Spain is set to scrap its 'golden visa' scheme that grants residency to foreign property buyers, it was announced by prime minister Pedro Sanchez on Monday.

Bringing an end to the programme would help to make access to affordable housing "a right instead of a speculative business," the PM stated.

The scheme grants special permits to non-EU residents who invest a minimum of €500,000 in Spanish real estate without requiring a mortgage, enabling them to reside and work in the country for a duration of three years.

"Today, 94 out of every 100 such visas are linked to real estate investment...in major cities that are facing a highly stressed market and where it's almost impossible to find decent housing for those who already live, work and pay their taxes there," Sanchez commented.

The prime minister went on to add that the government would begin the process to conclude the programme at the weekly cabinet meeting on Tuesday, after reviewing a report filed by the Housing Ministry, Reuters reports.

According to government figures, from the launch of the golden visa scheme in 2013 until November 2022, Spain granted almost 5,000 permits.

Chinese investors rank first on the list, with Russians following closely, having invested over €3.4 billion, as per a 2023 Transparency International report. The findings raised concerns about whether authorities had probed the source of these funds.

However, the move will unlikely impact the property market as under 0.1% of 4.5 million homes sold during that time were bought under the scheme, reports the Idealista property website.

According to Idealista spokesperson, Francisco Inareta, Spain's housing issue was not attributed to the golden visa scheme, but instead to a scarcity of supply and a surge in demand. 

"The measure announced today, which focuses on international buyers rather than encouraging new homes to come onto the market, is yet another misdiagnosis," Inareta stated.

Portugal recently overhauled its golden visa scheme, excluding real estate investment as a means to address its housing crisis. However, foreigners seeking residency rights can still place their funds in investment funds as an alternative.