The Balearic Islands are facing a common problem of rising property prices due to high demand for holiday homes and rental properties, foreign investment, and limited supply. This has caused concern among some residents who worry about the impact on the local economy and culture. They fear that the high cost of housing could make it difficult for young people and working-class families to afford to live in the area, and that an influx of non-resident buyers could further drive-up prices and contribute to a loss of local character and community.
To address these concerns, the Balearic Islands government has proposed banning non-residents from purchasing property in certain areas of the islands. This move aims to limit the number of holiday homes and rental properties in the area, with the goal of making housing more affordable for local residents and preserving the islands’ cultural and social fabric. Critics of the proposed ban argue that it could discourage foreign investment in the area and harm the islands’ tourism industry. However, supporters of the ban believe that it is necessary to strike a balance between economic growth and sustainability, and that limiting property sales to non-residents is a step towards achieving this balance.
The local authority has taken measures to address the issue of empty homes in the Balearic Islands by doubling the council tax on such properties. However, it is unlikely to have much of an impact on the wealthy owners who own these homes. The increasing number of empty homes is leading to fewer customers for bars and restaurants, which is affecting the local economy. Hoteliers and restaurateurs are struggling to attract staff from the mainland due to high rents. The situation is particularly severe in Deià, where there are twice as many tourist apartments as there are to rent. The local authorities need to take more proactive measures to address the issue of empty homes, such as incentivizing owners to rent out their properties, imposing higher taxes or fines, or limiting the number of tourist apartments in certain areas to preserve the local community’s character and social fabric.
However, according to a top law firm, a regulatory measure that prohibits or limits the acquisition of dwellings in the Balearic Islands by non-residents would be in violation of the fundamental freedoms of the Treaty, such as freedom of establishment and free movement of capital. This would be in direct opposition to the Treaty on the Functioning of the European Union, as well as the Charter of Fundamental Rights. Additionally, the Act of Accession of Spain to the EU does not contain any exception to the application of these rights, so restrictions would not be covered by it. The analysis also highlights that the proposed measure by the Balearic Government would be indirectly discriminatory as it would benefit Spanish citizens and harm citizens of other EU Member States, which would violate EU law. Therefore, the Balearic authorities need to consider alternative measures to address the issue of rising property prices and the displacement of local residents without violating EU law.
Having spoken to a partner who is part of an association called Abini (Association Balear Immobiliria Nacional e Internaticonal). They were founded in the beginning of 2020 with the main aim to create a professional and beneficial environment for real estate professionals focusing on the regional, national and international markets of the Balearic Islands.
They have been fighting for months for this legislation to not be put in place. As it must go through the EU, it will be a very long process and the party has now agreed that it was a bad idea to publicise the initial statement, and they are beginning to back track. The general election is in May, meaning Abini are on the right track and need to keep doing what they are doing. The stress caused on those who have been affected has been phenomenal, however they have the right people on their side to help.
Written by Tiger Brazil
