November 20th, 2024 at 12:16 pm

Spain to Halt Golden Visa Program Linked to Real Estate Investment by January 2025

A bill to exclude real estate investment from the Golden Visa Program has been approved by the Spanish Congress, with an effective date of January 2025. The goal of the action is to prevent speculative real estate purchases in highly desirable neighborhoods while maintaining access to alternative investment opportunities.

In a major step to alleviate the housing crisis in the nation, Spain plans to discontinue the Golden Visa Program’s real estate investment option.

A Step in the Right Direction for Affordable Housing

On November 14, 2024, the Spanish Congress of Deputies passed a bill that is expected to phase out real estate investment by January 2025. Prime Minister Pedro Sanchez voiced worries about the program’s role in driving up housing costs in key cities including Madrid, Barcelona, Malaga, and Valencia, which led to this decision.

Bill Yet to Receive Final Approval

The proposed bill will now go to the Senate for potential amendments, even though Congress has accepted the initial adjustments. Before real estate investments are formally removed from the program, they will be evaluated and then sent back to Congress for a final vote. The new regulations are anticipated to go into force early next year if they are approved.

Spain’s Golden Visa Program: Emphasizing Real Estate Investing

Spain’s Golden Visa Program, which offers residency through a variety of financial options, has long drawn non-EU nationals. Among the options are:

• Capital Transfer
• Business Development
• Real Estate Investment

Among wealthy foreign investors, the real estate path has been particularly popular. This option permitted foreign nationals to gain residency by purchasing properties worth at least €500,000, plus completing other specified restrictions.

Changes Are Prompted by Housing Market Concerns

Prime Minister Pedro Sánchez expressed worries in 2024 over how real estate investments might affect the housing market in Spain. He pointed out that “stressed” housing conditions resulted from 94% of Golden Visas associated with real estate purchases in in-demand locations like Madrid and Barcelona.

To curb speculative purchasing, Sánchez declared intentions to discontinue the real estate investing option. To increase housing accessibility for locals, the decision was formally announced in April.

Impact of the Golden Visa Program on the Economy

The economy remains greatly stimulated by Spain’s Golden Visa Program, especially through real estate investments. 2,462 visas were issued in 2022 for real estate transactions costing more than €500,000. This number is 60% more than it was in 2021. More than 11,464 investors have obtained residency under the Golden Visa Program since 2013.

Investor interest may go to other sectors, such as capital transfers and business development upon elimination of the real estate investment option.

What Will Happen to the Golden Visa Program Next?

The real estate market might close in January 2025 if the measure receives approval, forcing investors to look for alternative investments. Under the current regulations, money and business venture investments are still viable. The goal of Spain’s current assessment is to maintain the property market’s accessibility for locals by striking a balance between economic advantages and housing demands.

Conclusion

Concerns about the affordability of housing remain highlighted by Spain’s decision to stop accepting Golden Visa real estate investments. Investors should research other residence alternatives and keep up with legislative revisions. The program may redesign to encourage more equitable and sustainable contributions from foreign investors as a result of the policy change.