Very soon you cant buy a vacation house in Mallorca! Its gonna be forbidden in some parts of Spain to buy vacation house, if you are Swedish or another nationality. Authorities on the Balearic Islands in Spain recently put forward a motion to forbid the purchase of homes by foreigners. While officials recognise this ban will conflict with the principle of free movement in Europe, they believe it necessary to combat the high price of property in Spain. There is also a belief that outside pressure can damage cultural significance. Limiting foreign investment in property will help avoid or at least minimise any such impact.
But is this ban of buy Spain houses right or fair and how might it affect you?
Forbid Spain houses ?
In this article, we discuss these bans for foreigners buying homes abroad. We will also take a look at the positive and negative impact of these restrictions.
Bans and Limitations for Foreigners Buying Property Abroad?
It’s not the first time something like this has happened. Canada banned the purchase of homes by foreign investors for two years to reduce the price of property. In fact, prices had risen by more than 20% in the year prior to this announcement. These high prices made the purchase of property near impossible for Canadians and especially the first time buyers.
This ban would still be a major milestone for foreign investment. You see, there are no laws against buying a home in Europe. Germany, Italy, France and the UK allow for the purchase of both residential and commercial property. It’s even possible to obtain residency in some countries such as Greece, Serbia and Portugal. However, some countries have placed limitations on the type of property. For example, foreigners can only purchase homes in Poland, Malta and Denmark with prior permission from the local authority.
This is why the proposed ban in Spain is controversial. Authorities took a lenient stance until now but recent reports suggest there may be limitations on the way for any foreigners wanting to buy a second home there.
Is it Fair to Ban Foreigners from Buying a Home?
There are bans on foreign property investment in many countries. For instance, many people know that foreigners are not permitted to buy land, homes or villas in Thailand. This same rule applies in most Southeast Asian countries with the exception of Malaysia. The main reason for these bans is to keep property prices down and enable more locals to afford a home. You will also find similar laws in South America and then there’s Europe and the UK.
Lawmakers in the United Kingdom are taking a stance against foreign ownership. The goal is to reduce real estate prices and prices in London suggest this move will be welcomed by most locals. Switzerland intends to curb foreign investments and Australia has restrictions in place already. There is also definitive proof these measures are working because property prices have remained relatively stable compared to elsewhere around the world.
And why do officials in Spain thinks this ban is needed?
The Proposed Ban on Foreigners Buying Property in Spain
Officials on the Balearic Islands are concerned about the rising price of property. Foreign investment increases the price of property and locals cannot afford these asking prices. The number of vacant buildings is also creating a series of ghost villages around the islands. This is because most of the foreigners who purchase these properties are not here to stay. They buy with the intention of using these properties as a holiday home or second home.
Let’s take a look at the potential impact of this ban:
Protect National Security
A ban on foreign buyers can help protect National security. Authorities will often have no access to the criminal history etc of foreigners. This can enable unsavoury characters to come live in Spain. They can also perhaps sidestep certain requirements or laws by which citizens need to abide.
Protect Agriculture land
Agricultural land is a huge factor for the development of the economy in Spain. Banning the purchase of homes in Spain might lead to similar restrictions on buying farmland. This move would likely help protect the agriculture economy.
Stabilise the Real Estate Market
Bans in other countries have shown promising results in terms of property prices. In other words, the property prices in such countries have not sky rocketed in the same way as countries which have no bans or limitations.
Red flag for those Wanting to Buy a Second Home in Spain
Buying a home in Spain was already somewhat complicated. While property agents can typically burden much of these complications, they will be powerless in the face of a new ban. Foreigners simply will not be able to buy a second home or home in Spain unless they live there permanently.
It Might Not Work!
There is no guarantee that a Spanish home ban will have a positive impact on property prices. This might leave the local economy vulnerable because foreigners bring a huge amount of money into the country. As a result, the proposed ban might not work and be seen as a lose-lose situation for both locals and foreigners.
The proposed ban to stop foreigners buying property in the Balearic Islands, will not affect those living there permanently. However, it will affect anyone buying a second home or holiday home. If the ban goes through, it may be implemented in the Balearic Islands only but there is reason to think these limitations will expand to the rest of Spain. Either way, the proposed ban would be a big move and likely stop foreigners from buying a second home in Spain.