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By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
21st of January 2023
Spanish daily El Pais reports this week the Balearics regional government (hard left wing) is seeking a way to reduce the price of houses. This is a lofty goal, no doubt, to make housing more affordable for all. The problem is how they plan to achieve this.
To achieve this end, it is studying to ban house sales to all foreigners, in the wake of other countries adopting similar measures such as Canada and New Zealand.
Moreover, the ban would be extensive to all Spanish nationals who are not resident in the Balearic Islands! In other words, only Spanish nationals who have resided over 5 years in the Balearics could buy property if this law is approved.
The newspaper goes on to add that the negative impact of such a (draconian) measure -in the words of several reputed 'experts' which have been consulted- would be negligible.
Well, I don’t claim to be an expert, but I beg to disagree. I think it's akin to dropping a nuclear bomb on an already stagnant property market. But what do I know?
The whole economy of the Balearic Islands is heavily dependent on tourism and property ownership, of which a large part is in foreign hands. If the Balearics starts banning property sales to all foreigners (and even non-resident Spanish nationals!) it is only logical to assume that property prices will drop sharply, as in effect local politicians would have intervened the sales market to favour their electorate. Canada and New Zealand have their economies well diversified, they are not overreliant on tourism and property sales as the Balearics is.
And make no mistake, after this housing market bill they will go next after the tourism & hospitality industry. They will seek measures to restrict the amount of tourism to the Balearics using as an excuse to defend the environment and whatnot. The bottomline is that they want the islands only for themselves, period.
If this (daft) draft bill is approved, foreigners should consider (very) carefully on whether to buy property in the Balearics. Or be prepared to accept offers well below the real market value. I'm sure Germans wil love this idea.
This is not the first time the communist Balearics regional government floats such 'original' ideas. Last time they were planning on expropriating empty houses owned by foreigners. Fortunately, the central government stepped in to tone this down a notch, or two. Let’s hope it does it again.
"Common sense is the least common of the senses." – anonymous.
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