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Concern on Costa del Sol at end of residency visa for wealthier foreigners spending half a million on property
Golden Visa

Concern on Costa del Sol at end of residency visa for wealthier foreigners spending half a million on property

The Spanish government has announced an end to the Golden Visa incentive to prevent property prices soaring further in areas such as Marbella

J. M. Camerero / P. Martínez / N. Hesketh

Madrid / Malaga

Friday, 12 April 2024, 13:35

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Real estate agents on the Costa del Sol selling to foreign buyers outside the EU - including to Britons - have received a setback this week with the Spanish government's decision to abolish the Golden Visa for those investing in property. Set up in 2013, the visa scheme grants residency permits to foreigners from outside the EU who invest at least 500,000 euros in real estate in Spain.

Prime Minister Pedro Sánchez justified the move with the need to guarantee affordable housing to people in Spain. The government argued that the Golden Visa had contributed to the problem of soaring house prices in recent years and that the property market in the country had become "stressed".

The EU has been calling for member countries to toughen up these fast-track visas for richer people, arguing that the source of money invested is often murky. Countries including Portugal have recently watered down their own schemes in response.

According to Spain's housing minister, Isabel Rodríguez, the number of these special visas granted to people buying property has shot up from 461 in 2016 to 2,017 in 2023 and 3,273 last year. In total, 14,576 Golden Visas have been given out to property buyers since 2013.

Since the special visa scheme started, it is Chinese and Russians who have benefited most. But, since Brexit, many more Britons with sufficient money unable to move to Spain under flexible EU-member rules have taken advantage of the Golden Visa route and bought a home, rather than the slower and more restrictive other routes to residency.

Speaking after a cabinet meeting on Tuesday, Isabel Rodríguez said those taking out the visas were purchasing luxury real estate investments mainly in Barcelona, Madrid, Malaga, Alicante, the Balearic Islands and Valencia. These six provinces account for 90% of the authorisations, according to Rodríguez.

"In areas such as Marbella, Golden Visas already make up 7.1% of home purchases, in Barcelona they reach 5.3% and 10% in some municipalities in the Balearic Islands," the minister explained. "These transactions stress the market and increase the price of housing," she added. No individual should have to spend more than 30% of their income to have a "decent" place to live, said the government.

Reactions on the Costa

The news of the imminent disappearance of the Golden Visa sparked concern among the property and residential tourism industries on the Costa del Sol, as professionals fear a negative impact on foreign investment.

President of the Andalusian federation of developers and residential tourism Ricardo Arranz, who is also executive president of the Villa Padierna Hotels group, said the Golden Visa had developed quality tourism on the Costa and brought in wealth to the area.

"The unease is clear. I fear that this is another blunder," Arranz pointed out, while criticising the national government for making the decision "without consulting anyone, as a flash in the pan idea generating surprise and concern".

Criticism

Turismo Costa del Sol boss Francisco Salado, of the conservative PP party, said residential tourism "is a huge source of income and employment for our country and for the Costa del Sol, and this [Golden Visa] measure has favoured the arrival of many residents with high purchasing power".

"It is absurd to think that the Golden Visa has raised the prices of housing in the cities or for young people," Salado said. "This decision impoverishes our country, generates more unemployment and only benefits other countries and competing destinations," he added.

Ricardo Bocanegra, founder of the association of foreign residents on the Costa del Sol said the government's announcement had generated concern and pointed out the Golden Visa "does not influence or distort the housing market. It only contributes to attracting high-level foreign investment. The arguments put forward are poor and do not hold water".

Buying a property worth 500,000 euros has been one way to obtain a Golden Visa. Other routes to getting one - including investing a million euros in shares in a Spanish company or two million euros in government bonds - will still be available, said the government, although take-up of these is significantly smaller than the property route.

Liudmila with her daughter and parents-in-law in Marbella. Josele

‘Without the Golden Visa we wouldn’t have bought our home in Marbella’

The idea of living in Spain began to cross their minds many years ago. So much so that Liudmila, a Russian psychology teacher from Moscow, and her husband, a doctor in the same city, started saving for the huge investment ten years ago - their daughters even studied Spanish at a Moscow school in preparation for the big move.

The Spanish Golden Visa scheme, which from 2013 until now allowed foreigners who invested more than half a million euros in a home in Spain to obtain residency, was key to making this dream a reality. "If there hadn't been this visa we wouldn't have bought this house in Marbella. Spain was our goal and having this residence permit was very important," said Liudmila, who also pointed out they have been able to start a new life with their youngest daughter "who is happy at school in Las Chapas [Marbella]". "My eldest daughter is studying at a university in the UK and my in-laws also live with us here," she added.

Liudmila said that in 2013, coinciding with the year Spain launched the Golden Visa, she and her family visited Marbella for the first time on a one-week holiday. They were delighted. In 2017 they returned on holiday and then in 2021 they selected from Moscow, through a real estate portal, the three-bedroom house which they now call home. "We invested 510,000 euros in this house in 2021 and a year later we came to live here."

Despite the turbulent adventure of starting a new life in a country without knowing the local language, it has become clear to her that "I like to think that I have another future here". Liudmila also said learning Spanish has been key. "We have not stopped studying and I already have B1 level and my daughter is doing very well at school."

"I love the life in Marbella, its beaches and mountains, and being able to go from one place to another without big traffic jams. Here our dream has come true," she said while thinking of other families who have had their dreams of investing in Spain dashed following the government's plan to abolish the golden visa scheme.

"Many will be in the process of saving, as we did, but they will no longer have the opportunity to live here," she said.

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