Mark Stücklin
The Spanish Golden Visa scheme comes under renewed attack from its usual detractors in the Spanish parliament at the same time as Ireland and Portugal terminate their Residency by Investment programmes.
The EU has always opposed so-called ‘Golden Visa’ schemes that offer conditional residency and a path to citizenship in return for money, but they have been quite popular with EU member states over the years as a way to get much-needed foreign capital into depressed real estate markets after a crash. That is exactly why Spain introduced its own Golden Visa scheme back in 2013.
But it looks like EU hostility and buoyant housing markets are starting to get the better of Europe’s Residency by Investment schemes.
Earlier this week Ireland closed down its Golden Visa scheme (Immigrant Investor Programme) with Justice Minister Simon Harris saying the visa had been established during a time of “unprecedented economic difficulty” to help “stimulate investment in Ireland” but had been under review for “quite a period of time.”
Yesterday the Portuguese government was the second EU government in a week to announce the end of its Golden Visa scheme. This has been on the cards for a while. Back in November 2022 Prime Minister Antonio Costa said “there are programs that we are currently re-evaluating and one of them is the gold [sic] visa which, probably, has already fulfilled the function it had to fulfil and which, at this moment, it is no longer justified to maintain.”
It seems that Portugal will respect the terms of existing visas, but only until they come up for renewal. According to the FT, “Portugal is not cancelling existing golden visas, but Costa said they could only be renewed if the property they were linked to was the permanent residence of the holder or a family member or if it was put on the rental market.”
Spanish Golden Visa under attack for encouraging “housing speculation”
The Spanish government has not given any indication about its plans for Spain’s Residency by Investment scheme, but this week a left-wing party with seats in the Spanish Congress of Deputies called Más País Verdes Equo submitted a draft law proposal to eliminate the property-investment Golden Visa scheme ostensibly to “curb housing speculation.”
Though it is not easy to get reliable and timely data from the government on the results of the scheme (see Spanish Golden Visa data), it’s fair to say the Spanish Golden Visa was never a great success as it was badly designed from the start, and relatively uncompetitive compared to schemes in other countries like Portugal.
In the first nine years of its life it attracted something in the order of 4,500 investors, the majority from China, spending 500,000€ or more on property. In many cases, perhaps most, that meant one property purchase per investor, though some investors would have bought several cheaper properties including parking spaces to reach the 500,000 threshold. Assume a total of 10,000 property sales due to the Golden Visa over 9 years and you are probably over-estimating the business.
So the suggestion that scraping the Spanish Golden Visa will help “curb housing speculation” in a market with more than 700,000 homes sales in 2022 is farfetched. Golden Visa demand is just a drop in the ocean yet Más País claims it is “driving up house prices and pushing residents out of their neighbourhoods.”
They also claim it has furnished 100,000 rich foreigners with Spanish residency since it was introduced in 2013. “I think everybody knows that there are parts of Spain that are being transformed practically into colonies for people who don’t want to report anything and don’t want any questions,” says Íñigo Errejón, the boss of Más País, in comments to Spanish radio. Which parts of Spain? He doesn’t say. Few things excite the Spanish Left more than the idea of rich foreigners “speculating” in the housing market. You can listen to the full interview in Spanish here.
Rising house prices are one of the reasons behind the Portuguese decision to terminate the Golden Visa. “Government officials acknowledged that the visa programme was not the principal factor behind rising housing costs, but said it was creating uncomfortable questions for the government and ending it was symbolically important,” reports the FT.
How long can the Spanish Golden Visa scheme last?
The Spanish government is a left-wing coalition including the hard-left Podemos party, who split from Más País in one of the far-left’s interminable squabbles, but they undoubtedly share the same antipathy towards the Golden Visa scheme. With the tide in Europe clearly turning against Residency by Investment schemes, and political parties in Spain agitating against the Golden Visa with spurious arguments about housing speculation, how long will the Spanish government put up with “uncomfortable questions” from Más País and the like? The way the wind is blowing I wouldn’t be surprised if the Spanish Golden Visa in its current form offering residency in return for a property-investment of 500,000€ or more has gone by the end of the year, perhaps much sooner.
Mark Stücklin says:
Today it is reported in the Spanish press that the government has revealed that there were 4,940 ‘Golden Visa’ investors OF ALL TYPES between 2013 and 2022. Many of them, BUT NOT ALL, invested in real estate. How many? The government won’t say, but I guess around 70% because the other types of investment (government bonds, start-ups) were even less attractive than Spanish property. They also reveal that 45% of GV investors were from China (2,263), 19.6% from Russia (969), and 2.7% from Ukraine (136). The Spanish ‘Golden Visa’ Residency by Investment scheme has been a total flop. From the start it was a ‘typically Spanish’ government scheme, by which I mean complicated, bureaucratic, costly, and basically unfit for purpose. They might as well get rid of it because it doesn’t generate any worthwhile investment and gets the hard-left very excited.