Spain may offer residency to foreigners buying homes

With a still-crashing housing market, Spain considers luring rich investors to buy one of its million empty homes in exchange for residency.

MADRID — Spain is considering offering rich investors from countries such as Russia and China the right to settle in return for them buying up property in the stagnant housing sector.

Spain has more than a million empty homes across the country and is setting up a bad bank to clean up toxic assets from a housing bubble which burst in 2008.

Foreigners could be offered a residency permit if they buy a property worth $200,000 or more, the country's commerce secretary said Monday.

"We're looking at markets such as the Russian or Chinese, among which there is already a strong demand for Spanish real estate," Jaime Garcia-Legaz said during a conference.

Garcia-Legaz said his ministry was consulting the other departments about the idea and gave no figures about how many foreign individuals might be tempted to buy in Spain in order to get Spanish residency.

The government is also trying to drum up interest among foreign investors in participating in its bad bank and will meet with five banks this week, sources told Reuters.

Spain's second largest union, the UGT, criticized the proposal, saying immigration policy should be based on the needs of the labor market.

"It wants to attract foreigners who are obviously rich and able to buy and can supposedly remain in Spain without working with the aim of getting rid of a stock of houses that are largely in the hands of the banks," said the UGT in a statement.

Spain's economy has been either in recession or near-paralyzed since 2008 after the decade-long property boom went sour, sending housing prices tumbling more than 30 percent.

Real estate prices are expected to fall up to 30 percent more before leveling out, economists say, while there is estimated to be more than a million homes around the country.

Spanish banks' bad loans ratio hit a new high in September, the Bank of Spain said Monday, with massive unemployment and the economic downturn hitting Spaniards ability to repay their debts.