Spain is planning to scrap its so-called ‘golden visa’ program, which grants residency rights to property buyers from outside the European Union, as Madrid attempts to increase the amount of affordable housing available to locals.

According to The Iran Project,Prime Minister Pedro Sanchez told reporters on Monday that his cabinet would take the first steps this week towards eliminating the program. Golden visas were introduced in 2013 and have enabled non-EU citizens who spent at least €500,000 ($543,000) on real estate to obtain the right to live and work in Spain for three years.

Ending the initiative would help make access to affordable housing “a right instead of a speculative business,” Sanchez stated.

“Today, 94 out of every 100 such visas are linked to real-estate investment...in major cities 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,” Sanchez said.

Government figures show Spain issued almost 5,000 golden visa permits from the start of the scheme until November 2022. According to a 2023 Transparency International report cited by Reuters, Chinese investors top the list, followed by Russians, who invested more than €3.4 billion.

Proponents of the removal of the golden visa initiative have been insisting that it resulted in soaring housing prices.

Many economists, however, have pointed out that Spain’s housing problem was not caused by the golden visa scheme, but rather by a lack of supply and a spike in demand.

“The measure announced today, which focuses on international buyers rather than encouraging new homes to come onto the market, is yet another misdiagnosis,” property website Idealista told Reuters.

READ MORE: Europe on verge of housing crisis – Bloomberg
Spain has become the latest EU country to eliminate golden visas, following Portugal and Ireland’s decision to do so in 2023. In each of the three countries, the program was introduced to attract overseas investment to fuel a recovery from financial crises driven by crashes in their respective real estate markets.

The European Commission has long called for an end to such programs, citing security risks as well as concerns over possible corruption, money laundering and tax evasion.