Proposal To Limit Real Estate Purchases: How Could This Affect Non-EU Buyers?

Recently, the President of the Spanish Government mentioned in a public speech the possibility of introducing measures to limit property purchases by non-EU buyers. However, nothing official has been announced yet, and the proposal remains vague and open to interpretation. For this reason, we believe it is important to offer clarity and reassurance to our clients.

What measures are being discussed?

The announcement did not include specific details, but it has sparked speculation about two potential scenarios:

1. Increased tax burden: This could involve raising existing taxes, such as the Transfer Tax (ITP) or the Canary Islands General Indirect Tax (IGIC), potentially doubling the current tax rates.
2. Tax equivalent to 100% of the property’s price: Such a measure would effectively act as a prohibition.

As of now, no details or confirmation regarding the scope or exact nature of these potential measures have been provided, making it difficult to conduct a thorough analysis of their impact.

Who could be affected?

In the specific case of the Canary Islands, our data indicates that slightly more than half of foreign buyers are non-residents. Among non-resident non-EU buyers, British nationals form the largest group, followed by Russians. We estimate that such a measure could impact around 2,000 properties annually, representing approximately 8% of the total properties sold in the archipelago.

It is worth noting that non-resident buyers often have greater purchasing power and tend to acquire properties in prime coastal areas, where prices are higher. For this reason, such a measure would be relatively ineffective in addressing the shortage of affordable housing and would generally have a limited impact on the market.

What about Norwegian buyers and other citizens of the European Economic Area (EEA)?

We want to reassure our Norwegian clients in particular. While Norway is not a member of the European Union, it is part of the European Economic Area (EEA), along with Iceland and Liechtenstein. This status ensures that Norwegian citizens enjoy the same rights as EU citizens when it comes to acquiring property in Spain.

Therefore, any measures targeting non-EU buyers should not affect Norwegians or other EEA citizens. These rules include the four freedoms (free movement of goods, capital, services, and people), as well as competition and state aid regulations and other areas related to the single market. These regulations also guarantee equal rights and obligations within the single market for citizens and businesses throughout the EEA.

Final Thoughts

We understand that the uncertainty generated by these announcements may cause concern among our international clients. At Cardenas Real Estate, we are committed to keeping you informed and helping you make decisions based on facts, not speculation.

For now, the best strategy is to wait for official details to be released before drawing any premature conclusions. If you have questions or would like more information, please don’t hesitate to contact us.