Cancelling the Golden Visa - An Update

Why Is Spain Cancelling The Golden Visa?

Back in April, the Spanish government announced the cancellation of its Golden Visa programme due to growing concerns about its impact on the housing market and social inequality. Just to recap, the Golden Visa has offered residency to non-EU nationals (UK, USA, Canada, Japan etc.) who invest at least €500,000 in Spanish real estate. However, it has also sparked controversy for several reasons. Let’s look at why the government has taken this step.

1. Rising Property Prices and Gentrification

Critics argue that the Golden Visa programme has contributed to rising property prices in cities like Madrid, Barcelona, and popular coastal areas, making it difficult for local residents to afford housing. With foreign investors purchasing expensive properties, often for speculative purposes or as second homes, the demand has driven up prices in both the rental and purchase markets, leading to gentrification and pricing local residents out of the market. There is some justification for this argument in the cities but not in the countryside where the market for properties in excess of €500.000 is relatively small in number. And the countryside needs investment from non-EU nationals as there is still a drift away from rural zones amongst the Spanish population, leading to depopulation in some areas.

2. Housing Affordability

Many Spanish citizens are struggling to find affordable housing and there is increasing pressure on the government to address these concerns. As previously mentioned there is pressure on prices in the capital cities but whether holders of the golden visa have really influenced this is doubtful. There are varying figures as to how many Golden Visas have been issued for real estate investment as they are often lumped in with other visas to non-residents such as work visas and visas for retirees. The most reliable figure for the 11 years that the programme has been in existence is approximately 16.000. The largest beneficiaries have been Russians and Chinese. 

3. Limited Economic Contribution

Another criticism is that while the programme has attracted significant real estate investment, it has not generated broader economic benefits. Many of the properties purchased by Golden Visa investors are left vacant for long periods, e.g. when they are used as holiday homes. This means that these investments may not contribute to the local economy in terms of spending, job creation, or community development.

4. Shift Towards Sustainable and Inclusive Growth

The Spanish government has been focusing on sustainable and inclusive growth, with housing policies aimed at addressing inequality and social challenges. Cancelling or reforming the Golden Visa programme aligns with these priorities, as the programme is seen by some as benefiting only the wealthy while aggravating social division.

5. Pressure from the European Union

Several EU countries, including Spain, have faced pressure from the European Union to reconsider their Golden Visa programmes due to concerns about money laundering, tax evasion, and the potential for granting residency or citizenship to individuals with criminal backgrounds. The EU has been pushing member states to ensure that such programmes do not undermine security and fairness within the bloc.

6. Timetable for Ending the Programme

Cancellation of the programme was approved by Congress on 17th November 2024 by a small margin of 179 votes against 169 votes. It has been sent to the Senate for ratification, which is expected to take place in January 2025. It will pass into law when published in the BOE (Boletin Oficial del Estado). However, contrary to expectation it is rumoured that there will be a three month grace period, so if you are considering buying a property in Andalucia in order to get the visa, do so now!