Balearics foreign property ban is a breach of EU law

This is the conclusion of the report on the compatibility with European Union law of the limitation on the purchase of homes in the Balearics prepared for the Asociación Empresarial De Promotores Constructores De Baleares (Proinba).

Proinba warns that a regulatory measure that prohibits or limits the purchase of homes in the Balearics by non-residents “would restrict the two fundamental freedoms of the Treaty, such as the freedom of establishment and the free movement of capital”.

This report, prepared by the law firm Uría Menéndez, analyses the compatibility with European Union law of a hypothetical law prohibiting or restricting the purchase of homes in the Balearics by individuals or legal entities not resident in the islands or by persons with a period of residence in the community of less than five years.

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They warn that this measure “would be directly contrary” to the Treaty on the Functioning of the European Union, as well as the Charter of Fundamental Rights.

Furthermore, they point out that Spain’s Act of Accession to the EU does not contain any exception to the application of these rights, so the restrictions would not be covered by it.

The report also points out that the measure proposed by the government would be considered indirectly discriminatory by benefiting Spanish citizens and disadvantaging those from other EU member states. “This fact alone would be sufficient for the measure to be in breach of EU law,“ they add.

The High Court of Justice of the EU has confirmed on several occasions that restrictions on the sale and purchase of real estate imposed by Member States are, in themselves, restrictions on the freedom of establishment and the free movement of capital.