A new plan was disclosed today by the Spanish Trade Ministry Secretary, Jaime Garcia-Legaz.
Aimed at helping the stagnated property market, the plan is to offer permanent Residency to foreigners who buy a house or apartment valued over 160,000 euros ($200,000).
The plan is expected to be approved in the coming weeks, and would be primarily aimed at enticing Chinese and Russian buyers. It was not immediately clear if the residency would only refer to Spain, and not the European Union.
Spain has more than 700,000 unsold houses following the downfall of its real estate market in 2008 and demand from the recession-hit domestic market is stagnant.
Spain needs to sell these homes, was the message from the Prime Minister Mariano Rajoy, however he stressed that the plan has not yet been finalized. He added that getting them off the market could help resuscitate the nation's distressed construction industry.
The challenge to get the homes off the market comes as thousands of houses have been repossessed by banks and owners evicted because they cannot pay their mortgages. The government last week approved a declaration under which evictions would be suspended for two years in particular cases of extreme need.
The Spanish residency offer, once finalized and approved, would beat other countries such as Portugal and Ireland, where residency is offered to foreigners buying houses worth more than 500,000 and 400,000, respectively.
Although Spain is in the midst of a double-dip recession with 25% unemployment, Prime Minister Rajoy said he trusts that Spain has managed to avoid a financial cave-in and will see growth again in late 2013 and in 2014.
Rajoy told reporters after meeting with Brazilian President Dilma Rousseff, that he was convinced that the worst is over.
Figures from the Bank of Spain on Monday, showed that the level of bad debt in the country's banks had risen to a record 10.7% of their loan total in September.
The bank reported an amount totalling 182 billion euros, up from 179 billion euro’s in August, which made it the 15th monthly increase in a row.
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.
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.
By www.holprop.com (November 19, 2012)
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