The Spanish government, through the Secretary of State for Commerce Jaime García-Legaz, announced at year’s end that it is considering modifying the Ley de Extranjería (Immigration Law) in order to be able to grant residence permits to foreigners on the strength of a purchase of Spanish home worth upwards of €160,000.
García-Legaz admits that the government is targeting the Chinese and Russian buyers and that the price of +€160,000 is a reasonable starting point for further discussion since there’s nothing definite yet on the matter.
Focusing on these two foreign groups from emerging economies seems to make sense. In 2011 home purchases in Spain by Russians shot up to almost 28% more than those of the previous year. The rise represented 1757 units. The 868 homes that the Chinese bought in the same period was a 7% increase. Unfortunately, the purchases are a microscopic drop in the bucket of some 700,000 unsold homes in Spain.
Still, García-Legaz felt it necessary to reassure the Spanish people that the proposal of the government won’t give rise to another housing bubble.
Spain is of course still reeling from the mindless boom that continues to undermine the very foundations of its economy five years after it got busted.
To forestall any argument that the proposal is not viable, the Ministry was quick to point out that similar measures have been, or are being, implemented in Portugal, Ireland, the UK and the United States where speculation-fuelled boom in real estate had led to unprecedented economic and financial disaster.
Furthermore, the Ministry has said that the deal, if and when it pushes through, will not be extended to aliens illegally residing in Spain, nor to those with criminal records.
Prime Minister Mariano Rajoy said the proposal is meant to decongest the unbelievably glutted housing market.
Many members of the opposition parties are saying, however, that the proposal is “odd”, “unbelievable”, and “a move to sell Spain to the highest bidders.” Still others are saying that the announcement is nothing but a trial balloon to see how the Spanish people will react to the idea.
On the positive side, some real estate experts think it’s “a step in the right direction.”
For more on this report, please go to MONEY MATTERS.
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