The Canary Islands Executive (CC-PP) has submitted a proposal for a royal decree-law to the Spanish Government to prohibit the purchase of a property on the islands by any person, whether Spanish or foreign, who cannot prove ten years‘ registration on the local council’s register (or 15 years, if the registration has been intermittent).
This legislative proposal, to which EFE has had access, also stipulates that an individual may only purchase two properties in the Canary Islands, provided they are in different municipalities, whilst stipulating that legal entities (companies or investment firms) may only acquire properties on the islands if their corporate purpose is to sell or let them to individuals.
Fernando Clavijo’s government has submitted this draft ‚Law to guarantee access to housing for residents of the Canary Islands‘ as part of the conditions agreed by Coalición Canaria with the PSOE in exchange for its support for the first of the ‚Maricarmen‘ decrees, the one that has placed a cap on evictions of vulnerable people.
Buying property: Residence rule to comply with EU requirements
Throughout this parliamentary term, Clavijo has been in discussions with the European Commission in an attempt to secure authorisation for the Canary Islands to impose some sort of limit on the purchase of properties, given that statistics show that a third of those changing hands end up in the hands of foreign nationals and a significant proportion of these are used for holiday rentals.
However, his initial proposal clashed with the EU treaties, which guarantee the free movement of people and capital within the EU and prohibit discrimination on the grounds of nationality.
This legislative proposal seeks to overcome this obstacle in two ways: it is based not on nationality but on an objective fact, namely residence, as evidenced by registration on the municipal register; and it invokes Article 349 of the Treaty on the Functioning of the European Union, which guarantees the outermost regions the right to special treatment in the application of EU rules.
The explanatory memorandum explains it as follows: «The guaranteed access scheme established by this legislation is the most appropriate means of achieving the intended objectives, without giving rise to discrimination on the grounds of nationality, since anyone residing on the islands will be eligible for this scheme whilst, in the meantime, being able to live there as a tenant or under any other form of temporary occupation of a dwelling.»
«Furthermore, the limit of a maximum of two homes is intended to prevent resident status from becoming an unjustified advantage in relation to the objective of ensuring that these people can access decent and suitable housing; once that figure is exceeded, the guarantee ceases to apply,» it adds.
Gentrification: Government justifies measures to protect scarce housing stock
Why is the Canary Islands Government proposing these measures? Clavijo’s administration points out that the Canary Islands, due to their very nature as an archipelago, have a «small land area» and «vulnerable biodiversity», both of which «limit the use of the islands‘ space», thereby affecting access to housing.
At the same time, it warns, the islands are suffering from «the phenomenon of gentrification caused by the purchase of properties for purposes other than use as a main residence by individuals and companies based elsewhere, which is displacing those who actually live on the islands and making it very difficult, or even impossible, for them to buy the homes they need».
«This situation makes it necessary to adopt measures to ensure that residents have access to existing homes and to those yet to be built,» states the explanatory memorandum.
Land Register: Invalid property purchases would automatically be void
The proposed text restricting property purchases by non-residents is exhaustive and even includes enhanced safeguards. If it is passed, any property purchase in the Canary Islands by a person who cannot prove they have met the required length of residence «shall be null and void» and may not be registered in the Land Registry.
The same applies to companies: any purchase of a property by a legal entity shall be null and void if its corporate purpose does not include selling or letting it to individuals.
However, transfers ‚mortis causa‘, that is to say, inheritances, are exempt from these restrictions and prohibitions.
Local authorities should regulate holiday rental and tourism levies
The Canary Islands Executive is proposing a second legislative reform to the Council of Ministers, this time to the Framework Law on Local Government, to equip local councils with the tools they need to tackle the housing shortage in their areas.
Firstly, it proposes that local councils should be able to buy or rent properties within their area from non-EU nationals who have not resided in their municipality for at least two years (a category which includes, for example, citizens of the United Kingdom, the main source of tourists to the Canary Islands).
It also proposes that local councils be authorised to introduce tourism taxes, levied on «overnight stays, accommodation or stays in tourist accommodation by non-residents».
Finally, it suggests that local councils be authorised to ban holiday lettings in certain areas within their municipality.
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