Spain is to scrap a “golden visa” scheme that grants residency rights to foreigners who make large investments in real estate.

Ending the scheme would help make access to affordable housing “a right instead of a speculative business”, Spanish Prime Minister Pedro Sanchez said.

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The programme awards non-EU citizens investing at least €500,000 (around £429,000) in Spanish real estate – without taking out a mortgage – a special permit, allowing them to live and work in the country for three years.

Mr Sanchez said: “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.”

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From the start of the golden visa scheme in 2013 to November 2022, Spain issued almost 5,000 permits, government figures show.

Chinese investors top the list, followed by Russians who invested more than €3.4bn (£2.91bn), according to a 2023 Transparency International report.

Spain is also one of the most popular destinations for British emigrants in Europe.

The UN estimated in 2020 that 303,000 British nationals lived in Spain.

The scheme allowed British people with holiday homes in Spain to circumvent rules limiting non-EU citizens to a 90-day stay in EU countries without needing a visa.

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The measure is unlikely to affect the property market since less than 0.1% of 4.5 million homes sold during that period were purchased under the scheme, according to property website Idealista.

A spokesperson for the website said Spain’s housing crisis was not caused by the scheme but by a lack of supply and a spike 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,” they said.

Spain’s housing problem particularly impacts its younger population who find it “difficult to transition from education to the labour market” and this, coupled with a lack of affordable housing, means many Spaniards remain at home with their parents at an older age compared to other young Europeans, an OECD 2023 report found.

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Portugal has recently revamped its own “golden visa” scheme and excluded real estate investment to tackle its housing crisis.

The European Commission has long called for an end to such programmes, citing security risks.

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