In a move which is bound to upset the UK and other EU nations which have not gone cap in hand for bail-outs, the Spanish Government hopes the ‘passport to EU residency’ will revive its disastrous real estate market and offload hundreds of thousands of unsold homes.
Meanwhile, unemployed Spanish and other EU citizens are being paid by the European Union to look for work in Britain. Youth unemployment in Spain is around 40%.
Spanish trade secretary, Jaime Garcia-Legaz, said this week that the move was aimed at Chinese and Russian investors who might otherwise face difficulties buying a house in Spain, as they are not European Union residents. Yeah right!
Spain usually grants visas for up to 90 days to non-EU citizens. The residency permits for foreign homebuyers would be issued for a much longer period of time, but not as yet open-ended. The proposal will be discussed in detail by the Spanish Government. The permits would also not grant the buyer the right to work in Spain, which seems odd as work rights normally go hand-in-hand with residency.
High unemployment in Spain is forcing thousand of its citizens, as well as Romanians living there, to look for a job in the UK. Spain has also imposed work restrictions on Bulgarians and Romanians.
Garcia-Legaz claims that Spain is just doing the same thing as Ireland and Portugal, two other ailing euro-zone economies that have sought to resuscitate their housing markets by relaxing residency requirements.
The scheme would also allow foreign buyers to move around the 25 European nations of the Schengen zone, as the agreement allows holders of a residency permit of one country in the area to travel to – but not work in – any other.
Spain does not seem to care about the potential backlash from other European countries, as the scheme is bound to lead to eventual eligibility for a Spanish passport, and therefore the right to live and work in all 27 EU member states.
Spain has between 700,000 and 1.1 million unsold new homes following the collapse of its property market in 2008, most of which will sell for less than the ‘cash for residency’ figure of 160,000 Euros.
Buying property in Spain, with lax enforcement of real estate laws, comes with many risks for foreign buyers. During the boom years, authorities had often approved construction of houses that violated environmental laws or other regulations, which were later bulldozed leaving British and other foreign buyers hundreds of thousands of Euros out of pocket.
Spain’s ‘buy one take one’ residency offer undercuts bailed-out EU countries such as Ireland and Portugal, where residency is offered to foreigners buying houses worth more than €400,000 and €500,000, respectively.
But Latvia already offers the bargain basement deal, where property buyers are eligible for residency permits if they purchase real estate in the capital Riga worth €140,000 or €70,000 in the countryside.
What next? Perhaps Greece (the other member of the P.I.G.S. group) will offer residency for buying a few kebabs!
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