The announced elimination in Spain of golden visas, which provide residence to non-EU citizens for home purchases of more than half a million euros, has once again put the role of foreigners in local real estate markets on the table. The golden visa mechanism was put into operation by many countries after the real estate crisis of the late 2000s as a way to support purchases in a real estate market with very little demand. Several European countries adopted this same policy in 2012-2013 and, in some cases such as Malta, not only residency but also citizenship could be obtained fairly quickly. The trend is changing in recent years and the advantages of quickly obtaining residency are being associated not with real estate investment but with human capital, such as the advantages for workers in the artificial intelligence sector.
In Spain, the number of golden visas granted in the last ten years, which according to estimates ranges between 10,000 and 14,500, shows the little importance that this mechanism had in achieving the objective for which it was approved. When it was implemented in 2013, it was clear that it would not have the desired effects and it would have been better not to have put it into operation. Its elimination, following the lead of other countries such as Ireland, Portugal or the United Kingdom, has been justified to avoid real estate speculation and its impact on prices. The reality is that its impact on the real estate market was very limited and its value is merely symbolic, although from a political perspective it is a greedy measure, since it seeks to end the advantages of the rich and foreigners.
In 2023, only 9.7% of homes purchased by foreigners exceeded 500,000 euros. In 2022, 10.13% was reached, the highest proportion in the historical series. The proportion of purchases by non-EU citizens was 50.4% in 2023 compared to 42.2% the previous year. This means that, if all the golden visas (3,217 in 2023 and 2,017 in 2022) were concentrated in homes worth more than 500,000 euros (remember that this amount could be invested in several lower-priced homes), 74.7 % of these purchases from non-EU citizens (53% a year earlier) applied for the golden visa. In all housing transactions they represent only 0.5% in each of the last two years, although their proportion is higher in places such as Marbella, Barcelona or the Balearic Islands.
If we open the analysis to homes purchased by foreigners, without considering their price, we find that in 2023 the maximum of the series was reached with a proportion of 14.98%. British, Germans and French are the ones who buy the most homes, followed by Moroccans and Belgians. Foreign purchases are also quite geographically concentrated. Five provinces lead the proportion of foreign purchases and exceed double the Spanish average: Alicante (44%), Santa Cruz de Tenerife (35%), Málaga (34%), Balearic Islands (31.5%) and Girona (30%).
The current trend in the case of home purchases is the opposite of the golden visa. The idea is to make it difficult, or even prevent, home purchases by foreigners. In Canada, it was prohibited in 2023, and for a period of two years, for foreigners to buy homes. Ottawa has already extended it until 2027. This ban does not apply outside metropolitan areas (CMA) or census agglomerations (CA), nor in buildings with four or more units nor to permanent or temporary residents who meet certain criteria. A similar ban was also approved in New Zealand in 2018. In addition, in some regions of Canada such as Ontario or British Columbia, taxes have been approved for non-residents that tax their transactions with an additional percentage than that paid by residents. Toronto recently approved an additional municipal surcharge to that of Ontario starting in 2025.
The impact of foreigners' demand on rent also generates different types of reactions. On the one hand, an attempt is made to reduce demand. In the Netherlands, universities will reduce the number of courses in English to discourage the arrival of foreign students. In Canada, international students are also blamed for the accessibility crisis in the rental market and a 35% reduction has been imposed for 2024 and 2025, except for master's and doctoral students. On the other hand, we want to prevent part of the regular rental housing stock from being diverted to vacation rentals in a context of enormous lack of supply. In New York, the local law of September 18 requires hosts to request the registration of these homes and prevents rental sharing companies from processing transactions for unregistered homes. This is in addition to the prohibition of renting entire apartments for less than 30 days.
Other cities also have limitations on tourist rentals such as London, Berlin, Paris, Amsterdam or San Francisco. A little over a month ago, the EU approved a mechanism to share information from vacation rental platforms and the public sector, although the application will depend on each country. In Spain, holiday homes make up 1.3% of the total number of homes, around 340,000 according to the latest estimate from the INE. The problem is that these homes represent a very high proportion in some tourist areas (Marbella, Malaga, Palma or Alicante) and the centers of large cities (València, Seville or Granada). Many of these cities, including Palma, Barcelona or Madrid, have put limitations in place. In Catalonia, Decree Law 3/2023 was approved last November, which imposes the application for a license for tourist housing that is valid for five years and prevents the affected municipalities from granting more than ten licenses per 100 inhabitants.
These are the facts and the policies. In the next article we will analyze the pros and cons of measures to keep foreigners away from local real estate markets and their effects.
