The President of the Government, Pedro Sanchez, calls for an end to the Golden Visa.
The Prime Minister stated on April 8: “We will take the necessary measures to ensure that housing is a right and not just a speculative business”.
The Golden Visa program has come under increasing criticism from the EU over concerns about price inflation. Spain’s decision follows Ireland’s decision to eliminate the program altogether and Portugal’s decision to end its non-resident visa program.
The Golden Visa was originally introduced in 2013 and granted investors the right to live in Spain if they invested at least €500,000 in real estate.
94 out of every 100 investor visas are linked to real estate investments. The cities chosen by investors tend to be large cities such as Barcelona, Madrid, Malaga, Valencia and Alicante, and coincidentally they are the ones facing a tense market and where it is almost impossible to find decent housing for those who live, work and pay their taxes there.
What do economists think? According to them, the Golden Visa in Spain is not the main reason for the rise in real estate prices. Among the main contributing factors is the process of gentrification, which involves the displacement of the population to large cities with more services, healthcare, jobs and investment.
What about teleworking? A phenomenon that allows for commuting without the need for new employment contracts, changes in tax residences or further bureaucratic complications. Spain is attractive for those who telework from multiple points of view: Its much lower prices compared to other European Union countries, its wide range of services and its great climate. The phenomenon is becoming more and more evident. The rise in rental prices corresponds to a growing flow of citizens from other countries who, with salaries almost double the Spanish average, can afford rents that Spaniards cannot. This presents a law of supply and demand, in which the latter outweighs the former, and where there is a group of people who can pay these rents without incurring a considerable expense.
It is evident that the causes of this inflation are multiple, but that the solution does not lie in the suppression of a source of investment, but in the regulation of housing laws and the construction of social housing for the most vulnerable sectors.
As far as investors are concerned, they will have to look for alternatives in case they want a residency in Spain. Nicolás San Román, head of iCapital’s business, Wealth Management Solutions points out that Hispanic American and U.S. investors are going to continue to access a residence and work permit in Spain through one of the following investment mechanisms:
– 1 million euros in a Spanish bank deposit.
– 1 million euros in shares or stock in Spanish capital companies with a real business activity
– 1 million Euros in financial products issued by Spanish entities
– 2 million euros in Spanish public debt securities.
– Undertaking a business project in Spain of general interest.
