The Balearic plan to restrict foreign property ownership has been denied by Brussels
Foreign Purchase on the Balearics
Not-so-wise government plans
The ambitious plans of certain political groups on the island, suffering from a slightly short memory regarding the benefits of foreign investment to the Balearic Island over the years, have been rightly laid to rest by the European Union. In this case, the answer to the question “can you have the cake and eat it” is a definite “no”. In other words, you cannot take the money and tell the people you are getting it off you don’t want them! Unfortunately, the mentioned powers in charge of the Balearic Islands forgot to ask themselves this when they seriously tried to stop the purchase of properties for sale in Mallorca and the other islands by foreigners and non-residents.
The inevitable answer they received from the European Union was “no, you can’t do this” and the completely plausible reason being that freezing the sale of Mallorca properties could only be done for reasons of national security and public interest. As neither is the case on the Balearics, Brussels effectively put an end to this overzealous ambition before certain elements of the Balearic coalition government involved in this mis-guided plan even had a chance to attempt to put it into force. They seriously thought that by restricting foreign investment this would resolve the current housing crisis on the islands. A case of finding a culprit to cover up one’s own mismanagement.
Mairead McGuinness, the Irish European Commissioner for Financial Services, Financial Stability and the Capital Markets Union, ensured very plainly that article 63 of the Treaty on the Functioning of the European Union (TFEU) forbids restrictions on the movement of capital related to the purchase of a Mallorca property for sale. The local government was furthermore advised by the UE to have a complete rethink and consider the fact that the general principle of the free movement of capital between the countries of the Union includes the rights of citizens to buy property, such as a vacation home or a second residence. The commissioner adds that this includes homes and counts for all members of the European Union, whether they are non-residents or not.
Locals have a say
Many locals in business, including real estate agents, have pointed out that successive governments had received substantial taxes from transactions with foreign property buyers and these taxes could have been invested in more public housing. This brings up the inevitable question where do these taxes go to? Needless to say that real estate agents are delighted with Brussels’ ruling but are worried that some damage may already have been done. Of course, the ever headline-hungry press was delighted to pick up the doomed plans and the usual image damage was done until news of the stop was put out, albeit with less eye-catching headlines! Therefore, some uncertain foreign buyers of a finca or villa for sale in Mallorca decided to pull out of their investment plans, worried of a possible ban still on the cards!
The Golden Visa Scheme
On the Balearics, property buyers who purchase a Mallorca property for sale at a value of 500,000+€, have the right to apply for the Golden Visa. Conditions for a successful application are:
- Sufficient funds and healthcare to cover their sojourns
- A clean criminal record
- No previous Schengen visa refusals
Spain launched its golden visa programme in 2013 offering the advantage of being able to gain family residency with an investment of €500,000 in a villa or luxury penthouse apartment for sale in Mallorca and the Balearics, this counts for kids up to the age of 18 years. The Spanish investor visa can be renewed every two years, then after five years it is possible to gain permanent residency and after ten years citizenship. It is not necessary to live in Spain to hold and renew the residency visa. The initial Spanish residency permit is issued for a period of two years, the investor can then extend for a further five years provided they still own their investment and meet the required criteria.
The golden visa is a bit like having an insurance policy as security against economic and political risk in an increasingly volatile world. Those who are financially able to buy a property for sale and thus obtain a golden visa, enjoy increasing travel mobility throughout European countries and get the opportunity to relocate to the country of their personal dreams, to enjoy a more favourable climate and lifestyle. They also obtain the right to live, work, study, and receive healthcare in the country they move to.