Looking for a new place to call home? Spain is hoping to give you a little bit more than a welcome basket of baked goods if you decide to move there. 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 (US$200,000).
The plan, unveiled by Spanish Trade Ministry Secretary Jaime Garcia-Legaz on Monday 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.
Spanish Prime Minister Mariano Rajoy said on Monday 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.
Spain is in the midst of a double-dip recession with 25 percent unemployment, though Rajoy says he believes Spain has managed to avoid a financial implosion and will start growing again late next year and in 2014.
“I’m convinced that the worst is over,” Rajoy told reporters after meeting with Brazilian President Dilma Rousseff.
The stricken state of the country’s real-estate market was highlighted on Monday by figures from the Bank of Spain, which showed that the bad loan ratio rose to a record 10.7 percent in September.
The bank said bad loans totaled 182 billion euros, up from 179 billion euros in August — the 15th monthly increase in a row.
The 16 other countries that use the euro have agreed to lend Spain up to 100 billion euros to help support the country’s banks weighed down by these bad loans and investments. Spain has also been under pressure to apply for more outside financial aid to help it manage its debt and deficit. The European Central Bank has insisted on the move before it will make good on its pledge to buy the bonds of certain troubled countries to help lower their borrowing costs.
Spain says it is waiting to know all the conditions that might come attached to the rescue package before making a decision.