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Brussels pours cold water on Balearic dreams of excluding foreign buyers

Beach in front of 5eh Colonia de Sant Jordi new development for sale mallorca
Mallorca, where foreign buyers dominate the second-home market

The Balearic regional government’s idea of excluding foreign buyers from the housing market has not been warmly embraced by Brussels

For a while now the regional government of the Balearics has been making noises about banning “non-residents”, by which they really mean foreigners, from buying property in Mallorca, Menorca, Ibiza and Formentera, blaming them for rising housing costs in the region. The vast majority of foreign investors in the Balearics are EU citizens led by the Germans.

One of the problems with the idea is that it needs to be approved by Brussels as it goes against the fundamental principles of the EU. Balearic politicians promoting the idea have called for a ‘Balearic exception’ to EU founding principles, which one assumes would need wholehearted support in Brussels and Madrid to have any chance of success.

Madrid recently dismissed the idea as illegal under EU law, and it comes as no surprise that Brussels has also pointed this out, which is another way of saying that the idea is a non-starter. 

In a formal response on behalf of the Commission to a question posed by a Spanish MEP asking if it would it be possible for member states to limit the purchase of homes by non-residents, Mairead McGuinness, a European Commissioner, said that such restrictions contravene EU laws, and can only be contemplated for reasons of national security or public interest, which would be difficult to justify in this case (non-discriminatory, proportional, and recognised by the jurisprudence of the ECJ).

Nonetheless, the Podemos party in the regional government, which is strongly in favour of excluding foreigners from the housing market, argue the ‘public interest’ justification works in this case. “We are in a housing crisis, and the fact that 40% of homes are bought by non-residents means it’s possible to apply the Balearic exception and restrict purchases to residents alone,” says Alejandro López, Podemos spokesman in the Spanish parliament.

With neither Madrid nor the EC on board, it’s unlikely this idea will prosper.

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