SPAIN plans to offer foreigners residency permits if they buy houses worth more than €160,000, in a desperate attempt to reduce the nation's glut of unsold property.
The plan, aimed principally at the Chinese and Russian markets, was announced yesterday by the secretary of state for trade, who insisted it was necessary to reduce the housing stock in a stagnant market.
"In coming weeks, we will start to reform the law regarding foreigners to reactivate demand abroad and contribute towards reducing housing stock," Jaime Garcia-Legaz said at a conference in Madrid.
The scheme would also allow foreign buyers to move around the 25 European nations of the Schengen zone freely, as the agreement allows holders of a residency permit of one country in the area to travel to – though not work in – any other.
Spain risks a backlash from other European countries if the scheme is seen to pave the way towards eligibility for a Spanish passport, and therefore the right to live and work in all 27 EU member states.
Although the details are yet o be agreed, the proposal is expected to imitate agreements established in Portugal and Ireland earlier this year, where residency papers are issued in return for property investments of €400,000 and €500,000 respectively.
Spain has between 700,000 and 1.1 million unsold new homes following the collapse of its property market in 2008.