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Barcelona considers banning foreign investors and non-residents from housing market

barcelona looking at ways to ban foreign investors from housing market
Barcelona

Barcelona’s City Council is eyeing a ban on foreign investors and non-residents buying homes to tackle the housing crisis—but is it a real solution or just political posturing?

Barcelona City Council has discussed plans to restrict foreign investment funds and non-residents from purchasing homes in the city, unless the properties are intended for personal or family use. This initiative, spearheaded by the Republican Left of Catalonia (ERC) party and supported by other left-wing councillors including the Socialist Mayor Jaume Collboni and his municipal government, aims to tackle the city’s ongoing housing crisis by curbing external capital seen as driving up property prices. While proponents argue the move is necessary to protect locals’ access to affordable housing, critics question its practicality, effectiveness, and underlying assumptions.

The proposal: curbing foreign influence

The new proposal aims to block foreign investment funds from purchasing residential properties and restrict non-residents—whether EU or non-EU nationals—from buying homes unless they plan to live there. The idea follows recent moves by the Spanish government to consider banning non-EU nationals from buying property unless they are residents. Barcelona’s measures, however, go further, potentially targeting all non-residents regardless of nationality.

Supporters, including Councillor Eva Baró, claim that foreign investors are treating Barcelona’s housing market “like a Monopoly board,” prioritising profits over the needs of residents. They argue that foreign funds often buy up buildings, renovate them, and either resell them as luxury properties or turn them into seasonal rentals, further depleting the stock of affordable, long-term housing.

The numbers: are foreign buyers the real problem?

To assess these claims, let’s examine the data. In 2023, Barcelona recorded 8,195 home sales, with foreign buyers accounting for 1,836 purchases, or 22% of the market. Meanwhile, local buyers purchased 5,784 properties (71%), and companies—some of them foreign funds—bought 1,387 homes (17%).

While 22% is a significant market share, it’s worth noting that local and corporate purchases have both declined over the past decade, whereas foreign individual purchases have been the only growing segment. This raises questions: are foreign buyers driving up prices, or are they merely filling a gap left by declining local demand?

The housing crisis: supply and demand mismatch

Barcelona’s housing crisis is fundamentally rooted in a supply-demand imbalance. The city’s population is growing due to immigration, but its housing policies are reducing the availability of new homes. Rent controls, squatter protections, and a 30% social housing quota on new developments have deterred developers and reduced the incentive to build or renovate properties. At the same time, many properties sit idle because owners fear the lack of flexibility caused by these regulations.

Critics argue that foreign investment isn’t the problem—it’s a symptom of a market starved of supply. Without the influx of foreign capital, they contend, investment in Barcelona’s housing stock would decline further. For instance, some foreign funds specialise in buying and renovating properties to rent out at market rates, addressing a critical need for rental housing. If these funds are banned, where will the investment come from? The city’s own budget is insufficient, and local private capital is unlikely to fill the gap.

Practical challenges and unanswered questions

The proposal raises significant practical and legal questions. For instance:

  • Who qualifies as a non-resident? What if a buyer spends half their time in Barcelona for work but isn’t a full-time resident? Will they be allowed to buy?
  • Enforcement issues: How will authorities verify whether a non-resident buyer intends to live in the property or use it for family purposes? Could buyers simply claim they plan to make it their main home in the future?
  • Legal hurdles: Under Spanish and EU law, discriminating against non-residents could face significant legal challenges. The city council has yet to explain how the policy would comply with these frameworks.

The downside of cutting off foreign capital

While the initiative may reduce demand from foreign investors, it would also have unintended consequences. A significant reduction in foreign investment would likely reduce funding for renovating Barcelona’s ageing housing stock, further limiting supply. With the city already struggling to meet housing demand, this could exacerbate the crisis rather than alleviate it.

For example, while some funds focus on luxury redevelopments, others invest in rental properties, helping to address the city’s severe shortage of affordable rentals. Banning foreign funds outright risks throwing the baby out with the bathwater, leaving a vacuum that local investors are unlikely to fill.

A political move rather than a serious policy?

Critics also argue that the proposal is more political posturing than a viable solution. The council has not provided any data to support the claim that foreign buyers are the primary driver of rising housing costs. Nor have they offered details on how the ban would be implemented or how its effectiveness would be measured.

Moreover, the council lacks the legal authority to enforce such a ban. Under Spanish and EU law, restrictions on property purchases by non-residents are unlikely to hold up in court. This raises the question: is this initiative a genuine attempt to solve the housing crisis, or a populist move aimed at placating voters?

A complex problem requires nuanced solutions

Barcelona’s housing crisis is a multi-faceted problem requiring targeted, data-driven solutions. Banning foreign funds and non-residents may sound appealing on paper, but it risks undermining much-needed investment without addressing the root causes of the crisis: restrictive housing policies, insufficient new construction, and a growing population.

Rather than scapegoating foreign buyers, the city would do well to focus on creating a regulatory environment that encourages investment in affordable housing, incentivises developers to build, and ensures that long-term residents have access to the homes they need. Without these measures, the housing crisis is unlikely to improve—regardless of who is allowed to buy property.