Minister rules out absolute ban on foreign home buyers in Spain's Canaries

Canary Minister of Finance and Relations with the European Union Matilde Asián warned this week that the "absolute limitation" on the purchase of homes by foreigners - resident and/or non-resident - "is not authorised" under European law.

This comes after the nationalist party in power in the archipelago Coalición Canaria (CC) announced earlier this year that they intended to approach Brussels with a proposal to prevent non-resident foreigners from buying homes in the Canaries.

READ ALSO: Spain's Canaries ask EU to help them limit foreigners buying homes

The Atlantic islands off the coast of Western Sahara are struggling with one of the worst housing crises of all regions in Spain. The rate of property purchases by more affluent foreigners - roughly 1 in 4 of the total - has been partly blamed for spiralling rents and property prices.

The goal of Coalición Canaria is to use the Canary Islands’ status as an ultra-peripheric part of Europe to get the EU to make an exception for them even if limits on certain foreign buyers goes against the bloc’s principles of freedom of movement of capital and people.

But it’s unlikely to be smooth sailing for the party headed by Canary president Fernando Clavijo.

"Absolute restrictions, without justification, are not authorised under European law, and the Canary Islands government is studying every possibility," Asián stated during her speech before the Parliamentary Committee on European Affairs and Foreign Action.

Asián stressed that the acquisition of second homes "is a movement of capital" regulated by the Founding Treaty of the European Union, which stipulates that restrictive measures on this free movement "must be justified by some exception contained in the treaties."

She then pointed out that "certain restrictions" were maintained in the case of Bulgaria, Estonia, and Hungary's entry into the EU, and that territorial provisions relating to "very specific" areas were also negotiated in the EU ascension process of Denmark, Finland, and Malta.

In the case of limiting the acquisition of real estate, Asián said that this must be "protected by compelling requirements" of general interest and be based on two principles: "non-discrimination and proportionality."

"These exceptions for reasons of general interest must be perfectly justified," the minister said.

In her words, the Court of Justice of the European Union has established a "solid doctrine" establishing that "the acquisition of secondary residences in a certain geographical area can be limited as long as it serves certain purposes" such as guaranteeing the housing rights of a population in a territory and achieving an economic activity distinct from tourism.

Therefore, zonal restrictions on the acquisition of second homes may be possible in Canarias, but "always within these principles of general interest based on non-discrimination and proportionality to the intended goal."

The reason why Asián’s words are of particular importance currently is because limitations on property purchases by foreigners have been considered on several levels this year in Spain, including nationally.

Spain’s Prime Minister Pedro Sánchez has made international headlines in recent months as a result of proposing a 100 percent tax on Spanish property purchases by people who don’t reside in the EU, effectively doubling the price.

READ MORE: Who exactly would have to pay Spain's 100 percent property tax?

At first, this was crossed off as political grandstanding at a time when his ruling Socialists have come under increasing pressure to resolve the country’s deepening housing crisis, but then his party lodged a formal proposition in the Congress, suggesting that Sánchez actually means business.

Lawyers have already spoken up about the fact that such measures, if approved, will end up in EU courts.

INTERVIEW: 'Spain's 100% tax on foreign buyers will end up in EU courts'

There have even been calls to actually block foreign residents from buying property in Spain if they haven’t first lived in the country for five years, a suggestion made by Catalan party ERC which has so far been rejected by Madrid but is being carefully considered by the Catalan government.

Last May, Spain’s right-wing parties already rejected a proposal brought forward in the Congress and Senate to limit foreigners in the country’s two archipelagos from buying properties, with Vox labelling the move “xenophobic”.