. It aims to appeal to voters by appearing strong and decisive, and the ‘Golden Visa’ program has proven to be a useful tool in this effort. Whether this pre-MEP election promise will be fulfilled remains to be seen.
Furthermore, many economists do not regard Spain’s golden visas as the primary cause of rising property prices. However, since last year, Prime Minister Sánchez has faced pressure from left-wing members of his coalition to terminate the scheme, as they are concerned about soaring housing costs.