What it means to remove the Golden Visa: Pedro Sanchez's latest attack on Spain's real estate sector

The measure will nip in the bud foreign investment in a very specific portfolio of apartments and houses.

The 'last' occurrence of Pedro Sanchez in his particular war against the rich and against anyone who wants and can determine how their money will be spent. The luxury real estate sector is about to receive one of the most considerable blows in recent years. The announcement to eliminate the so-called 'Golden Visa' will nip in the bud foreign investment destined for a very specific portfolio of apartments and houses, constructions within the reach of very few and which had become an indisputable driving force in various sectors. The small print of the elimination is yet to be known, since only the headline has been announced and a somewhat vague justification for the extent of the measure. The Russians could no longer receive it since the beginning of the war in Ukraine, from the moment the Government of Pedro Sanchez determines, the Golden Visa will disappear forever. The measure promoted by the Popular Party in 2013 will come to an end after having been effective on almost 11,000 occasions, 11,000 foreign investments of more than 500,000 euros. More than 55 million euros have arrived in Spain from abroad, an amount difficult to make up for without an alternative plan.

This Monday, April 8, the next plan of the Government of Pedro Sanchez against large foreign fortunes was announced. The worst thing is that this group of population, which has invested and invests so much periodically in Spain, has been accused of generating the current situation of rental prices and the sale and purchase of homes. On a populist level the measure may find some justification, but on a real level the only thing that is achieved is to attack a sector that generates jobs in various ways and that will now await future attacks or unsuccessful measures. After trying to decree a public rental price, the Government now closes the doors to a vital foreign investment for our current welfare society.

What is the Golden Visa

Back in 2013, the central government of Mariano Rajoy launched a mechanism through which foreigners could obtain a residence visa in Spain by complying with certain levels of investment. Since then, and according to official data collected by various media, in 10 years the Golden Visa for the purchase of a property of more than 500,000 euros has been granted to about 11,000 people. That is to say, that the total investment of these people has been, at least, of more than 55 million Euros only for the acquisition of the property, to which later it would be necessary to add other expenses of services, works and home works. The total amount, impossible to add up, could be exorbitant.

Who could receive the Golden Visa

Any foreign person who invested more than 500,000 euros only in the purchase of a property located in Spain could start the procedures for the acquisition of this 'Golden Visa', a special visa. The Russian population was one of the most benefited groups by this measure initiated in 2013, but the beginning of the Ukrainian War caused the Government to prevent Russians from benefiting from this beneficial measure. The 'Golden Visa' was no longer only a benefit for a direct investment, but the opening to an investment certainly prolonged for several years, since the visa was granted for an initial period of two years, although extendable for periods of five years. During these more than ten years, this measure has become a very effective instrument for attracting a much-needed level of investment in Spain, both for its economic muscle and for becoming a showcase and tourist pole for certain countries.

The unrealistic justification for removing the Golden Visa

Pedro Sánchez has announced that a report will be presented by the Ministry of Housing and Urban Agenda which determines the elimination of these benefits for any type of foreign investment. The justification, an unprecedented attack on the real estate sector. The President of the Government has linked unrelated concepts to try to make it appear that these millionaire investments are behind what he has defined as "inaccessibility of many young people and families to housing". The reality of the real estate market tells us professionals that foreign investors, young people and families are not looking for the same type of housing. Every person who arrives in Spain benefiting from the Golden Visa concession seeks to acquire real estate within the reach of very few investors. In other words: whoever invests more than 500,000 euros for a house is not depriving those buyers who spend between 100,000 and 200,000 euros of access to housing.

The reality that has led the Government of Pedro Sánchez to eliminate the Golden Visa is the long list of failures that the Socialist Executive has had in the area of housing. Both with Podemos in the past and now with Sumar, the Council of Ministers presided over by Pedro Sánchez has only sought to undermine both domestic and foreign investment capacity. Blaming Golden Visa holders for the real estate situation in Spain is an unprecedented attack on a very specific and concrete sector that lives a very particular situation within the national reality that the Government is unable to control. It is this free market that is at stake with measures such as those announced by Pedro Sánchez.

Will the current Golden Visa be lost?

That is all that is missing. Between the time the measure has been announced and until more details are known, a period of time will elapse that will only allow Spain's chances of maintaining a certain level of foreign investment to begin to diminish very early on. Turning Spain into a country in which the most select foreign investment is accused, pointed out and blamed does not seem good. For now, only the elimination is known, and it is currently unknown when the Golden Visa will not be granted for real estate investments of more than 500,000 euros.

The fine print of eliminating the Golden Visa

Well, we will have to wait for the Council of Ministers in which the striking report of Housing that will serve to revoke the Golden Visa will be unveiled. The only thing that is known is what Pedro Sánchez announced. It will be necessary to be aware of what happens with the current Golden Visa and those in process, as well as the exact date from which these special visas will no longer be granted. Foreign investment will have to decide whether to maintain its economic level in Spain, after being blamed for the current situation in the real estate sector, or whether to opt for countries where such 'prestigious' investments are sought and granted.