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The Balearic Parliament is scheduled to debate a proposal on Tuesday, February 24th, that could restrict property purchases on Mallorca and other islands to individuals who have been registered residents for at least three years. The measure, put forward by the regional party Més per Mallorca, aims to address a surge in housing costs that is displacing long-term residents in popular areas.
According to a draft of the legislation, property prices have risen approximately 30 percent since the start of the pandemic, even as rental costs have increased by nearly 40 percent. This has created significant affordability challenges for locals in towns like Santa Catalina and La Llonja, according to proponents of the new rule.
The proposed regulation would apply to municipalities experiencing housing shortages, limiting purchases to those with a documented residency of three years or more on the Balearic Islands. However, the initiative faces considerable opposition, with critics raising concerns about its legality under European Union law.
Legal experts suggest the restrictions on non-residents purchasing property could violate EU principles of free capital movement. Brussels has already expressed skepticism, and the likelihood of a nationwide implementation is considered low. Challenges in regional courts are anticipated, potentially leading to lengthy legal battles and ultimately invalidating the rule.
Beyond the legal challenges, practical implementation issues remain unresolved. Defining what constitutes an “acute housing shortage” and determining who will make that designation are key questions. Verification of residency status and the handling of legal structures, such as shell corporations, also present difficulties.
Opponents of the proposed restrictions argue that the debate overlooks more effective solutions to the housing crisis. They advocate for increased investment in social housing, taxation of vacant properties, and stricter regulation of holiday rentals. Proposals include a transparent registry of property transactions, tax incentives for long-term leases, a municipal fund for land acquisition, and subsidized mortgages for residents.
The debate comes as the EU continues to scrutinize housing market policies across member states. While the Balearic Islands are not the only region grappling with rising property prices and limited affordability, the proposed three-year residency rule represents a particularly assertive attempt to address the issue through direct purchase restrictions.
