Protests in Madrid as housing prices force locals out of their neighborhoods. Photo by Lito Lizana.
With pressure from European Union officials on member countries to scrap all Golden Visa Programs, plus the recent example of Portugal, Greece and Ireland, among others, that have already started the process to partially or completely stop the controversial scheme, Spain is in a quandary.
The Spanish government has admitted it’s considering two alternatives: abolishing the “golden visa” altogether or doubling to €1 million the minimum amount of investment required.
Ireland sunset its program in February. Greece doubled the minimum investment to €500,000 in several cities including Athens. And Portugal is in the legislative process to also kill the golden visas.
Currently, Spain permits non-E.U. nationals and their families to obtain residency permits of up to 10 years if they make an investment of at least €500,000 in real estate.
As ‘Golden Visa’ programs close around Europe, foreign investors are rushing to buy while they can.
Golden Visas and ‘brutal’ house prices
The leader of Spain’s left-wing Mas Pais party, Iñigo Errejon, said that his party has reached a preliminary agreement with the Social Security Ministry to put an end to the program, adding that “golden visas had led to a ‘brutal’ rise in housing prices and forced locals out of their neighbourhoods without creating any new jobs,” Reuters reports.
The real estate problem particularly in the most popular cities around Europe adds fuel to the controversy around the Golden Visas that have been denounced by the European Parliament’s Civil Liberties Committee as “objectionable from an ethical, legal and economic point of view.”
Dangerous and undemocratic
The Golden Visa programs, described by the European Commission as “undemocratic,” were created worldwide in an attempt to attract foreign investment, boost tourism and revive the real estate market.
According to Brussels E.U. headquarters, the initiative that enables wealthy foreigners to ‘buy’ the right to residency — sometimes without even having to live in the country — have become “a risk to security, permitting money laundering, tax evasion, terrorist financing, corruption and infiltration by organised crime, that is incompatible with E.U. norms.”
Real estate prices in popular locations like Barcelona have pushed locals out.
In Spain’s case, as argued by Errejón, the initiative has given way to a “speculative movement” in the Spanish housing sector, with prices increasing overs 7% throughout 2022.
“Aiming to stimulate the country’s economy, the Spanish government launched the Golden Visa Program in 2013, granting residency to applicants who meet the needed requirements and made significant investments, thus offering its beneficiaries visa-free access to the Schengen Zone and a path to permanent residency, among other benefits,” Schengenvisainfo reports.
A significant portion of the investments for visas in Spain, according to the Spanish Publico, have been made by Latin American, American and Chinese investors.
In Ireland, according to the publication, the disbursements by Chinese citizens have proliferated: more than 90% of the real estate purchases since 2012 (with minimum payments of half a million euros and proof of personal wealth of more than two million euros).
In Greece, Chinese capital also has monopolized 60% of the visas for investment transactions. In Portugal, where half of the work force makes less than €1,000 a month, rents in Lisbon rocketed 37% in 2022 alone.
The European Parliament has calculated investments of more than €3,5 billion annually in the period between 2016 and 2019.
Rush to buy while you can
In an urgent call for the end of Golden Visas in Europe, Transparency International writes: “Golden passport and visa schemes have turned European Union (E.U.) citizenship and residency rights into a luxury good: with enough money, anyone can buy in. This is a particularly attractive prospect for criminals and the corrupt – and numerous scandals have proven they are taking advantage. These E.U. golden passport and visa schemes are not about genuine investment or migration – but about serving corrupt interests.’
Their solution? “Golden passport schemes need to be banned. Golden visa schemes must be regulated with adequate checks in place.’
The organization also recommends governments to review previously-awarded golden passports and visas, “and the European Commission should oversee the process of revoking citizenship or residency from those who should have never received it in the first place.”
Meanwhile, with “Europe’s Golden Visa Programs Dying Out as Housing Costs Rise,” Bloomberg writes, and as “investment-for-residency plans face increased scrutiny, buyers are rushing to get in while they can.”
