The big backlash from the wild rally in real estate prices that is effectively putting a large portion of residents out of the housing market is forcing Spain and Portugal to put the brakes on or make significant changes to their Golden Visa programs. Greece is now taking similar steps after the continuous price increases.
Previously countries such as Ireland and Britain have suspended similar programs of their own, mainly to deal with money laundering or the circumvention of international sanctions. This is yet another dark side of those programs that in the not-so-distant past had been targeted by the Commission itself.
In Spain, Portugal and other countries the housing cost challenges due to the golden visa came to be added to large price increases brought by the purchase of houses to be used as AirBnb.
“Golden visas” and “golden passports” essentially make it easier for wealthy residents of countries outside the European Union to reside and move without restrictions in European countries, in most cases without even having to live in the country where they have made their purchase or purchases . For governments, especially countries hit by the eurozone debt crisis that had entered into memorandums of understanding, the gain was an inflow of significant capital in an effort to improve fiscal positions.
But the big losers in many cases were most of their permanent residents who saw the golden visas as one more factor that drove housing prices to the heights. These are both purchase and rental prices that are now leaving a large number of locals out of the market.
Most of the people who were interested in the Golden Visa programs were investors mainly from China, the Middle East and also Russia who arrived in many big cities in Europe, looking for a “golden” passport as a prize. The buyers were also American as well as British, especially after Brexit.
Spain
With prices already skyrocketing, the changes have arrived. Spain is now ending the program that allowed foreigners to invest from 500,000 in property and obtain a golden visa. This investment allowed them to live in the country for at least three years.
“Access to housing must be a right rather than a speculative business,” said Pedro Sanchez, Spain’s prime minister, as he announced the end of the country’s golden visa program for property purchases. “Big cities are facing very depressed (real estate) markets, and it’s almost impossible to find decent housing for those who already live, work and pay their taxes” there, he said.
Before all this of course, the country had issued almost 15,000 such golden visas which sent real estate prices soaring, especially in popular destinations and big cities. Spain had started this program in 2013, in the middle of the debt crisis.
Portugal
Portugal, which has attracted more than 5.8 billion euros in investment from the golden visas, has also decided to change the terms of the program. Golden visas are no longer given for real estate purchases especially in popular destinations and big cities. Of course, this happened after buying and renting a house became unaffordable for a large part of the population in various cities. It is telling that an influx of foreign such investors has driven thousands of low-income Portuguese citizens from their homes in cities such as the capital Lisbon.
Greece
In Greece, according to the provisions of the amendment for the granting of a 5-year residence permit to citizens of third countries through the Golden Visa, in the Region of Attica, the Regional Units of Thessaloniki, Mykonos and Santorini and in the islands with a population of more than 3,000 inhabitants, the value of of real estate that the interested party must own increases to 800,000 euros. In the rest of the country, the amount is 400,000 euros. The investment must be made in a property with an area of at least 120 square meters. For buildings that have a different use and are converted into residences, the minimum amount of investment is 250,000 euros.
Ireland
Ireland abolished its own Golden Visa program last year, in part because it found that some foreign investors, including Russians, were using the program to launder money.
Britain
Earlier, Ireland and Britain had put the brakes on such a program which allowed wealthy foreigners to stay in the country in exchange for bringing some of their wealth with them. London took this decision as part of an effort to stop the inflow of suspicious money from Russia.
SOURCE: ot.gr
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