End of the Spanish Golden Visa: April 2024 Update

End of the Spanish Golden Visa: April 2024 Update

In April 2024, Spain announced plans to end the Golden Visa program for foreigners investing in real estate in the country. The decision to investigate the feasibility of Golden Visa was made due to concerns that the scheme contributed to rising property prices and money laundering in the country.

Prime Minister Pedro Sánchez said the decision was made to turn affordable housing into “a right instead of a speculative business.”

He added, “Today, 94 out of 100 such visas are related to real estate investment… “In big cities that are facing a highly stressed market and where it’s nearly impossible to find decent housing for people who already live, work and pay them there.”

Spain’s housing minister revealed that more than 14,000 visas have been issued between 2013 and 2023, mostly for Chinese and Russian citizens.  However, the real estate transaction rate for Golden Visas accounts for 0.2% of the total real estate market in Spain.

Controversial elements of the Golden Visa Program

The Golden Visa Program, also known as the Immigrant Investor Program, has attracted many wealthy investors to many countries around the world. However, besides the economic benefits, the program has also faced controversy and criticism. Here are some of the main factors that are controversial:

1. Negative impact on the real estate market

House price increase: The rush of foreign investors’ investment in the real estate market to receive golden visas has pushed up housing prices, especially in big cities. This makes it difficult for locals, especially those with low incomes, to buy housing.

Reduced Liquidity: The influx of investors purchasing properties solely for golden visas rather than for residential purposes can diminish the liquidity of the real estate market. This could potentially lead to a real estate bubble if not tightly regulated.

2. Money Laundering and Corruption Risks:

Lack of Transparency: The lack of transparency in scrutinizing investor applications and the origins of their funds can facilitate money laundering and corruption activities.

Lax Oversight: Some countries with golden visa programs are perceived to have lax oversight mechanisms, creating opportunities for corrupt individuals and criminals to exploit the system.

3. Conflicting Interests:

Prioritizing Foreign Investors: Critics argue that golden visa programs prioritize attracting foreign investors while neglecting the interests of local citizens.

Underinvestment in Other Sectors: The focus on attracting investments into the real estate sector may lead to underinvestment in other crucial areas like education, healthcare, and infrastructure.

4. Integration Issues

Lack of Interaction: Some Golden Visa program participants engage minimally with the local community, hindering cultural exchange and social integration.

Social Imbalance: The influx of foreign immigrants can strain local social welfare systems and infrastructure, leading to social imbalances.

Overall, Golden Visa programs have both advantages and disadvantages. Countries need to carefully assess the potential impacts of these programs before implementation and implement strict control measures to ensure benefits for the entire community.

In addition to the above factors, Golden Visa programs also face other controversies such as national security concerns, environmental impacts, and the ethics of attracting investment by selling “citizenship.”

What happens if the Spain Golden Visa program ends?

1. Eliminate Real Estate Residency Rights:

Similar to Portugal’s approach, the ability to obtain residency through real estate investment could be eliminated. This means that Golden Visas would no longer be granted for purchasing real estate. However, opportunities for investing in the domestic economy, such as purchasing bonds, could remain open.

2. Impose Real Estate Investment Restrictions:

Another option would be to impose restrictions on real estate purchases in certain areas and raise the minimum investment threshold, as was done in Greece.

3. Closing the Golden Visa program

Spain may close the Golden Visa Program, leaving no way to obtain residency by investment.

Even in the event that the program is canceled for the last time, the amendment of Spanish law will take from 6 months to 1 year.

Investors can still get a Spanish Golden Visa if they apply immediately. To qualify for the Spanish Golden Visa, individuals must make one of several qualifying investments, of which real estate is the most popular option.

Investors need to buy real estate in Spain worth €500,000 or more. The visa also extends to family members, including spouses and dependent children.