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Spain Might Trade Residency For Property To Combat Housing Bust

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LINDA WERTHEIMER, HOST:

This is WEEKEND EDITION from NPR News. I'm Linda Wertheimer. Have you ever been on vacation someplace great and wished you could just overstay your tourist visa and settle there for good? In Spain, there may soon be a way to do exactly that - for a substantial price. The government there is considering offering residency to foreigners who buy property worth about $200,000 or more. The idea is to find buyers for all the empty homes left over from Spain's housing boom and bust.

Lauren Frayer reports from Madrid.

LAUREN FRAYER, BYLINE: Inside a real estate office in downtown Madrid, agents and their foreign clients are thrilled with the Spanish government's proposal; automatic residency for anyone who buys property worth about $200,000.

VALERIE KRIEGER: It's incredible. I mean, it's really incredible.

FRAYER: Valerie Krieger is originally from New York and just moved to Spain for her husband's job. The offer of residency is luring the family to buy a home here. It would mean their visa status wouldn't be dependent on her husband's work.

KRIEGER: Well, you know, we've been looking at both rentals and properties for sale. It's very appealing because then there's a certainty knowing that we can definitely stay here. I mean, my children are in school. They're making friends, you know. They're following the curriculum. I don't want to change that. So if, God forbid, there's a problem, it's very appealing.

FRAYER: It's not yet a done deal. Spanish officials have yet to disclose details, whether the residency would be for one or two years or unlimited, whether foreigners would have to buy private health insurance or have access to Spain's public system, which could end up costing the state. But the idea is to lure buyers for an estimated quarter-million empty homes that now litter Spain's landscape after the housing market's collapse.

Krieger's real estate agent, Rachel Bellis, thinks the deal could bring her some much needed business.

RACHEL BELLIS: I think that it's wonderful that the Spanish government has obviously seen that there's a problem in the real estate world and that they're taking measures to make it easier for foreign investors.

FRAYER: Bellis is originally from Florida, married to a Spaniard and has been here for six years. During that time, the economy went bust. Spaniards are defaulting on their mortgages and losing their homes. Almost no one is buying, except maybe those from abroad.

BELLIS: Really, the majority of our clients right now are foreigners and the fact that they could get residency much easier now is going to be a big plus for us.

FRAYER: Home sales are down by as much as 50 percent in parts of Spain. Prices are also down by as much as that, too. But sales to foreigners jumped by 18 percent in the third quarter of this year. I reached Gary Lewis, another real estate agent, by phone in Alicante, in southeastern Spain.

GARY LEWIS: And I've sold to maybe 12 different nationalities this year so, you know, people are realizing that Spain is a good place to invest, but it's very much driven by price.

FRAYER: Prices like $90,000 for a beachfront condo. Lewis says he's unsure whether his buyers would more than double their budget in order to get Spanish residency. Most sales are on the Mediterranean coast where Britons and Germans love to retire. Their European passports allow that. But until now, it's been more difficult for Americans and others from outside the EU to retire here.

The paperwork can take years. Marcello Belgrano is an immigration lawyer who helps foreigners through that process. He's got serious questions about how the new residency would work.

MARCELLO BELGRANO: (Through Translator) It hasn't been spelled out yet. Up until now, the law says foreigners can apply for residency without permission to work here if they can prove they have enough money to live without working.

FRAYER: It's unclear whether new home buyers would be held to that standard or whether they'd be eligible to work. The law is still being drafted. That hasn't stopped some from eyeing foreign sales as a way out of the market slump. Again, Valerie Krieger, the prospective buyer:

KRIEGER: They're pretty happy when they hear the American voice on the phone. It's exactly what they need. They need more foreigners to come in, you know, and spend money, buy things.

FRAYER: Buying a house might be the easy part. Spain does have quite an inventory at much lower prices now, but good luck finding a job. Spain's unemployment rate tops 26 percent. For NPR News, I'm Lauren Frayer in Madrid. Transcript provided by NPR, Copyright NPR.

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