The New Spanish Residency Law

So it seems the Spanish government has finally decided that they will give residency to anyone who spends over €500,000 on a property or invest 2 million in Spanish debt. (As if) Let's look at what effect this will have on the market.            

There you go nothing.

Why am I saying this? Well the truth is that there maybe some sales made to people who want Spanish residency with this law but let's look at some facts here. Fact number one: the vast majority of property for sale in Spain is under €500,000, around 98% of properties. Fact number two: there are over 2 million properties for sale in Spain probably (nobody is quite sure) Fact number three: last year the number of sales made to foreigners of properties over 500,000 Euros could be counted in the hundreds. Fact number four: this year, with the new law, the number of Property Sales made to foreigners of over 500k will still be counted in the hundreds. Fact number five: this will have no effect on reducing the outstanding stock of Spanish properties for sale because as we have already mentioned there are over 2 million of them and a few hundred sales will make no appreciable difference. As stated they are mostly under 500,000 euros. Fact number six: the Spanish government has just introduced a new law requiring foreign residents to declare overseas assets of greater than €50,000. The fear amongst many people is that this declaration will lead to taxes like those recently imposed in Italy where foreign residents pay a new 0.78% tax on their overseas assets even though tax has already been levied in the country of source. Fact number seven: in many areas of Spain, including Valencia, you can get an absolute mansion for well under 500,000 Euros. You would be hard pushed to manage to spend that amount even if you wanted residency. This may well benefit Marbella in a small way and maybe even Puerto de Andratx in Mallorca or central Madrid or Barcelona but very few other places. The Spanish government needed to make a statement with the new residency law. As usual it has failed totally and this law will have no effect whatsoever in reducing the stock of properties that are sold. One of the great fears of setting the price at €160,000 for residency as previously suggested was that it would allow criminals to come into Spain and get residency easily. I can say now that I am pretty certain that a greater percentage of criminals will get a property in Spain for residency purposes because this price simply means that ordinary people, the middle classes that Spain should be trying to attract, will not be able to afford to buy. Criminals will have no problem. As for investing 2 million in Spanish debt… Yeah, right, as if that is going to happen. [caption id="attachment_3728" align="aligncenter" width="700"]The New Spanish Residency Law Infographic The New Spanish Residency Law Infographic[/caption]

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