How does the Spanish 'buy property for residency' scheme work?
Gaining right of residency in European countries is becoming increasingly easy for Hong Kong and Chinese individuals, provided you buy yourself a home.
The Spanish government is the latest European country to offer foreigners residency. European Union nationals already have the freedom to reside in Spain, and from now on so do people from outside this economic area who spend at least euro160,000 on property.
This residency offer is one of many Spanish government attempts to revive its flagging housing market and wider economy. Other schemes have included temporary VAT cuts on new home purchases.
Spain's housing market needs all the help it can get – property prices fell 15.2 per cent in the year to the end of the third quarter, 2012, according to the National Statistics Institute. This was the 18th consecutive quarter of price falls. Supply and demand are out of kilter, with 200,000 repossessed properties being added to about one million unsold, newly built homes. Buyer numbers are well below what they were before the credit crunch.
The Spanish residency deal is the most generous offered yet by a EU nation. To gain residency in Ireland and Portugal, a foreign national must spend at least euro 400,000 and euro 500,000 respectively on homes in these countries.
A potential complication for foreigners who buy homes in the Spanish region of Catalonia is what happens if it declares independence? Will residency rights be withdrawn? In November, Catalans voted for pro-separatist parties in its regional elections, so a referendum on whether to declare independence is expected in the next few years. Catalonia is home to three locations popular with foreign home buyers – Costa Brava, Costa Dorada and Barcelona, its capital.
Uncertainty about Catalonia's future may benefit housing markets elsewhere in Spain, because overseas buyers who want Spanish residency may decide to play safe and buy homes regions like Andalucia instead.