MADRID — Ever had such a great vacation abroad that you wished you could overstay your tourist visa and settle there for good? Spain is weighing a plan that would let you do just that — for a price.
The Spanish government is considering offering residency to foreigners who buy property worth about $200,000 or more. With discounts as deep as 50% along the Mediterranean, a 1,100-square-foot three-bedroom beachfront apartment in Alicante goes for $130,000. Or how about a 1,200-square-foot four-bedroom with a view of Barcelona’s skyline for $175,000? A few miles inland, a two-bedroom house goes for $90,000.
The idea is to attract buyers for an estimated 700,000 empty homes scattered across Spain’s landscape, the remnants of the nation’s dramatic housing boom-and-bust. The offer is aimed at Chinese, Russians and Americans, who are usually limited to a three-month tourist visa in most parts of Europe.
For U.S. expatriates like Valerie Krieger, who moved to Madrid from Florida four months ago when her husband decided to open a branch of his business here, the offer of residency is luring the couple toward buying a home rather than renting, which is exactly what Spanish officials want, in hope of jump-starting the housing market.
“It’s very appealing! Because then there’s a certainty that we can definitely stay here,” said Krieger, 52, whose current visa status depends on her husband’s continued employment in Spain. “My children are in school, they’re making friends, following the curriculum, and I don’t want to change that. So if, God forbid, there’s a problem [with my husband’s job], it’s very appealing.”
The idea of rewarding foreign investors with residency, which often comes with Europe-wide work and travel visas and state-sponsored healthcare, has already been adopted by bailed-out Portugal and Ireland, as well as Hungary. Greece is considering a similar measure. It’s one of the unconventional perks European governments are offering potential investors in return for gambling on Europe’s shaky economic recovery.
But Spain’s proposed price tag is less than half of what’s required for residency in Portugal and Ireland. In Hungary, foreigners have to buy more than $325,000 worth of government bonds in order to stay put. Some immigration experts in Spain worry that a relatively lowball offer could lead to too much of a good thing. There are also questions about the long-term costs of offering residency, with the host of social services it usually brings, to foreigners who might not reside in Spain full time and might not even pay taxes here.
It’s still unclear whether the residency granted would be temporary, for one or two years, or unlimited, and whether foreigners would be required to buy private health insurance or have access to Spain’s public health and education system, which could end up costing the state.
Spain’s trade secretary, Jaime Garcia-Legaz, first floated the residency offer in a speech at an economic conference in November. It’s one of several proposals the government is considering to stimulate the property market, he said, without elaborating on any others. Spain previously offered a tax break for new home buyers, though that program expired Jan. 1.
“I don’t really know if he understands the immigration politics he’s getting involved in here,” said Marcelo Belgrano, an immigration lawyer in Madrid who shepherds foreigners through the lengthy current application process for Spanish residency.
Belgrano said he has been fielding dozens of phone calls a week from clients asking how they can take advantage of the residency offer, which is still being drafted. Spanish officials would not comment on legislation that is not yet final.
“It hasn’t been spelled out how this is going to work. For example, the law currently says foreigners can apply for residency without permission to work here, if they can prove they have enough money to live without working,” Belgrano said, looking exasperated.
It’s unclear whether the purchase of property would exempt foreigners from that means test, even if the new home is fully mortgaged.
The many unknowns have failed to damp the excitement in real estate offices across Spain since November. Many see foreign buyers as their way out of Spain’s worst recession since it became a democracy in the late 1970s. With the unemployment rate hovering above 26%, hundreds of Spaniards are evicted from their homes each day.
Home sales and prices are down as much as 50% in some parts of the country, especially the Mediterranean coast. Meanwhile, sales to foreigners jumped 18% in the third quarter of last year, even without the lure of residency privileges.
“They’re pretty happy when they hear the American voice on the phone!” said Krieger, the prospective buyer. “It’s exactly what they need. They need more foreigners to come in, you know, and spend money, buy things.”
Frayer is a special correspondent.