The Canary Islands are studying the idea of ​​limiting the sale of holiday homes to foreigners –

The Canary Islands are studying the idea of ​​limiting the sale of holiday homes to foreigners

Nueva Canarias (NC) has reignited the debate over “overcrowding” in the Canary Islands by saying there is a housing emergency in the archipelago due to excessive rents, a shortage of residential properties and the increase in privately rented vacation homes. They asked for an official study on the impact of real estate purchases by foreigners and alluded to the request of the Balearic Islands to limit the amount authorized.

Last week, they took advantage of the creation of the Demographic Challenge Committee in the Regional Parliament to formulate a request: to study the effects of the sale of real estate on the Islands to non-residents.

“We have a very serious residential problem that will only get worse,” NC spokesman Luis Campos said. 33.69% of homes sold in the third quarter of 2022 were purchased by foreigners, according to data from the College of Property Registrars, which is the highest proportion in all of Spain, ahead of the Balearic Islands (31.46 %) and more than double the state average (15.92%).

However, it has not always been so. In 2012, the first year to include this data, the figure provided by the College of Registrars is 22.11%. Since then, foreign investors have once again become interested in Canarian real estate as an important investment asset, particularly due to its low cost and location.

Landowners, vulture funds and foreign investors have found greater profitability in outlying, tourist-rich regions, such as the Canary Islands. A study by island scholars suggests that the fall in prices caused by the “economic shock” (the average cost of an apartment in 2013 was around 134,000 euros), and a large number of homes that remained unsold during the bursting of the real estate bubble, have resulted in a combination too attractive to be dismissed, especially by foreigners.

Official statistics do not specify the motivation of buyers, ie whether they are residents or not. There are relationships, such as associating the high percentages of acquisitions of mini-apartments (less than 40 square meters) in the archipelago with vacation rentals, or that the highest concentrations of second homes are located in municipalities with tourism consolidated residential, such as Yaiza (40.6%), Tías (29.4%), Pájara (16.6%), La Oliva (more than 20%) and San Bartolomé de Tirajana (16.4%).

However, Alejandro Armas, geographer of Tenerife at the University of Leipzig, points out that there should be no difference whether the houses are owned by foreigners or not. The key lies in their use.

“If it’s for rent, it shouldn’t have a negative effect. It might even improve the housing stock in that sense, because in Spain we tend to buy property. Another thing would be to buy an apartment in a popular area and renovate it with the intention of getting a very high rent from the lease. This can induce processes of social change and gentrification,” he says.

Research published in the American Journal of Sociology details that landlords enjoy greater benefits in poorer neighborhoods, where mortgage and tax burdens are lower, but rents are not. “The third scenario would be that these people buy the property to put on Airbnb or for their own seasonal use. In these cases, the offer for habitual residence would be reduced.

Nueva Canarias has not yet specified what they want, because in the same statement, in which they presented this case, they cited the examples of Mallorca, where the MES per Menorca party asks “to prevent second residents to eat the first residence”; Denmark, where the acquisition of second homes by foreigners is already restricted; Malta, which requires a minimum of five years of legal residence before you can buy a second home.