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MEP questions permits for real estate investments

Timothy Kirkhope, MEP for Yorkshire and the Humber, has raised a question in the European Parliament concerning the issue of residence permits to third country nationals investing in real estate.

MEP TIMOTHY Kirkhope is concerned that Cyprus, together with a number of other EU member states, is offering temporary residence permits to non-EU citizens investing in real estate and has raised the following question in the European Parliament.

Question for oral answer O-000108/2013
to the Commission

Rule 115
Timothy Kirkhope, on behalf of the ECR Group

Subject: Schengen area residence permits for third-country nationals investing in real estate  

Several Member States (Bulgaria, Greece, Cyprus, Latvia, Portugal and Spain) are issuing temporary residence permits to third-country nationals who invest in real estate in these countries. In most cases, the temporary permits can later be transformed into permanent residence permits for the Schengen area. The number of permits issued under such investment programmes is growing rapidly, as is the number of issuing Member States. In fact, these countries have begun to compete with each other to create ever-softer and -easier conditions for obtaining residence permits in exchange for investment in real estate.

Such investment programmes have had several negative consequences: for example, in some countries external demand is distorting the housing market, artificially inflating real estate prices and generating fierce competition for commercial loans for the local resident population. This is contrary to the proposal for a directive on credit agreements relating to residential property (COM(2011)0142).

According to information from national law enforcement bodies, these arrangements are not always transparent or properly controlled, and may facilitate money laundering. Furthermore, they allow undesirable persons to gain residence in the Schengen area. Commercial activities linked to the granting of residence permits have become a lucrative business for narrow interest groups such as certain banks, consultancies and real estate companies, and this business is taking place at the expense of safety across the entire Schengen area.

1. Is the Commission aware that granting Schengen residence permits has become a profitable business model created by the authorities of some Member States?

2. How does the Commission view the fact that these very diverse procedures for the granting of residence permits across the Member States have a direct impact on access to the whole Schengen area, while being subject to different levels of transparency and control and different investment thresholds? How does the Commission view this in terms of the long-term stability and sustainability of the Schengen area?

3. Would the Commission consider taking any action on the matter, such as setting minimum criteria for obtaining Schengen residence permits, bearing in mind that permit recipients often do not reside in the issuing countries and move freely across the Schengen area, and that these practices cause obvious distortions in the housing market?

About Timothy Kirkhope

Timothy John Robert Kirkhope is a British lawyer and politician, currently serving as Member of the European Parliament for Yorkshire and the Humber for the Conservative Party.

After serving for ten years as Member of Parliament for Leeds North East, he was first elected to the European Parliament in 1999.

Readers' comments

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  • Janner says:

    Surely Cyprus will just ignore EU law and do whatever they like in terms of residency. Who will stop them?

  • @Mike – Non-EU nationals holding a Cyprus residency visa who wish to visit EU countries in the Schengen area for a short stay of up to 90 days per six months, need to apply for a short-stay Schengen Visa (tourist or business). If granted, this visa does not entitle its holder to permanent residence in the country being visited, whether for study, employment or settlement.

    Non-EU nationals holding a Cyprus residency visa who wish to visit EU countries outside the Schengen area, need to apply for a visa at the embassy of the country they wish to visit.

  • Mike says:

    Once granted a residence permit then the EU is an open door surely?

  • Johnny Cyprus says:

    Denton; I think Mr Kirkhope’s immediate concerns relate to the Schengen area but not the UK, which as you say has opted out.

    Of the six states that he cites as offering temporary residence permits, Cyprus is the only one not currently in the Schengen area. Cyprus has not opted out and has a target date of 2016 for implementation, albeit subject to certain conditions that one could say might not be met.

    I don’t pretend to know the detailed regulations, but I think one can see where he is coming from.

  • Cydee says:

    So the only thing the matters is money; what a great way to plant a terrorist – or two.
    Well done Mr Kirkhope.

  • Stuart Monkcom says:

    I would agree with Denton.

    Cyprus, along with Croatia, Romania and Bulgaria is not in the Schengen area at the moment but is legally obliged to eventually become a member of it.

    The UK and Ireland have both opted out of the Schengen agreement and will not be joining the scheme any time soon which is good news as far as our borders are concerned.

  • Denton Mackrell says:

    Mr Kirkhope’s EP submission includes the statement: “In most cases, the temporary permits can later be transformed into permanent residence permits for the Schengen area”.

    I’m not sure that is correct where the country is not already operating a Schengen scheme, as in the case of Cyprus, UK and some others. It is not possible at the moment for a third country national such as a tourist to use Cyprus as a Schengen conduit into the rest of the EU, so why would it be possible for those with temporary or even permanent residence visas in Cyprus to get through??

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