Balearic Islands plan to ban foreigners from buying homes

Officials in Spain's Balearic Islands want to ban non-residents from buying property as rising prices in Mallorca, Menorca and Ibiza are pushing out locals and creating "ghost villages" with empty homes. Such a move could make it impossible for foreigners to purchase a vacation home in the archipelago. This follows a similar scheme in Canada, which has imposed a two-year ban on the purchase of real estate by non-residents, the exception being immigrants and legal residents.

Juan Pedro Yanez, vice president of the Balearic Islands

Juan Pedro Yanez, vice-president of the Balearic Islands, said that "we must follow Canada's example" and asked the Spanish government to pressure the European Union to allow the islands to impose a similar ban. Francina Armengol, president of the Balearic Islands, previously said: "Many Europeans and other citizens can afford real estate at prices that are unaffordable to citizens of these islands. "

Yanes recognized that a ban would be contrary to the European principle of free movement. However, there are precedents, such as in the Austrian Alps, where the EU has recognized areas of cultural significance or natural beauty that should be protected from "undue external pressure." Another precedent is the Åland Islands in Finland, where there are restrictions on the purchase of second homes. In Croatia, EU citizens must be residents for 10 years before they can buy farmland.

The Balearic Islands government also wants Madrid to rein in rising house prices by declaring the islands a "stressed zone," which is defined as a place where rent or mortgage costs exceed 30 percent of average local income.

The property prices on the islands held up even during the 2008 financial crisis and then the pandemic, with homes on Mallorca and Formentera among the most expensive in Spain. The village of Deia in western Mallorca has been a favorite spot for the British since poet Robert Graves set up home there in the late 1920s.

Real estate in Deia costs 6,091 euros per square meter, making it the second most expensive in Spain. Engel & real estate agency;

In addition, foreign real estate purchases in the Balearic Islands far exceed the rest of Spain. Foreign buyers accounted for 38.95% of all transactions in the Balearic Islands in 2022, while the national average is 12.61%, according to the national statistics office.

Of the 700 houses in Deia, 200 are empty, with 37% of all properties in the village owned by foreigners, including 23% British. Local authorities have doubled the tax on unoccupied homes, but this will have little effect on their wealthy owners. As locals are displaced and homes are left empty most of the year, bars and restaurants see a decrease in demand. Hotels and restaurateurs also complain that they find it difficult to attract staff from the mainland due to high rents. In Deia, the number of tourist apartments is double the number of rental accommodations.