After much dithering, the Spanish Government has let it be known it plans to raise the residency-permit investment hurdle to €500,000, which will buy non-EU nationals the right to reside in Spain for the duration of their investment.
The Spanish Government is reported to have prepared a new draft law granting qualified residency permits (with strings attached) to non-EU nationals who spend half a million Euros or more a home in Spain, according the Spanish press (elEconomista.es). The draft could become law as early as this summer.
This means the Government is finally doing something about the residency-permits-in-return-for-property-investments idea it floated last November, which met with stiff criticism. Back then the investment hurdle for a residency permit was just €160,000, which some said was too low and made Spain look cheap.
Under the latest draft, non-EU nationals – predominantly Russians and Chinese – would get a residency permit (with strings attached) for them, their spouses and children, upon spending €500,000 or more on a property in Spain. That would bring Spain in line with countries that have introduced similar incentives, like Portugal and Ireland.
Investments tied to residency permits will no longer be limited just to property. Permits will also be obtained with investments that create at least 2 jobs, or by investing in financial assets like Spanish government debt, say press reports.
Good news for upmarket segments
The news will go down well with affluent buyers from outside the EU, particularly the Russians, who have already flocked to Spain as house prices dropped, and are now the third biggest group of foreign buyers by nationality.
Lucas Fox, an upmarket, Barcelona-based estate agency, reports a sustained increase in Russian, Chinese and Asian buyers in the last few years. In 2012, approximately 90% of sales at Lucas Fox came via foreign buyers, around 40% of those who were either Russian or Chinese, say the company.
An increase in the residency-permit investment threshold to half a million Euros will be good for upmarket property segments in Spain, say Lucas Fox.
“We are very excited about the potential impact of the proposed law change on our business,” says Alex Vaughan, a Director. “For the last 12 months we have dedicated a lot of time to business development in key regions such as China, Russia and India. We now have a large number of investors ready to buy as soon as the law is introduced.”
In anticipation of the surge in demand from non-EU nationals, Lucas Fox have set up a division called Residency in Spain to provide advice and support to clients who want to get residency permits in Spain through local investments.
But press reports suggest the law will not be retroactive, which would be a big disappointment to the many Russians who have already spent more than €500,000 on a home in Spain.