Jim and Katharine Miller Diehl thought they had found their ticket out of the United States: a three-bedroom condo in a new development overlooking the Mediterranean coast in southern Spain. The retired couple from St. Petersburg, Fla., were banking on Spain’s popular residency-by-investment program, known as the “golden visa.”
“Living abroad has been a lifetime dream,” said Ms. Miller Diehl, 63. “We just were attracted to Spain. The cost of living is a lot less than in the States. The pace of life is slower. The food is great.”
That was three years ago. They never anticipated it would be a race against the clock. In March, with construction of their condo nearing completion, the couple hurried to Spain to formally apply for the program, which granted residency rights to foreigners who bought property worth at least 500,000 euros. But now they were staring down a fast-approaching deadline: April 3.
“It wasn’t supposed to be a time bomb,” Mrs. Miller Diehl said. “I had to go dye my hair last week. I’ve grown a bunch of gray hairs.”
Last year, the Spanish government abruptly announced that it would stop issuing visas by investment, part of a new approach to combat a housing crisis that had pushed rents and home prices out of reach for many native Spaniards. For foreign home buyers, the door to a new life was closing.
“Housing is a constitutional right, not a mere speculative business,” said Prime Minister Pedro Sanchez in a news conference last April. “That’s why we’re going to eliminate the golden visa.”
It was a 180-degree shift. A decade ago, Spain and other European countries, including Portugal and Greece, were desperate to attract investors as they climbed out of the debt crisis of 2009. They offered golden visas — allowing newcomers to work, live and study in the country — to help fill budget deficits and revive their crumbling housing markets.
Spain’s program, which began in 2013, proved too popular. More than 15,000 visas linked to real estate investments were granted, according to the government, mainly to Americans, Brits, Chinese, Russians and Middle Easterners. From 2016 through 2023, the program generated about $10 billion in investments. The visas were valid for five years and could be renewed every five years, and they allowed recipients to use their homes as short-term rentals.
Since 2020, the number of Americans residing in Spain has grown by 32 percent, to nearly 70,000. “They wanted to avoid the poisonous politics,” said Javier Rosado of Strand Properties Fuengirola, a coastal town near Málaga, about his growing American clientele. Spain also offered a more affordable lifestyle, as the euro came down to near parity with the dollar. Consider mortgages: The borrowing rate averages at just above 3 percent, less than half the current American rate.
As the number of new golden visas spiked coming out of the pandemic, so did property values, leaving more domestic buyers frozen out of overstressed markets. Over the past year in Spain, rents and home prices have both risen by 11 percent. Protests against short-term rental platforms and rising housing costs have erupted in major cities, including Madrid and Barcelona. (Greece, Hungary, Cyprus, and Malta still offer golden visas with a real estate component.)
In addition to the April 3 cutoff for submitting visa applications, Mr. Sanchez said he planned to double the real estate tax at the time of purchase on properties bought by non-European Union nationals — an effort, in part, to stop golden visa holders from converting their new homes into short-term rentals. In announcing the move, he said that “the West faces a decisive challenge: To not become a society divided into two classes, the rich landlords and poor tenants.”
Indeed, Spain isn’t the only European country overwhelmed by the success of residency by investment: Portugal shuttered its program in 2023, as did Ireland.
According to some Spanish real estate agents, the proposed tax will do little to resolve the country’s real issue: a severe shortage of inventory. Since 2021, Spain has built around 90,000 new homes each year, according to the Bank of Spain. But the population has grown by nearly 2 million in that time, according to the National Statistics Institute.
It’s also unclear whether the new tax will become reality. Spain’s parliament, which remains fragmented following inconclusive elections in 2023, must approve it. And by Mr. Sánchez’s admission, real estate sales to foreigners accounted for only 27,000 transactions in 2023.
“It’s a political stunt,” said William Morillas of Target Estates in Mijas Pueblo, near Málaga. “It will not do anything to help housing.”
Caught in the gears are buyers like the Diehls, who planned to live part-time in their new condo. In 2022, they signed a contract for €839,580 ($921,000) to buy a home at the Valley Collection development, about 15 miles outside of Málaga, just as construction was getting underway. Once completed, the transaction would close, allowing the couple to proceed with their residency application. The Diehls submitted the application last month, just as the apartment was being completed. Their lawyer told them that while there has been a slowdown in the approval process lately, they should be approved since their application met all requirements. But if not, they’ll likely sell the unit and take a loss.
“You can’t imagine how stressful this has been,” Mrs. Diehl said. “We’re jumping off the cliff and hoping it’s all gonna work out.”
Alvaro Hernandez and his wife, Alicia, had long toyed with the idea of moving to Spain, concerned about rising crime in their native Mexico. They thought Madrid would be ideal thanks to its sizable Mexican expatriate community. Last September, the Hernandezes toured a few places in the Spanish capital but held back on making an offer because prices were too high. When the government declared it was ending the golden visa program, the couple scrambled and bought a four-bedroom condo in Madrid’s Chamberí neighborhood for €1.8 million ($1.95 million). Just before Christmas, they filed for the visa. If it is denied, they’ll sell the unit quickly and move out of the country.
“This was a lot of money. We made the purchase in a rush to get the paperwork,” said Mr. Hernandez, 36, who runs a company that builds software for mobile apps. “Now we are in this strange, stressful standby situation.”
Others have managed to overcome the obstacles. Michael Schatman, a native of New Jersey, chose to move to Spain after his son studied abroad in Madrid. He could continue his work as a pain-management researcher remotely. “I was just so disgusted by the country and Trumpism,” Mr. Schatman, 65, said. “I thought, I need to get out of here.”
He quickly made an offer last October for a house near the Mediterranean Sea in Xàbia, about 70 miles south of Valencia. The deal collapsed when the seller fell ill. A week later, he went under contract on a different home for €960,000 ($1.03 million), €100,000 more than he’d initially budgeted.
“I was rushing through,” Mr. Schatman said. “I felt like I had to do this, if I wanted the golden visa.”
But it was worth it. Mr. Schatman received his visa about two months after his sale closed in November. These days, he works in the mornings before the United States wakes up. In the afternoons, he hikes on nearby mountains. “I love the weather. I love the ocean. I love the views,” he said. “I’m looking at the ocean right now and can see Ibiza — it’s nuts.”
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