The Spanish administration has initiated the process to phase out the "golden visa" program.
This initiative allows overseas investors to gain expedited residency.
During a Cabinet session on Tuesday, government officials decided to discontinue the issuance of this visa, which is currently granted in return for a real estate purchase of at least €500,000 (£428,000).
The conservative leadership of Mariano Rajoy introduced the visa program in 2013.
It was intended as a method to draw in much-needed foreign capital following the eurozone crisis, which severely impacted Spain's real estate market.
According to the organization Transparency International, by 2023, a total of 6,200 visas had been granted for property investments, although some reports suggest the figure could be higher.
Transparency International's data shows that nearly 50% of those who received Spain's Golden Visa, amounting to 2,712 individuals, were from China.
Following the Chinese, the largest group of recipients were Russians, with 1,159 visas issued. They were trailed by Iranians who received 203 visas, and closely followed by Americans and Britons, with 179 and 177 visas respectively.
In addition to property investment, the Spanish "golden visa" program also offered residency to those who invested at least €2 million in government bonds or contributed to the growth of new businesses in Spain.
Nonetheless, the government indicated that a mere 6% of the visas were issued for investment activities other than real estate purchases.
Prime Minister Pedro Sánchez has announced his administration's plans to eliminate a certain scheme, emphasizing the objective "to ensure that housing is recognized as a right, not just an opportunity for economic speculation."
He pointed out that the bulk of visas granted have been associated with real estate purchases in key locations such as Madrid, Barcelona, Valencia, Málaga, Alicante, and the Balearic Islands. These are all regions experiencing significant strain on their housing markets, making it exceedingly difficult for local residents who are employed in these areas and pay taxes daily to secure affordable homes.
Particularly hard-hit by escalating rental costs is Ibiza, located within the Balearic Islands.
The previous year saw the introduction of a new housing legislation by the government, which was designed to put a limit on rent hikes in regions that have witnessed rapid increases.
The left-wing factions that form part of Mr. Sánchez's coalition government have been vocal advocates for discontinuing the visa program.
Critics argue that abolishing it won't make things better.
Francisco Iñareta from the Idealista property portal points out that the issues with the Spanish housing market, including sales and rentals, are not due to the Golden Visa but stem from an increasing shortage of housing stock coupled with a surge in demand.
Moreover, there's been external pressure on Spain, particularly from the European Commission, which has urged EU countries to tighten controls on such programs, mainly due to security worries, which have heightened following Russia's incursion into Ukraine.
In 2022, the British government discontinued a program that allowed affluent foreigners to gain residency if they invested in the country.
The next year saw Ireland eliminate its Golden Visa program, and Portugal made changes to its similar scheme, ceasing to offer residency in return for investing in real estate.