At this moment in time 20 European Union countries offer a variety of golden visa programs effectively granting residency and EU status to those investing in those member states. The European Commission has issued a coded message to European Union counterparts suggesting that these visa programs should be better administered. It would appear there are serious concerns that criminals have been able to launder money by acquiring EU property and investing in EU based businesses.
However, there is no doubt these golden visas have also helped to support many EU property markets, weakened after the 2008 US mortgage crisis.
How widespread is the use of golden visas?
When you consider that European Union states have raised around $29 billion from golden visas over the last decade this puts the issue into perspective. The United Kingdom, Spain and Portugal are the three highest earners from the schemes with each country having sold more than 10,000 visas. Investigations by the European Commission suggest that some countries are “lax” with their records making it difficult to trace golden visa holders. While much focus has been on the funds raised and impact on local property markets, EU residency allows these visa holders freedom of movement right across the Schengen countries.
Impact on property markets
We know that Chinese and Russian investors have had a great impact on many EU property markets including the United Kingdom. They have also been supporting Spain and Portugal during the recovery process as well as buying property in the likes of Malta and Greece. It is difficult to say with any great certainty the impact they have had on local property prices but it has certainly been supportive and positive.
It would appear that the European Commission is questioning the “commitment” of these individuals to a crime free life within the EU. The fact that so many European Union member states have failed to maintain adequate records on the issue of golden visas does set alarm bells ringing. If these wealthy individuals are using golden visas simply as an entry point into the European Union where will they finally settle?
Money-laundering, property purchases and criminality
Who would’ve thought that the European Union would be effectively backtracking on the billions of euros spent over the years improving money-laundering procedures and general security across the region? It appears that some countries are willing to risk local and EU security as a means of attracting new investment and offering a degree of support to their property markets. What would happen if the European commission introduced a purge on golden visa holders with criminal connections?
Despite much of the focus being on the UK and the potential consequences of a no deal Brexit; let’s not forget that the European Union is tipping into recession. Germany is leading the downtrend although it is fair to say that the country still has a relatively buoyant and strong property market. However, other European property markets are not so strong. There is still a massive overhang of repossessed properties in Spain and Portugal despite the recent recovery in property prices.
Summary
Many people believe that the European Commission has issued nothing but a half-hearted appeal to EU member states to get their house in order. Calls for the withdrawal of golden visa programs could not have come at a worse time for the European Union and its weakened economy. Property markets across the EU are ready under pressure and switching off the tap of investment from countries such as China and Russia would be unhelpful to say the least.