Spain’s Golden Visa is Ending… And That’s a Good Thing

A few weeks back I read an article in the New York Times about the problems facing Spanish renters in the city of Malaga. The author interviewed a working-class Spaniard who said he’d just been told his rent was going to triple. His landlord wanted him out of the place so he could put it on the Airbnb market.

As if on cue, Spanish Prime Minister Pedro Sánchez announced that his government plans to end the residential investment option for Spain’s Golden Visa. Under current rules—which remain in place until the law is formally changed—it's possible to get a long-term residence permit by investing a minimum of €500,000 in a Spanish property.

It's a story we've seen before. Last year neighboring Portugal announced it was ending the residential investment option for its fabled golden visa. This was in response to precisely the same sort of complaints from ordinary Portuguese as the renter in Malaga.

The political context is similar as well. Both countries are governed by a socialist party with a slim parliamentary majority. Both are under intense pressure to deliver for their working- and middle-class voter bases. In a context like that, changing residency rules for well-heeled foreigners is a no-brainer.

But I don’t see this as a negative development—precisely the opposite, in fact. It’s good news for folks looking to establish a home in Europe.

The concept of a golden visa emerged in the aftermath of the global financial crisis of 2008. As in the US, real estate markets collapsed, and banks’ balance sheets went with them. Unlike the US, however, countries within the eurozone can’t print money to bail out their banks. So, to goose property values and rebuild bank balance sheets, they threw open the doors to foreigners, letting them invest in residential property in exchange for residency. That boosted property prices and saved the banks.

But 80% and more of golden visa applicants were Chinese who had no immediate interest in living in these countries. They just wanted an offshore Plan B, along with the lucrative rental income to be had from the Airbnb market. The result was to price locals out of housing in many places, both as buyers and renters.

Moreover, governments eventually recognized that they weren't making much out of these deals either. Migration consultants, property developers, estate agents, accountants, and banks did great. But the government just got a bit of tax income here and there. No new jobs were being created.

Enter so-called “independent means” visas. These include digital nomad permits and retiree visas. The crucial difference is that instead of a one-off investment by a foreigner who rarely sets foot in the country, these visas require you to live in the country, where you're going to spend your money, boosting the economy and creating jobs.

Of course, there’s nothing preventing someone on an independent means visa from renting or buying a home. But instead of a market driven by cash-flush foreigners, with independent means visas, you're getting people living on regular salaries, business income, or pensions. They're not going to move the needle on house prices by anywhere near as much.

So, whilst you'll see a lot of angst and gnashing of teeth in the migration “press,” don't worry. Closing the residential golden visa door will help Spain and other countries open a much bigger one for regular folks like us. Including a cheaper place to live!