canary islands non resident property purchase ban

Canary Islands push to ban non-resident property purchases

Compiled with the help of artificial intelligence, based on Spanish-language information. Source below the article.

Canary Islands move to restrict property purchases by non-residents

The Canary Islands government, formed by Coalición Canaria and the Partido Popular, has submitted a proposed royal decree law to the Spanish government that would prohibit anyone — Spanish or foreign — from buying a home in the islands unless they can prove ten years of registration on the islands’ territory, or 15 years if that registration has been discontinuous.

The legislative proposal, seen by the news agency EFE, also stipulates that a single citizen may only buy two homes in the Canary Islands, and only if they are located in different municipalities. It further provides that legal entities — companies or investment firms — may only acquire homes in the islands if their corporate purpose is to sell or rent them to private individuals.

Part of a deal with the PSOE

The administration of Fernando Clavijo has sent this draft law to guarantee access to housing for Canary Islands residents, as part of the conditions that Coalición Canaria agreed with the PSOE in exchange for supporting the first of the so-called Maricarmen decrees, the one that placed limits on evictions of vulnerable people. CC voted in favour of the first decree and against the second. Both fell in the Congress of Deputies due to opposition votes from the PP, Vox and Junts, but the government intends for them to be definitively approved in the Permanent Deputation.

Timing raises questions

Despite being an issue that has been addressed by Canary Islands administrations for years — including two parliamentary commissions on the demographic challenge — it is now, a month and a half before an election and with parliament dissolved, that the Clavijo government is referring the matter to the central government.

Earlier this same week, the regional president insisted that action must be taken on “supply and demand” unless a “communist dictatorial system” is to be imposed, and he stressed the difficulties the Canary Islands face with a population that has grown by more than 500,000 people in 25 years, and moreover in an “uneven” way, with 48 municipalities having fewer than 10,000 inhabitants.

A shift in Coalición Canaria’s position

It should be remembered that Coalición Canaria has voted on various occasions in the regional parliament against proposals by other parliamentary groups to limit or control foreigners’ access to housing, and that Clavijo himself ruled out any measure aimed at taxing the acquisition of homes by foreigners, as his party colleague Carlos Alonso had proposed when he stood in the European elections. Alonso also proposed a levy on new residents, but Clavijo dismissed all these measures just 24 hours after those elections, in which CC failed to win any seat in Brussels.

Attempts to secure Brussels approval

During this parliamentary term, Clavijo has put to the European Commission the attempt to secure authorisation for the Canary Islands to set some kind of limit on home purchases, since statistics show that a third of properties changing hands end up in the hands of foreign citizens, and a good part of them end up in the holiday rental business.

However, his initial approach clashed with EU treaties, which guarantee the free movement of people and capital within the EU and prohibit distinctions based on nationality. This legislative proposal attempts to overcome that obstacle in two ways: it does not rely on nationality, but on an objective fact such as residence, proven through local registration, and it invokes Article 349 of the Treaty on the Functioning of the European Union, which guarantees the outermost regions the right to special treatment in the application of EU rules.

The explanatory memorandum sets this out as follows: “The guarantee of access regime established by this rule is the most appropriate route for achieving the aims pursued, without incurring discrimination on grounds of nationality, since anyone residing in the islands may make use of this mechanism, being able in the meantime to live there under a rental arrangement or any other form of temporary occupation of a home.”

“In turn, the limit of a maximum of two homes is intended to prevent resident status from becoming an unjustified advantage with respect to the objective of guaranteeing that these people can access decent and adequate housing; beyond that figure, the guarantee becomes inapplicable,” it adds.

Why the Canary Islands government is proposing these measures

The Clavijo administration recalls that the Canary Islands, by virtue of their island status, have territory of “limited surface area” and with “fragile biodiversity”, circumstances that “determine a limited use of island space”, which has an impact on access to housing.

At the same time, it warns, the islands suffer “the phenomenon of gentrification being produced by the acquisition of homes for purposes other than habitual residence by individuals and companies domiciled elsewhere, displacing the people who do reside in the islands and making the purchase of the homes they need very onerous or even impossible”.

“This reality makes it necessary to adopt measures that guarantee residents’ access to existing homes and to those that will be built,” the explanatory memorandum argues.

Purchases would be null and void

The proposed text to limit purchases by non-residents is categorical and even includes reinforced guarantees. If it goes ahead, any purchase of a home in the Canary Islands by someone who cannot prove the required period of residence “will be null and void by operation of law” and cannot be registered in the Land Registry. The same is established for companies: any purchase of a home by a legal entity will be null and void if selling or renting it to private individuals is not among its corporate purposes.

Inheritances, however — that is, transfers mortis causa — are exempt from these limitations and prohibitions.

New powers for town halls

The Canary Islands government is proposing a second legal reform to the Council of Ministers, this time of the Law on the Bases of Local Government, to give town halls the tools to intervene in the problem of housing shortages in their territory. First, it proposes that town halls be able to buy or rent homes in their area to citizens of non-EU countries who have not resided for a minimum of two years in their municipality — a category that includes, for example, citizens of the United Kingdom, the main source of tourists to the Canary Islands.

It also proposes enabling local councils to create tourist levies, taxing “overnight stays, lodging or stays in tourist accommodation by non-resident persons”. Finally, it suggests authorising town halls to ban holiday rentals in certain areas of their municipality.

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