Banning foreigners from buying houses? The European Commission says no

The European Commission has ruled that for a European Union (EU) Member State to restrict home buying to non-residents there must be "overriding reasons of general interest" recognised in the case law of the Court of Justice of the EU (CJEU). This was the view of the European Commissioner for Financial Services, Financial Stability and Capital Markets Union, Mairead McGuinness, in response to a parliamentary question from Rosa Estaràs, a Spanish member of the People's Party (PP) from the Balearic Islands.

Banning foreigners from buying property in Portugal and Spain

The question raised by Ms Estaràs was whether it would be possible for member states to limit the purchase of homes by non-residents, given the restrictions on the movement of capital between EU countries.

In the official response, Brussels recalls that Article 63 of the Treaty on the Functioning of the EU prohibits restrictions on capital movements related to the acquisition of real estate, "including housing", by non-resident citizens. It points out, however, that "such restrictions may be justified" on "grounds of public policy or public security, or on overriding reasons of general interest recognised in the case law of the CJEU, provided that they are not discriminatory and are proportionate to the aim pursued".

This means that the measures must be "appropriate to ensure, in a consistent and systematic manner, the attainment of the objective pursued" and not go "beyond what is necessary to attain it", it adds.

Balearic Islands government wants to ban foreigners from buying homes

The Majorcan MEP's question made no mention of this possibility, which has been debated for some months in the Balearic Islands. Recently, the secretary general of the Podemos party and current minister of Social Rights and Agenda 2030, Ione Belarra, promised to "put pressure" on the socialist part of the government of Spain so that "the islands can legislate the restriction on the purchase of houses to non-residents".

The vice-president of the Balearic Islands government, Juan Pedro Yllanes, has said on several occasions that the CJEU could accept a "Balearic exception" to allow this measure, taking into account the "special circumstances" existing in the Islands. Yllanes assures that the CJEU "does not totally rule out" this type of regulation and that the Balearic Islands "fulfil the requirements" for this restriction to be allowed.

Is Portugal also considering banning the sale of homes to foreigners?

In Portugal, the Left Bloc (BE) presented a bill at the beginning of the year to prohibit the sale of property to citizens or companies with headquarters or permanent residence abroad, as a way of fighting rising prices in the property market. This measure is not, for the time being, part of the Government's plans.

The real estate sector does not look favourably on such a measure either. Rafael Ascenso, CEO of Porta da Frente, said that such a measure "could implode the market".

"Throughout these 27 years that we are in the market we have never seen a populist measure that worked. But they continue to be taken. Our reality is not the same as Canada's, on the contrary, we have lived during these last few years much of the income we have had through foreign real estate", said the CEO.

The Autonomous Region of Madeira also refuses to move forward with the solution sought, for example, by the government of the Balearic Islands. "We don't want to do that. I think that at the moment real estate in the region is doing very well," said the President of the Regional Government, Miguel Albuquerque.