Spain offers residency to foreigners buying homes

Updated: 

Costa del SolCorbis

Fancy buying a home on the Costa del Sol? There is now an extra incentive for foreigners to invest in the Spanish housing market which has hit rock bottom after the 2008 bubble burst.

Left with more than 700,000 unsold houses after its property crash, Spain is offering more than a welcome basket of muffins to those willing to splash out on a Spanish home. The country intends to offer foreigners residency permits if they buy properties worth more than €160,000 (£128,500).

The plan, unveiled by trade ministry secretary Jaime Garcia-Legaz this week, is targeted mainly at Chinese and Russian buyers, but Brits could also benefit.

Spain's offer comes after other crisis-stricken countries moved to lure foreigners to save their housing markets. Ireland and Portugal are offering residency papers to foreigners buying houses or apartments worth more than €400,000 and €500,000 respectively.

Spain's economy is mired in recession and a quarter of the working population are out of jobs. Some 40,000 houses have been repossessed by banks and their owners evicted since the property bubble burst in 2008.

A woman's suicide earlier this month as she was being evicted - the second within weeks - prompted Spain's banking association to suspend eviction orders for two years in cases of extreme need.

Spanish economy minister Luis de Guindos promised that no family would be left homeless because they can't pay their mortgage. He admitted that there were nearly a million empty houses in Spain.

Spanish prime minister Mariano Rajoy said the plan has not been finalised yet, but stressed that Spain "needs to sell these homes" to breathe new life into its property market. He did his best to talk up the Spanish economy, saying it would be growing again in a year's time. "I've convinced that the worst is over."

However, the dire state of Spain's property market was illustrated by new figures from the Bank of Spain that showed the level of bad debt held by banks had risen to a record 10.7% of the loan total in September. The bad debts have increased to €182 billion from €179 billion in August.

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