The Balearic Government's Intention to
Limit the Purchase of Real Estate to Non-Residents

Over the last few months, we have seen a continuous stream of statements from members of the Balearic Government about their intention to restrict the purchase of property by non-residents of the Balearic Islands.

Certainly, most of these statements have tried to avoid mentioning the word "foreigner", referring only to "non-residents", to avoid communicating a discriminatory or xenophobic message, but there is no doubt that what is intended is to prohibit the purchase of property by foreigners. Article 19 of the Spanish Constitution states the principle that all Spanish citizens have the right to freely choose their residence; and Article 33 establishes the right to private property, so it is obvious that the Government's initiative is aimed at preventing foreign citizens from buying property. Defending the contrary would be the same as affirming that the representatives of the Balearic Government ignore the content of the Constitution.

Limiting the purchase of property to non-resident citizens of the Balearic Islands is not legal

Many clients and friends have asked me to what extent this measure is possible, which is why I would like to briefly explain the reasons why this initiative cannot succeed. And it is not just a humble lawyer and all those fellow jurists who have long been warning of the unfeasibility and political opportunism of such a proposal, but recently the Secretary of State for Relations with the Courts (under the central government in Madrid), in response to questions from Antonia Jover, a member of the Podemos political party (together with "Mes per Mallorca", the main promoter of this initiative), has stated that limiting the purchase of property to non-residents of the Balearic Islands is not legal.

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The most surprising aspect of this project is that all members of the working group that was set up for this purpose in early December 2022, know or at least should know that the substance of the proposal is simply illegal.

The Presidency, Housing and Finance Departments, the Autonomous Community's Legal Department, and the University of the Balearic Islands all participate in this working group. Thus, significant personal resources and time are being devoted to this "project", resources that are paid for by all the citizens of these islands.

Given that, as we have explained, the measure is aimed at foreign citizens who wish to buy property in the Balearic Islands, it will be necessary to study whether the measure is legal, both for EU citizens and for non-EU citizens. And in both cases, the answer is the same, although with a different legal basis.

Freedom of residence and establishment is a fundamental right both in the European Union and in international treaties

It is not possible to restrict the purchase and sale of real estate to EU citizens because the freedom of movement, residence and establishment of European citizens is included in various international treaties ratified by Spain, such as the Schengen Agreement of 1990, the Maastricht Agreement of 1992 and the Lisbon Agreement of 2009. Likewise, Article 21.2 of the European Union Charter of Fundamental Rights prohibits any discrimination on grounds of nationality within the scope of application of the Treaties.

Spain signed these treaties without including any protocol of exception and is therefore obliged to fully comply with their content. Only a modification of these treaties, subject to the unanimous approval of all the signatory states, would open the door to the Govern's initiative to be viable. It does not seem that, in view of the investment that many EU citizens have made in Mallorca for years, that their respective countries of origin would approve such a modification, which would imply that their nationals could only sell their properties to other citizens that are resident in the Balearic Islands, which would undoubtedly mean a limitation of their rights.

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On the other hand, non-EU foreigners have the right to choose their residence without any limitations other than those generally established by treaties and laws, as provided for in Article 5 of Organic Law 4/2000 on the rights and freedoms of foreigners in Spain.

The Autonomous Community of the Balearic Islands does not have jurisdiction over these matters

Furthermore, there is another strong argument that makes it impossible for the autonomous community of the Balearic Islands to adopt such a measure, namely that it does not have the authority to approve it. And this is so, while the Spanish Constitution reserves to the State the powers in matters of foreigners (Article 149.1. 2º) and international relations (Article 149.1. 3º), so, in addition to the fact that such a regulatory change is not possible for the above reasons, the community has no competence in this matter.

I am afraid that the members of the Govern are fully aware of these circumstances, but, in view of the facts, it matters little or nothing to them. Nor does it affect them that, as we have already mentioned, the Government rejects this initiative and warns that any restriction "for reasons of public order or public security must be necessary, proportionate and non-discriminatory" and reminds them that Article 63 of the Treaty on the Functioning of the European Union prohibits all restrictions on the movement of capital between Member States and between Member States and third countries, and clarifies that this freedom of movement of capital protects the right of European citizens to acquire second homes in another State of the Union.

Regarding the examples of Malta or the Aland Islands, which have been cited as a precedent and justification for such a measure, the central government clarifies that "the limitations on the acquisition of real estate by European citizens cited in the question were included in the Primary Law of the European Union. This was the case in Denmark (Protocol 32 of the TEU), Malta (Protocol 6 of the Act of Accession), Finland/Aland Islands (Protocol 2 of the Act of Accession) and Croatia (Annex V of the Act of Accession)", limitations that the Kingdom of Spain did not negotiate.

Having said this, I would like to convey a message of confidence to all those who, for any reason, have been negatively affected by the Government´s initiative. I understand that the initiative has no legal basis, and I fear that it is nothing more than another electoral measure just three months before the elections.


Article by Carlos de la Mata

Lawyer at De la Mata Abogados

De la Mata Abogados is an international law firm based in Mallorca with extensive experience, among other areas, in civil and commercial law, as well as in real estate. Its advice includes everything related to the acquisition, development, construction and sale of real estate.

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