Pedro Sanchez, Spain’s Socialist prime minister, wants to abolish the country’s ‘Golden Visa’ scheme, according to which non-EU citizens automatically receive residency for three years if they purchase property worth at least €500,000 (£429,000). Sanchez hopes that doing so will help tackle the cost-of-living crisis and soaring rental prices in the country’s biggest cities. It’s unlikely to do either. It might, however, have unintended positive effects in other areas.

Golden Visas were introduced by Spain’s then-Conservative government in 2013, as a way of stimulating foreign investment after the economic crisis. They can also be acquired by non-EU citizens who invest at least a million euros (£855,000) in Spanish shares or two million euros (£1.7 million) in the country’s public debt – two routes to residency that Sanchez proposes to leave open. But 94 per cent of Golden Visas awarded since 2013 have been pegged to high-end property purchases, which the Socialist leader claims is pricing Spaniards out of the market; affordable housing, he announced on X earlier this week, is a ‘constitutional right and not a mere speculative business’. Spain thus hopes to follow France, Portugal and Ireland, all of which have recently banned or tweaked comparable initiatives.

Sanchez seems to think that half a million-euro properties are ‘affordable’ for the majority of Spaniards; but according to the property portal Idealista, less than 0.1 per cent of homes purchased in Spain between 2013 and November 2022 were part of the Golden Visa scheme. Scrapping the initiative will therefore only affect a tiny portion of sales at the high end of the market. A spokesperson for Idealista called the proposed ban on Golden Visas ‘yet another misdiagnosis’ by Sanchez’s Socialist-led government.

The proposal also misses its intended target in another way. Because you’re not required to be a resident in Spain in order to purchase a house (you just need a Spanish ID number and bank account), foreign investors who plan to use property as a money-maker without ever setting foot in the country can continue to do so. For such investors, whether high-net-worth individuals or not, gaining permission to live and work in Spain is irrelevant, an offer that will never be taken up. According to the Berlin-based NGO Transparency International, the top two beneficiaries of Spain’s Golden Visa scheme have been Chinese and Russian nationals, who between them hold well over half (3,871) of the 6,200 automatic residencies granted since 2013. One wonders how many of these wealthy individuals fall into the permanently-absent-landlord category.

Golden Visa applicants might, of course, be interested in securing residency abroad for reasons that have nothing to do with culture and lifestyle: tax evasion and money laundering may be among the less benign motivations. In recent years, Transparency International has led the campaign against ‘citizenship by investment’ (CBI) initiatives on this basis, claiming that they don’t encourage ‘genuine investment or migration – but [serve] corrupt interests’. The EU adopts a similar stance: in early 2022, MEPs called for a blanket ban on CBIs, on the grounds that they’re ‘objectionable from an ethical, legal and economic point of view, and pose several serious security risks’.

The standard objection to banning Golden Visas centres on the supposedly off-putting message sent to legitimate foreign investors, who in Spain’s case are said to make substantial contributions to the economy. But this objection is misleading in two respects. First, it confuses a ban on automatic residency with hostility to foreign investment. There is nothing to stop wealthy individuals continuing to purchase property in Spain, for whatever purpose they choose: a cancellation of Golden Visas would only mean that, if the house is actually for them, they’ll have to take the normal, bureaucracy-laden route to residency. And secondly, hardly any statistics exist to demonstrate the extent to which owners of Golden Visa properties benefit their local communities, let alone the national economy. But given that such houses account for less than one per cent of those sold in Spain, can that impact really be so great? If these houses are sitting empty most of the time or being used for nefarious purposes, they are benefiting no-one but their owners.

On a more personal note, I have little sympathy for one class of prospective buyers who would be affected by Sanchez’s proposed measure – namely, those who are looking for an easy way into Spain. Securing a permit to live and work in a foreign country is almost a rite of passage for most expats. I speak from experience when I say it’s a difficult and frustrating process, but perhaps it should be: the reams of forms and photocopies of forms, appointments with omnipotent bureaucrats, linguistic challenges and a vast range of cultural nuances that tell you a lot about the country in which you’re starting afresh. As a Brit in Spain, you have to deal with all those things eventually, so taking a costly shortcut won’t benefit you in the long run. Sanchez’s proposed ban on Golden Visas won’t make a dent in the property market, but it might deter fraudsters and democratise the residency process.