The Golden Visa is a special type of visa that was created during the last global economic crisis to attract wealthy foreign investors and expats who had to pull the collapsed real estate markets and the economies of the affected countries out of the abyss.
However, at the moment, the Spanish government is considering the possibility of canceling this visa — their next step in a new policy towards the country's residential real estate market. Such a change is of particular importance against the background of recent changes in housing legislation that expand the powers of the authorities to control the crisis market.
The new government of the country has put the housing issue at the top of its political agenda and surprises with something new almost every week. Considering the possibility of limiting or canceling the issuance of golden visas for home purchases is only the latest in a series of reforms. Although there has been talk about this for a long time, it is still unexpected for many to observe such discussions in the highest offices of the state.
Currently, Golden Visas in Spain allow foreign citizens to obtain a residence permit in the country when buying a home worth more than $544,000. Buyers from different countries choose Spain for different reasons, for some it is cheaper because of the exchange rate, someone wants to move, someone invests. One way or another, demand is growing at a much faster pace than new supply arrives on the market and prices are rising at a rapid pace.
Given the economic situation and falling incomes of the population, rich foreigners are capturing an increasing share of the market, sellers are counting on them and inflating prices, even more local people are cut off from the market. The cycle repeats over and over again. There is little new supply, subsidized affordable housing is even less. In view of all the circumstances that have developed over the past two years, the situation has turned into a vicious circle.
And it is the radical decision to cancel the visa that seems to the government the most reliable way to break this circle. But what consequences can such changes have?
Other restrictions
Business representatives agree that this measure represents another obstacle to the free market functioning of the sector. The measure complements the recently adopted "Real Estate Law", which, among other things, sets limit and control prices for rental housing and complicates the process of eviction of insolvent tenants. And such measures are hardly the last in the list of decisions that the government plans to take.
The law also joins other initiatives that directly affect international investors, such as the initiative of the government of the Balearic Islands, which wants to ban the sale of real estate to foreigners altogether, and the Podemos party proposes to do the same in Madrid. Also, a new tax was recently introduced for non-residents of Spain who own real estate in it. Now they will have to pay taxes on all assets they own, including those located outside the country, if 50% of the total assets are located on its territory.