VALENCIA – Political party Compromís wants to restrict the sale of Spanish homes to foreigners. To this end, the party has submitted an amendment to the Housing Act to the Senate.
It states that the sale of homes to foreigners must be prohibited for three years, with a few exceptions. This measure is similar to what happened in Canada.
Moreover, Valencia is not the only autonomous community in Spain to talk about restricting property sales to foreigners. It has also been proposed in the Balearic Islands to limit the sale of homes to non-residents. Furthermore, local politicians from Podemos in the Canary Islands also came up with a similar proposal.
Compromís Valencia says that this proposal is intended to prevent speculation. Therefore, the party calls for a 36-month moratorium from the entry into force of the Housing Act on the sale of real estate to non-Spanish foreigners from one year before the transaction.
There are, however, some exceptions to this rule. Foreigners with a work permit in Spain of at least three years before the sale, exiles or refugees and citizens with a valid temporary residence permit of at least five months before the sale are exempt from this ban. However, this is subject to the condition that they have not bought another home. Institutions that focus on the social use of real estate are also exempt.
Control of ‘vulture funds’, speculation and tourist housing
With this measure, Compromís hopes to strengthen the control on ‘vulture funds’, speculation and tourist apartments. The Housing Act was passed in Congress on April 27 and is currently in the amendment phase in the Senate. It is not yet known whether the Compromís Amendment will be adopted.
In Spain, the term ‘vulture funds’ is used specifically for funds that often buy bank loans from people who can no longer pay their mortgages. They then take ownership of the property. Then they try to sell these houses for a profit. In some cases this can lead to problems for tenants or homeowners who are evicted.
Sales ban against EU rules
The chance that such a ban will come about is small. Earlier, the central government in Madrid warned the Balearic authorities that such a ban would go against European regulations. This was subsequently confirmed by the EU itself. Indeed, Article 63 of the Treaty on the Functioning of the European Union strictly prohibits restrictions on the movement of capital related to the acquisition of real estate. This restriction can only be imposed for reasons of public policy, public security or “overriding reasons of public interest recognised in the case law of the Court of Justice of the European Union”.
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