Why has Spain abolished the Golden Visa?

Spain’s Golden Visa programme, which was renowned for being one of the most successful granters of residency by investment in Europe, has just been abolished.

The Spanish government has made an official announcement, in recent days, explaining that the reason they have made the decision to end their Golden Visa Programme is due to property speculation and to help ensure housing is being used for the right reasons, and not just for business.

The Spanish Housing Minister, Isabel Rodríguez, has revealed that since launching the Golden Visa programme in 2013, Spain has granted over 14,500 “golden visas”, which were all linked to investments in real estate, that mainly benefited non-Spanish citizens. Including citizens from the UK, US, Iran, China and Mexico.

The reason for the sudden abolishment may be due to the number of applications that have been made over the last two years, which has accelerated dramatically. In 2022, Spain approved just over 2,000 visas and approved 3,273 visas in 2023. Despite trying to save the Golden Visa programme, by planning to increase the minimum investment requirement to €1 million, a sudden increase in applications at the start of 2024 has seen Spain put an end to the Golden Visa scheme altogether.

For those of you who don’t know, the Spanish Golden Visa programme allowed non-EU citizens to obtain Spanish residency by investing at least €500,000 into local real estate. This resulted in house prices rising to be unaffordable for local residents, especially those in the younger generations, who would have historically been first-time buyers.

The cities with the highest housing prices include Madrid, Barcelona, Alicante and Valencia, which has been a direct result of visas being granted in these locations.

According to Spain’s Prime Minister, Pedro Sánchez, in the cities with highly stressed housing markets, like Madrid and Barcelona, it’s almost impossible for locals to find affordable places to live. Adding that as of this week, the Spanish government will take the first steps toward abolishing the Golden Visa altogether. Having sparked questions around investment in housing and the inequality it’s caused, Pedro Sánchez has decided the Golden Visa programme no longer serves the values Spain holds.

The recent decision to end the Spanish Golden Visa programme was triggered by an increase in Spanish citizens being forced to move out of their neighbourhoods amidst surging house prices. This division between those who can afford the real estate, and those who no longer can, has seen the Golden Visa programme deemed politically toxic. The criticism has created divisions within the Spanish government, leading to the decision to end the programme in the coming weeks.

Spain has seen a rise in the number of young adults choosing to live with their parents, as opposed to moving into their own property. In 2023, the average age that young adults leave their parents rose to 30, which is four years older than the E.U average (according to the OECD).

Along with the internal pressure to put an end to the Golden Visa programme, Spain has also faced external pressure. Portugal, Greece and other countries in the E.U. have already put an end to their Golden Visa schemes, or made changes to make them less detrimental to the lives of their citizens. E.U. officials have also made it clear that they disapprove of such programmes and have stressed the importance of all countries ending their Golden Visa programmes due to the potential security risks they pose. Similarly, the schemes make countries vulnerable to corruption, money laundering and tax evasion.

The Brussels E.U. headquarters have criticised the Spanish Golden Visa programme, saying that the initiative allows wealthy foreigners to simply ‘buy’ the right to residency in Spain. In some cases, without even living in the country. Such activity encourages money laundering, terrorist financing, corruption and poses a risk to Spain in general - which is all incompatible with E.U. standards.

In a study reported on by the Financial Times in 2023, they revealed that since 2013 Spain had granted more than 1,000 visas to Russian citizens and over 2,700 visas to Chinese citizens. Although this achieved the initial goal of attracting foreign investment to help Spain recover from financial trouble, with Russians investing a total of €3.4billion. The resulting inflation and security issues have raised concerns across Europe about the security and ethics of the Golden Visa programme and left E.U. members questioning whether Spanish authorities ever investigated the source of the funds.

Spain is a very popular destination for British people looking to relocate, with sources recording over 280,000 British expats residing there as of 2023. Historically, the Spanish Golden Visa programme allowed British expats to bypass traditional E.U. stay limits, whereas expats will now have to apply for Spanish residency or visa 90 days after their arrival.

Professionals have highlighted the issues expats will now face if they wish to move to Spain, with some even criticising the decision to abolish the Golden Visa as they attribute the rise in housing costs to an increase in demand for Spanish real estate, and a lack of supply. They use Portugal as an example, as they have recently made changes to their own Golden Visa scheme, by excluding the option to invest in real estate, but allowing expats to put money into investment funds if they wish to obtain residency rights.

Want to learn more about buying property in Spain as a non-resident? Get in touch with one of our friendly team members today or read our blog about buying property in Spain as a non-resident.

Why has Spain abolished the Golden Visa?

Learn about the reasons why Spain took the decision to abolish the 'golden visa' program, impacting international investors and residency seekers.

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