Spain to give residency to foreign house buyers

MADRID - The Associated Press

A woman looks out from her balcony in Madrid. Spain announces that it will offer residency to foreigners, who would buy a home worth more that 160,000 euros. AP Photo

Spain may offer automatic residency to foreigners who buy homes in the country, aiming to help the ruined housing market.

In an attempt to reduce the country’s bloated stock of unsold homes, the government is set to offer permanent residency to any foreigner provided they buy a house or apartment worth more than 160,000 euros ($200,000).

The plan, unveiled by Trade Ministry secretary Jaime Garcia-Legaz on Nov. 19 and expected to be approved in the coming weeks, would be aimed principally at Chinese and Russian buyers. Spain has more than 700,000 unsold houses following the collapse of its real estate market in 2008 and demand from the recession-hit domestic market is stagnant.

Prime Minister Mariano Rajoy stressed that the plan has not yet been finalized, but added that Spain “needs to sell these homes” and that getting them off the market could help revive the nation’s devastated construction industry.

The plan to unload the unsold homes comes as thousands of houses have been repossessed by banks and their owners evicted because they cannot pay their mortgages. The government last week approved a decree under which evictions would be suspended for two years in specific cases of extreme need.

The country’s residency offer would beat others in bailed-out countries such as Ireland and Portugal, where residency papers are offered to foreigners buying houses worth more than 400,000 euros and 500,000 euros, respectively. However, Latvia on the Baltic coast offers a cheaper deal, with property buyers eligible to receive residency permits if they purchase real estate in the capital Riga worth 140,000 euros or 70,000 euros in the countryside.