In this week’s Inside Spain we look at how the Catalan Parliament has voted in favour of preventing temporary residents who’ve lived in the country for under five years from buying homes.
Restrictions on foreign property ownership appear to be at the forefront of national and regional political agendas in Spain currently.
Most recently, we’ve had Pedro Sánchez’s ruling party push forward with the idea of a new 100 percent tax which would double the property price for non-residents of the EU.
FACT CHECK: Yes, Spain’s proposed 100% tax doubles property price
But there are those who want to take it one step further and restrict actual foreign residents in Spain from buying homes.
The plenary session of the Catalan Parliament on Thursday supported a motion by separatist party the Republican Left (ERC) calling on the government to limit the purchase of temporary residents to “curb speculation.”
ERC is the party which already tried to get the Spanish Congress to do this, but the proposal was rejected. Now they’re attempting to do the same but just in Catalonia, where 45 percent of 25 to 40-year-old residents are foreign born.
The legal text specifies that only foreigners who have “permanent residency” – those who have officially resided in Spain for five years – should be able to purchase a property, and that they would to prove this residency period first to the region’s housing department before being able to buy.
The premise for this is that there has to be limits for property purchases from overseas which aren’t for “habitual and permanent residence”.
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The initiative received the approval of the Catalan Socialists-Units parliamentary group and ERC, Comuns and CUP, while right-wing parties Junts, PP, Vox and Aliança Catalana rejected it.
A similar left-right political divide has been seen on a national level vis-à-vis the 100 percent property tax. At one point, far-right party Vox referred to such proposals as “xenophobic”.
The Catalan Parliament’s green-lighted document also stipulates that a supplementary tax could be introduced on the transfer of real estate to non-EU residents, in line with what Spain’s ruling Socialists have proposed, although it’s unclear if this would be exactly the same.
Furthermore, a “differentiated regime” could be established for legal entities from other EU states wishing to acquire a property for commercial use.
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The Catalan Parliament has also approved a restriction on foreign investment in real estate development if for commercial purposes.
Interestingly, what was rejected was a proposal to reduce the Property Transfer Tax (ITP) on the purchase of a first home for residents.
Crucially, even though the Catalan Parliament has voted in favour of this motion, it remains a declaration of intent with no immediate effect.
In other words, foreigners – regardless of their nationality or residency – can continue to buy properties in Catalonia as this is not a law that’s in force.
What the motion and vote does require is that Spain’s Prime Minister Pedro Sánchez and the Catalan leader, Socialist Salvador Illa, take action to create a “legal framework” to make these limits on foreign property ownership a reality.
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Whether this actually occurs will remain to be seen, subject as well to the possibility that such measures may contravene EU legislation on the free movement of capital from within and outside of the bloc.
INTERVIEW: ‘Spain’s 100% tax on foreign buyers will end up in EU courts’
What does seem to be clear is that hardly a week goes by in Spain currently without a new proposal from a political party or a region hard hit by the housing crisis – usually those with large foreign populations as well – suggesting foreigners should be limited from buying Spanish property.
As with every war of attrition, it may just be that one side caves in eventually, and that some legislation affecting foreign home ownership in Spain does pass.
People doubted the cancellation of the golden visa scheme – which gave Spanish residency to non-EU nationals who bought property worth €500,000 – would ever happen. But after a year of legal rigmarole, the residency scheme for wealthy foreigners did get scrapped.
