Spain’s Golden Visa initiative, which awards Spanish (and EU) residency to foreign nationals who purchase a property worth at least €500,000 ($524,000) will end on April 3. The scheme was introduced by the Conservative government of Mariano Rajoy in 2013 to encourage foreign investment; but according to Spain’s Socialist prime minister, Pedro Sánchez, it has turned the Spanish property market into a branch of the stock exchange.
Sánchez aims to tackle a housing crisis which has seen rental prices increase by 80% over the last decade. Announcing the ban on Golden Visas last April, he said that “housing is a right, not a speculative business”—a reference to the Spanish Constitution, which states that “all Spaniards are entitled to decent and adequate housing.” Sánchez claimed that 94% of the Golden Visas granted in Spain are “linked to investment” in places such as Valencia, Barcelona, Madrid, Málaga, Alicante, and the Balearic Islands, where it is “almost impossible to find a dignified home for those who live and work and pay taxes.” But banning this residency-by-investment scheme is unlikely to improve Spain’s housing situation: like a recent proposal by Sánchez that would punish second-home buyers, it’s a misdiagnosis of the problem.
The Spanish government gives the impression that huge swathes of property are being snatched away from Spaniards by Golden Visa holders, the majority of whom are Russian, Chinese, or Iranian. But the properties bought under this scheme are unaffordable for most middle-class Spanish households, let alone young Spaniards struggling to afford soaring rents. Francisco Iñareta, spokesperson for the property portal Idealista, claims that fewer than 0.1% of the 4.5 million homes sold between 2013 and 2022 were through the Golden Visa program, and therefore that removing it will have “no impact on the [Spanish] real estate market.”
Other statistics support Iñareta’s argument. Out of 87,000 property purchases by foreigners in 2023 (roughly 14% of total property sales in Spain that year), only about 4,200 were non-EU nationals buying houses costing €500,000 or more. In other words, only 0.7% of all property transactions in Spain in 2023 were linked to the Golden Visa scheme.
In January this year, Sánchez announced another measure aimed at putting off foreign buyers—a 100% tax on non-EU nationals buying second homes in Spain. This proposal is far from becoming law, but if it did, it would be equivalent to a ban for all but the wealthiest buyers. That’s exactly what the leftist alliance Sumar, the Socialists’ junior coalition partner, has demanded—a prohibition on the purchase of homes that are not to be lived in, similar to the one recently extended in Canada.
Such a measure would not just affect foreign buyers, but also millions of Spaniards: 14% of Spanish households own a second home, the highest rate in the EU. Spanish investors who buy properties in tourist hotspots and convert them into holiday rentals have also, for some reason, escaped the government’s scrutiny—but if such investments are driving up housing costs, as Sánchez claims, they share as much blame as foreign buyers.
The proposed 100% tax on second homes and the ban on Golden Visas appear designed to discourage foreign High Net Worth Individuals (HNWIs) from investing in Spain—but ironically, this group of buyers will be the least affected. In the first case, they would be the only ones able to afford such a punitive tax; and in the second, revoking automatic residency for high-end property purchases only removes something that foreign investors aren’t interested in anyway. Non-EU investors who have no intention of relocating to Spain, but who buy there to profit from a distance, won’t be deterred by the ban on Golden Visas.
A specific kind of Golden Visa applicants might be discouraged by the ban: those who actually want to live in Spain, rather than just speculate or acquire EU residency, and who were hoping to bypass the normal route to residency. If they’re still set on Spain, they’ll now have to go through the same process as everyone else to obtain residency: the ban will serve as a test of their commitment. But it’s not credible to suggest that this very specific group of foreign buyers is driving Spain’s housing crisis. As Iñareta says, “Spain’s housing problem—both for sale and rent—is not caused by Golden Visas but by the increasing lack of supply and the exponential increase in demand.”
A recent study found that 200,000 new houses need to be built in Spain every year to meet demand, roughly double the current construction rate. Obstacles to achieving this include a lack of buildable land, a large stock of housing left over from the 2008–13 financial crisis (most of which now needs refurbishing or demolishing), and lengthy, complicated administrative procedures. Sánchez has recently created a body called the Public Housing Company, through which he has promised to build thousands more affordable properties—but he’s looking in the wrong place for a solution. The required 200,000 houses per year would stand a much better chance of being built if the government focused on reducing regulatory barriers to development.
Foreign buyers who aren’t interested in Spain, but who just want a second home in the sun and/or EU residency—and with it the freedom to travel within the border-free Schengen Zone—will start looking elsewhere. Responding to EU security concerns, especially after Russia’s invasion of Ukraine, Ireland, the Netherlands, and Portugal have all recently terminated their Golden Visa programs. Five investment routes to EU residency remain, three of which offer real estate options.
Greece has already surged in popularity for those seeking an EU Golden Visa, especially in the US: the number of American applicants increased from 302 per month when Sánchez announced Spain’s ban last April to 383 in November. In return for an investment of €250,000 in Greek real estate, applicants are given residency for five years.
Cyprus grants permanent residency for a property investment of at least €300,000—although it has recently stripped several Russian tycoons of their Golden Visas. In Malta, a real estate purchase of the same value also guarantees permanent residency, while a Maltese passport can be obtained with a property investment of €700,000 and a €10,000 donation to a national charity.
Hungary relaunched its Golden Visa scheme in July last year, after terminating it in 2017. The new version originally rewarded a real estate investment of €500,000 with a ten-year residency permit, but that was scrapped in January. Two options remain: a €250,000 investment in a real estate fund, or a €1 million donation to the education sector. Italy’s program doesn’t offer property options either. Instead, an investment of at least €2 million in government bonds, €500,000 in corporate bonds (which drops to €250,000 for startups), or a €1 million donation to public projects secures residency for five years.
The HNWI’s back door to the EU is still open. All Sánchez has done is send a hostile message to foreign buyers and investors without making any meaningful improvements to Spain’s housing situation. The ban on Golden Visas will have about as much impact on the Spanish property market as the scheme itself did: none at all.
The post No More Golden Tickets to Spain was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.
