Approximately 67,500 foreigners bought houses in Turkey last year. With the latest regulation, the value of the real estate to be taken in the application for Turkish citizenship through the sale of housing was set at 400 thousand dollars. This practice caused some reactions, especially after the exorbitant increase in rents in big cities. A similar debate is now taking place in the European Union.
The EU is calling on member states to limit the sale of residence permits in exchange for real estate investment. Ireland, Greece, Malta, Malta and Portugal have already taken measures in recent months, and now Spain is joining them. Spain is working on restricting the sale of residence permits in exchange for large investments by tightening the so-called “golden visa”.
Thus, it aims to increase the value of the real estate to be purchased for a residence permit application above 500 thousand euros. One of the biggest reasons behind the decision is to prevent people sanctioned due to the Russia-Ukraine war from obtaining a residence permit in Europe.
Started In 2013
The golden visa scheme was introduced by Mariano Rojoy’s government in 2013 to prevent investors from fleeing the country after the bursting of the brick bubble and to lift the real estate sector out of the bottleneck it had fallen into.
Spanish practice allows foreigners who invest at least 500,000 euros in real estate to obtain a three-year residence permit, which can be extended for another two years. Residential real estate accounts for a large share of the foreign wealth invested in the country. Spain issued residence permits to 2,462 investors who bought real estate last year. This is an increase of 60 percent compared to the previous year.
Since 2013, 11,464 people have bought a house and obtained a residence permit. This number is expected to include other family members, about 20 thousand people. According to the information obtained, officials from the Spanish Ministry of Social Security and Migration believe that the 500 thousand euro amount is no longer sufficient. The ministry is carrying out this work in contact with the ministries of economy and transportation. However, a full agreement has not yet been reached on this issue.
Divergence Of Opinion
There is little house-building in the country, so rents are rising, and some say the move by the Ministry of Social Security and Immigration will increase pressure on an already struggling real estate market. The government has not taken a firm decision on this issue.
One possibility is that the government is considering giving the golden visa to shareholders in companies. However, there are concerns that this could negatively affect commercial projects and social inclusion. Another concern is that prolonged discussions on this issue could lead to a bubble in the real estate sector. There are also those who say that a decrease in foreign investment will have a negative impact on other areas of the market. So why is this decision on the agenda against such a negative backdrop?
In a warning last year, the Council of Europe highlighted the problems associated with the sale of citizenship to wealthy foreigners and pointed to the need to check carefully whether they were on sanctioned lists. In its statements, the Council expressed deep concern that oversight mechanisms were not being properly implemented.
Manuel Villoria Mendieta and David Martinez of Transparency International say that the source of the investors’ income must be thoroughly investigated and that the practice of trading residence permits for houses must be prevented from being used as a tool for crimes such as money laundering. Mendieta and Martinez note that the lack of oversight will also allow criminals to enter Spain.
HOW IS IT IN TURKEY?
Foreign citizens are not required to have a residence permit as a prerequisite for acquiring real estate in Turkey. 67 thousand 490 houses were sold to foreigners in 2022. House sales to foreigners increased by 15.2% in 2022 compared to the previous year and became 67 thousand 490. Last year, the highest number of housing sales by nationality was made to citizens of the Russian Federation.
Citizens of the Russian Federation bought 16 thousand 312 houses in Turkey in 2022. The Russian Federation was followed by Iranian citizens with 8 thousand 223 houses and Iraqi citizens with 6 thousand 241 houses. According to the decision taken at the Presidential Cabinet meeting held in April 2022, the application requirement of 250 thousand dollars was increased to 400 thousand dollars. For the application, it was also decided to annotate the title deed registry that no transfer could be made for 3 years.