MADRID, Spain — Spain is considering granting residency to foreigners who buy homes worth $204,000 or more, the deputy trade minister said Monday.
The plan - an attempt to reduce the country’s bloated stock of unsold homes - will offer residency to any foreigner provided he buys a house or apartment that meets the value requirement.
Introduced by Trade Ministry secretary Jaime Garcia-Legaz, the plan is expected to be approved in the coming weeks. It would be aimed principally at Chinese and Russian buyers. Spain has more than 700,000 unsold houses afte the collapse of its real-estate market in 2008, and demand from the recession-hit domestic market is stagnant.
The price level, which is the average for Spain, isn’t definite, according to a spokesman for Garcia-Legaz.
Prime Minister Mariano Rajoy stressed 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.
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 $512,000 and $640,000, respectively. However, Latvia on the Baltic coast offers a cheaper deal, with property buyers eligible to receive residency permits if they purchase real estate worth $180,000 in the capital, Riga, or $90,000 in the countryside.
Spain is in the midst of a double-dip recession with 25 percent unemployment, though Rajoy said he thinks Spain has managed to avoid a financial implosion and will start growing again in late 2013 and in 2014.
“I’m convinced that the worst is over,” Rajoy said after meeting with Brazilian President Dilma Rousseff.
The stricken state of the country’s real-estate market was highlighted Monday by figures from the Bank of Spain, which showed that the level of bad debt in the country’s banks had risen to a record 10.7 percent of their loan total in September.
The bank said the amount totaled $233 billion, up from $229 billion in August - the 15th monthly increase in a row.
The 16 other countries that use the euro have agreed to lend Spain up to $128 billion to help support the country’s banks weighed down by these bad loans and investments. On top of the bank loan, Spain has 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.
Information for this article was contributed by Shawn Pogatchnik, Barry Hatton and Gary Peach of The Associated Press and by Sharon Smyth of Bloomberg News.
Business, Pages 23 on 11/20/2012