Golden Visa Programs, Once a Blessing, Lose Their Shine | Trending Viral hub

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When Ana Jimena Barba, a young doctor, started working at a Madrid hospital last year, she moved with her parents half an hour outside the city until she was able to save enough to buy her own house. But when she started looking for houses in the same town, almost all of them had a price of more than 500,000 euros.

The amount (almost 20 times more than the average annual salary in Spain, it corresponds to the cost of the country’s “golden visa,” a program that offers residency to wealthy foreigners who buy property there. After a decade, the program has generated billions of euros in investments, but has also helped fuel a heartbreaking housing crisis for its own citizens.

“There’s nothing I can afford,” said Dr. Barba, an allergist who has been working 100 hours overtime each month to save. “If foreigners inflate prices for those of us who live here, it is an injustice,” he said.

Faced with growing pressure to address the housing crisis, Spain said this month that scrap their golden visas, the latest in a broader withdrawal from the program by governments across Europe.

Half a dozen eurozone countries offered visas at the height of Europe’s debt crisis in 2012 to help plug huge budget deficits. Countries that needed international bailouts Spain, Ireland, Portugal and Greece Among them, they were especially desperate for cash to pay creditors and saw a way to attract investors while reviving their moribund real estate markets.

The countries made unexpected gains: Spain alone has issued 14,576 visas linked to wealthy buyers who made real estate investments of more than 500,000 euros. But the prices they can afford are driving people like Barba out of a market already heavily inflated by the rise of Airbnb and the lure of Wall Street investors.

“Access to housing must be a right and not a speculative business,” Pedro Sánchez, Spain’s prime minister, said in a speech this month announcing the end of the country’s golden visa program. “Big cities are facing very stressed markets and it is almost impossible to find decent housing for those who already live, work and pay their taxes.”

Visas make it easier for people outside the European Union to purchase the right to temporary residence, sometimes without having to live in the country. Investors from China, Russia and the Middle East flocked to buy real estate through them.

In recent years, British citizens have done the same after Brexit, purchasing homes in Greece, Portugal and Spain, joined by an increasing number of Americans looking enjoy a lifestyle They can’t afford it in major cities in the United States.

But golden visa programs are now being scrapped or closed across Europe as governments seek to repair damage to the property market. And after Russia’s invasion of Ukraine, EU officials urged governments to put an end to them, warning that they could be used for money laundering, tax evasion and even organized crime.

Portugal, which has made more than €5.8 billion in investments thanks to visas, modified its program in October to eliminate real estate as an investment to reduce speculative purchases and cool an overheated real estate market. An influx of foreigners has displaced thousands of low-income Portuguese citizens from homes in cities like Lisbon.

The government in Lisbon is trying to solve the affordable housing problem with new rules that would require landlords to rent empty apartments to families, limit rents and convert some commercial properties into housing.

Ireland closed its program last year, in part to address concerns that Russian citizens money laundering through.

Greece, one of the last countries in Europe to offer a golden visa, is raising its foreign investment threshold to 800,000 euros from 500,000 euros in the Athens area and on popular islands such as Mykonos and Santorini. The country’s Prime Minister Kyriakos Mitsotakis acknowledged the severe housing shortage and pressure on rental markets, especially in Athens, but said the government still wanted to attract investors. Greece raised €4.3 billion in investments thanks to visas between 2021 and 2023 alone.

TO report A paper published by the Institute of Labor Economics in March said visa programs had helped spur economic development in countries that offered them. But governments must strike “a delicate balance between realizing economic benefits and protecting against potential risks,” including money laundering and rampant gentrification, according to the report.

The recoil occurs as a Wider housing crisis grips Europeafter years in which their housing markets have undergone a profound metamorphosis that has increasingly driven out modest-income workers, including doctors, teachers and police officers.

Gentrification has spread across European cities for decades, but the rise of Airbnb and other short-term rental providers has accelerated the affordability crisis. That was especially the case in countries hit by Europe’s debt crisis, where landlords found they could earn more renting to tourists than to locals whose finances had been squeezed by austerity programs.

The golden visa programs compounded the tension. In Greece, which initially granted foreigners a five-year residence visa if they invested 250,000 euros, many ads for apartments and houses in Athens and on the windy Greek islands suddenly it went off from bargain prices up to 250,000 euros, well out of reach of most Greeks.

Laura McDowell, an agent at Athens-based real estate agency Mobilia, said short-term rentals had made rentals unaffordable in city centers, and the problem worsened when investors from numerous countries converted houses bought through of golden visa programs in vacation rentals. further reducing the supply of affordable housing.

The plan particularly attracted Chinese citizens, many of whom flew to Athens carrying with them suitcases loaded with cash. Chinese investment companies also purchased buildings in low-income neighborhoods and areas with student housing, renovating apartments and reselling them to visa applicants. Today, entire blocks of apartments, even in once undesirable areas of Athens and its surroundings, are largely owned by foreigners.

“Prices driven by golden visas have not come down,” Ms McDowell said. “The Greeks have been ruled out.”

In Spain, Chinese investors accounted for almost half of visa applicants, followed by Russians. Low interest rates set by the European Central Bank have compounded the problem in recent years by pushing more real estate investors out of the visa program, said Ernest Urtasun, Spain’s culture minister.

The Spanish government plans to build 40,000 social homes for people with limited resources as part of a broader plan to restore affordable accommodation.

But it’s not clear that it will quickly help people like Dr. Barba. Despite Spain’s recovery from the financial crisis, wages have failed to keep pace with the growth of the property market. Almost a fifth of workers earn the minimum wage of 1,134 euros a month, while rents in Madrid increased by 15 percent in 2023. An inflation rate of 3.2 percent has added to the tension.

Dr. Barba has been saving money for the past three years for a down payment on a home. She rented a room in a shared apartment in Barcelona when she began training as an allergist at a hospital in the center. But her monthly income was consumed by basic living expenses, such as food, rent and transportation.

To save more, he moved to the hospital in Madrid and now lives with his parents rent-free outside the city, working overtime to increase his salary to 1,900 euros. But with houses valued at half a million euros, even in her parents’ town, she feels desperate.

“It would take years to save enough to put down a deposit on a house,” Dr. Barba said. “Buying a house is just a dream.”

Rachel Chaundler contributed reports from Madrid, and Niki Kitsantonis of Athens.

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