Spain to axe ‘golden visa’ scheme in blow to British expats

Are you a British expat affected by visa rule changes? Write to money@telegraph.co.uk with your story 

Spain is planning to axe a “golden visa” scheme that grants residency to foreign property buyers in a blow to British expats.

The programme allows non-EU citizens investing at least €500,000 (£429,000) in Spanish real estate to live and work in the country for three years.

However, Spain’s prime minister Pedro Sanchez told reporters on Monday that the scheme would be scrapped to make access to affordable housing for Spaniards “a right instead of a speculative business”.

He said: “Today, 94 out of every 100 such visas are linked to real estate investment… in major cities like Barcelona, Madrid, Malaga, Alicante, Valencia or Palma de Mallorca that are facing a highly stressed market and where it’s almost impossible to find decent housing for those who already live, work and pay their taxes there.”

He added that the government would launch the process to eliminate the scheme in Tuesday’s weekly cabinet meeting after studying a report submitted by the housing ministry.

Spain introduced its golden visa programme in September 2013 to encourage wealthy foreigners to invest in real estate to boost the Spanish economy in the wake of the financial crisis.

However, the EU has urged member states to wind up such schemes or implement stricter checks, amid fears that golden visas are inflating house prices and being exploited by criminals to launder cash in villas and bogus firms. 

Spain’s decision comes after the Portuguese government also announced it was pressing ahead with plans to end its non-habitual resident (NHR) visa scheme offering lucrative tax breaks to foreigners – including Britons – who spend more than six months a year in the country.

In January, a French court blocked efforts to allow British expats to stay in the country for longer than 90 days without a visa.  

Spain is one of the most popular destinations for British expats in Europe. United Nations estimates put the number of Britons living in Spain at 303,000 in 2020, second only to Ireland (305,000) and ahead of France (170,000) and Germany (118,000).

The golden visa scheme has proved popular since Brexit, as it has allowed expats with holiday homes in Spain to skirt around rules limiting non-EU citizens to a 90-day stay in EU countries without needing a visa.

Some 185 Britons have been granted these visas since Brexit came into force in 2021, according to data obtained by online newspaper El Confidencial.

The scheme is predominantly used by Russian and Chinese property investors, but Mary Dunne, of estate agents Hamptons International based in Marbella, said the planned closure of the scheme would make it harder for Britons looking to move to Spain.

She added: “It’s like a bomb went off this morning. It’s going to be a big issue for expats wanting to move and a lot of people are very unhappy about it.

“What’s being done isn’t hugely different from other European countries, but it’s not a positive message.

“Anyone thinking about using that route would now have to look at becoming a resident – but this will affect your tax status, as you would need to pay tax in Spain rather than the UK.”

The scheme’s current criteria are generally considered easier to satisfy than other routes to residency. The three-year residency can be extended by two years, and foreigners are entitled to apply for Spanish nationality after 10 years of living in the country. 

Applicants can also be granted one of Spain’s golden visas by investing €1m (£858,000) in shares or in funds established in the country. It is understood that foreigners will still be able to secure residency rights in this way.

It is not yet clear whether the restrictions will only apply to major cities, where competition for housing is most acute, and not in rural areas which are under less pressure.