I don’t think anyone can really put their finger on why there has been so little interest in Spain’s so called “Golden Visa’ since it became law in October 2013 but the fact is that only 530 non-EU citizens applied for residency in the first 15 months of the scheme, that is to the end of 2014. A very weak performance when compared with Portugal, which claims over 2,200 investors for a similar scheme, although a strict comparison can’t be made as it has been running for a year longer.
Under the scheme there are several methods of securing Spanish residency, including a minimum €2m sovereign debt purchase, establishing a business creating employment, post-graduate study, but what caught most attention was the requirement related to property purchase with a minimum value of €500,000, which can be one property or the accumulation of two or more less expensive purchases. Of the 530 qualifiers so far 490 were property buyers.
Although the scheme is open to all non-EU citizens I think it’s fair to say the assumption was that interest would come mainly from Russia and China. Indeed, many Spanish agents got very over-excited, opening offices with Chinese-speakers in places like Marbella, setting up links with Chinese partners and spending considerable sums of money attending exhibitions and seminars in Beijing and Shanghai. As far as the Russian market goes, almost as soon as the scheme was operational the bottom fell out of the rouble and in estate agents offices in those places they favoured, such as Barcelona and Marbella, it became a case of ‘spot the Russian’, or perhaps wondering if the phones had been cut off! Of course, the mega-rich Russians are still buying but the middle market of buyers with the €500,000 minimum required now have to find another 40% compared with a year ago.
And as regards China, the much hoped for surge never came, it was the non-event of 2014 with just 71 Chinese visa applications in the first six months. However, as I blogged here Getting Money out of China gets Harder, the Chinese President Xi Jingping’s crackdown on corruption and money laundering, with increased scrutiny of foreign currency export, may be one of the reasons for the low take-up from China. Of course, people are still finding ways to get round the rules and there have been suggestions that the Bank of Spain is being so scrupulous in investigating possible money laundering that Spain is seen as ‘a problem’.
Another factor in the sluggish reaction could be that the scheme as originally set up was seen as a bit mean, at least in comparison with Portugal, which granted immediate access to healthcare and citizenship after six years, against the need for private medical insurance in Spain and a ten-year wait to become a citizen. So it was interesting to see proposals for some modifications announced in March 2015, in a clear attempt to attract more wealthy international buyers into the scheme, and these have just passed into law, the principal ones being:
- The visa now covers common law partners and dependant children over 18years old, plus parents of the visa holder, whereas previously residency was just for married couples and children under 18.
- Under the original scheme a one-year visa had to be applied for in the country of origin, after which there could be two renewals for two years each followed by a renewal for five years, taking the visa holder up to the ten year mark required for citizenship. Now a six month visa is available once a contract to purchase (contrato de arras) has been signed and deposit funds lodged in a Spanish bank account, even though the completion may not take place immediately. This visa can be applied for in Spain, the renewal can be done from outside Spain and will be for five yeas.
- The residency visa now includes the right to work and of course, once employed, that brings the right to access social security and health care.
So now we wait to see if these new measures have any effect and on whom. I expect Russians numbers will continue to decline because of currency weakness and the Chinese will continue to face difficulties to export currency legitimately, although there has been an announcement that limits may be increased from 2017. Enquiries from the US, Canada, the Middle East and Far East have been strong but have yet to convert into a steady stream of actual buyers.