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Canary Islands government moves to restrict property purchases
The Canary Islands government (CC-PP) now wants to place limits on the purchase of housing in the archipelago. In the middle of an election pre-campaign, the regional executive plans to send the Spanish government a legislative proposal containing nine measures to restrict the acquisition of properties, among them a requirement for a minimum of ten years’ registration as a resident in the islands. The aim is to ease pressure on the property market and make it easier for those living in the Canary Islands to access housing.
The draft ranges from limiting the number of properties a single person may acquire to imposing restrictions on purchases by companies and investment funds. It also includes exemptions for inherited homes and proposes that the limitations remain in force for ten years.
Ten years of residency to buy a home
One of the main requirements of the draft is proof of a minimum of ten years of uninterrupted registration as a resident in the Canary Islands in order to buy a home. The proposal also contemplates the possibility of meeting the requirement through fifteen years of discontinuous residence. The restriction would apply to both Spanish and foreign citizens, so that the determining criterion would be residence rather than nationality.
A maximum of two homes per person
The proposal sets out to limit to two the number of homes a single person may acquire in the archipelago. In addition, the properties would have to be located in different municipalities. With this measure, the regional government is seeking to curb the accumulation of properties and purchases made for speculative purposes.
Restrictions on purchases by companies and investment funds
The draft also focuses on legal entities, including companies and vulture funds that acquire properties as an investment. According to the proposal, these entities would not be able to buy homes, except in the cases envisaged for those whose sole activity is the sale or residential letting of properties to private individuals. The measure is intended to limit the acquisition of homes for tourist or holiday use, although its precise scope will depend on what the final legal text establishes.
Inherited homes would be exempt from the restrictions
Acquisitions of homes through inheritance, known in legal terms as transfers mortis causa, would be excluded from the residency requirements set out in the draft. In this way, heirs could receive a property without having to prove the ten years of residence demanded for purchases covered by the measure.
Sales that fail to meet the requirements could be void
The proposal contemplates declaring void any sale transactions that breach the restrictions and preventing them from being registered at the Land Registry. This is one of the provisions that would require particular legal precision, since its effects would depend on the final wording of the rule and how it fits within the existing legal framework.
Restrictions would apply to new-build and second-hand homes
The draft does not confine the measures to the second-hand market. The restrictions would also apply to newly built homes, including developments carried out in the future, according to the scope set out in the proposal. In this way, the plan is intended to cover both transactions involving existing properties and new acquisitions.
The measures would last for ten years
The limitations are proposed as a temporary response to the housing emergency. The draft proposes that they remain in force for ten years, a period with which the Canary Islands government aims to ease pressure on the housing market. The actual duration would depend on approval and on the conditions established by the final rule.
The Canary Islands’ argument for fitting the measure into EU law
One of the main challenges of the proposal is its legal fit, particularly in relation to European rules on the free movement of capital and the internal market. To defend the restrictions, the draft appeals to the criterion of residence rather than nationality and to the Canary Islands’ status as an Outermost Region of the European Union, enshrined in Article 349 of the Treaty on the Functioning of the EU. This argument forms part of the justification for the proposal, but does not in itself guarantee that the measures are compatible with European law. Their viability would depend on the final content of the rule and the corresponding legal assessment.
More municipal powers over tourism and holiday homes
The proposal also contemplates giving town halls greater room for manoeuvre. Among the measures put forward are the possibility of introducing tourist taxes for non-residents and limiting the creation of new holiday homes in the most saturated neighbourhoods. The aim is for municipalities to be able to act on tourist pressure in the worst-affected areas, although the application of these measures would depend on the powers finally attributed to them and on the relevant legal framework.
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