Balearic Islands government may restrict foreigners from owning property there

One-third of homes on the islands this year were sold to nationals of other countries, many of whom are non-residents

Last week, the regional government of the Balearic Islands decided to create a working group, which will have the task of studying the legal possibility of limiting the purchasing powers of foreign nationals in the housing market there. The reason behind this drastic move is the fact that high purchasing incidence from foreign buyers is driving the price of housing often beyond the reach of locals.

Banning the outright purchase of properties by EU nationals, however, would likely be impossible as it would clash with EU legislation, the rules of the common market and the freedom of movement of people and capital.

The group is already working on the preparation of an initial report on the current European regulatory situation, which prevents the limitation of the purchase of properties by foreigners from states of the European Union. 

From now on, the group will analyze the existing experiences in the European sphere and the international community to draw conclusions applicable to the situation of the Islands. Apparently, there’s already precedence in the case of Denmark, but this exclusion had been specifically written into its EU-accession treaty. The initiative called for the report to be delivered in one year.

The islands’ attractiveness is the cause of its housing crisis, too

Without a doubt, the Balearic Archipelago is very attractive for buyers of other nationalities, either as a second residence or as an investment. The dean of the Association of Registrars of the Balearic Islands, José Luis Jiménez-Herrera, explained to Ultima Hora, that the sunny climate, as well as good transport connections and legal certainty, are some of the main attractions of this Spanish region.

So much so that this year alone, 35.1% of the housing units on offer in the Balearics were snatched up by non-Spanish nationals. This makes the archipelago, the Spanish region with the highest percentage of property sales to citizens of other countries. For comparison, the national average sits at 14.14%.

The main buyers are predominantly from northern Europe – British, Germans and Scandinavians. What’s more, many of them buy the units without having to resort to mortgages.