The European Commission cools the intention of the Balearic Islands to prohibit the purchase of housing to those who have not been residing in any of the islands for a minimum of five years, including Spanish citizens. The European Commissioner for Financial Services, Financial Stability and the Capital Markets Union, Mairead McGuinness, has sent a response to the PP MEP Rosa Estaràs in which she closes the possibility of these limitations with current regulations.
The left-wing parties in the Balearic Islands, PSOE, Podemos and Més, have shown their willingness to prohibit the sale of housing to non-residents on the islands. The Balearic Government has created a work commission in which the University of the Balearic Islands participates to see what possibilities exist to limit purchases. In parallel, the Government of Pedro Sánchez has a mandate from the Senate to examine what legal formulas exist to approve these exceptions.
In her response, the commissioner recalls that article 63 of the Treaty on the Functioning of the European Union prohibits restrictions on the movement of capital related to the acquisition of real estate, including homes. These limitations cannot affect non-residents in a certain member country of the Union.
He qualifies that these prohibitions could only be set for reasons of public order or public security, “or for imperative reasons of general interest recognized in the jurisprudence of the Court of Justice of the European Union”, something that greatly complicates the will of the Government of Francina Armengol.
In any case, the representative of the Commission points out that the measures that are approved cannot be discriminatory and, at the same time, must be proportionate to the objective pursued, “which means that they are adequate to guarantee, in a coherent and systematic way, the achievement of the objective pursued and do not go beyond what is necessary to achieve it”.
The Government of Francina Armengol defends the limitations and calls for the establishment of a “Balearic exception” that allows limiting the purchase to non-residents. He assures that the real estate transactions of foreign citizens are one of the reasons that explain the high price of housing on the islands.
Last year, 34% of the home sales that were made on the islands were made by foreign citizens. The Balearic Islands are experiencing a real estate price bubble to the point that Santa Eulària des Riu, a small municipality in Eivissa, has become the town with the most expensive square meter in Spain, above San Sebastián. The city of Eivissa is the second most expensive in Spain, according to official data from the Ministry of Transport.
Several countries of the European Union have current limitations on the purchase of a home by foreign citizens or non-residents, but all of them entered the European club with this prior condition, something that does not occur in the case of Spain. There are restrictions on real estate transactions in Finland, specifically on the Aland Islands, as well as in Denmark, Croatia and Malta.
