Malta goes for gold as spain takes silver
Photo: Andrea-S
Golden Visas are increasingly common site in the overseas property industry, as recovering housing markets seek to boost their sales and attract new buyers by offering residency to non-EU buyers who meet a minimum threshold in real estate.
Portugal's has been a success, fuelling demand for property in Lisbon in particular, and totalling 772 visas in its first 18 months. Spain, though, has found its own offering overshadowed by that of Malta.
The tiny island republic launched its programme in March. Since then, it has already seen more than 100 successful applicants, according to Henley and Partners, the UK company managing the scheme.
Spain, on the other hand, has attracted just 81 investors in its first seven months - despite the Spanish threshold of €500,000 theoretically being far lower than Malta's €650,000. In practice, though, Spain's bureaucratic procedures are reportedly bumping up that cost, making Malta's only marginally more expensive but much simpler, while also offering the same EU benefits.
Spain's appeal may have been diminished by falling property prices, while others argue it is merely misjudged in trying to attract the wrong kind of people: “People coming here are not coming here for a visa, they are looking for a home in the sun,” Markus Thoene of Sotheby's tells Spanish Property Insight.
"The focus of the law is not focused on immigration, it’s focused on investment... Many of the expectations [of people interested in immigrating] are not met by the law."
Nonetheless, Malta's own scheme has not been without controversy.
David Hanson, the shadow immigration minister, told The Independent in January 2014 that he had “significant concerns” about the scheme because it offered those rich enough the right to live in any EU country. Moreover, Henley and Partners were accused of making "disguting amounts of money" from the programme by effectively providing passports for sale. Henley gets a 4 per cent commission on the €650,000 and also a fee of €70,000 from each applicant.
Malta tightened the law in response to complaints and introduced a one-year residency requirement before an applicant can get a passport.
“We are not trying to make a quick buck,” Kurt Farrugia, a government spokesman, told the New York Times. “We are a small country, and we want people to know about us and invest in our country.”
Eric Major, the chief executive of Henley and Partners, says that any potential conflict of interest - Henley vets applicants as well as marketing the scheme - would be avoided by keeping the two departments separate. Those with "murky pasts" will also not be considered.
As a result, Malta has enjoyed more than €100,000 in foreign direct investment in a matter of months.
So what of Spain?
The country's Golden Visa may finally be having an impact according to new data from the General Council of Notaries. The number of Spanish homes bought by US, Chinese and Russian buyers in the first three months of 2014 increased by 88.9 per cent, 83.1 per cent and 62.6 per cent respectively year-on-year.
Kate Everett-Allen, head of international residential research at Knight Frank, says that the growth may be an indicator of the Golden Investment Visa having an effect.
Foreign buyers currently account for one in five Spanish property sales.