Canary Islands home purchase plan may breach EU law

What exactly is planned?

The draft from the government of Fernando Clavijo, President of the Canary Islands, targets natural persons with at least ten uninterrupted years of residence in the archipelago. Where residence has been interrupted, 15 years would have to be proven. Proof would be provided by a certificado del padrón municipal, a municipal registration certificate issued by the relevant Ayuntamiento (local council).

The purchase limit is set at a maximum of two residential properties per person, generally in different municipalities. Anyone who already owns at least two homes when the measure comes into force would not be allowed to buy another. Sales made in breach of the requirements would be void.

Legal persons (companies, investment vehicles) would only be allowed to buy if their corporate purpose is the sale or rental of property to natural persons. This is not a complete exclusion. The proposed EU changes would also allow time-limited rules for individual islands, municipalities or larger areas, provided the housing shortage justifies them.

What would change for foreign residents?

According to the published text, the draft does not expressly link eligibility to nationality, but to length of residence. An EU citizen with ten uninterrupted years of residence in the Canary Islands could therefore be treated differently from a newcomer. However, there is no final rule yet.

Non-residents and second-home buyers could be excluded from purchasing, or restricted for a period. This particularly affects people without registered periods of residence in the Canary Islands. Specific exemptions, transitional periods and application procedures have not yet been defined.

Nothing changes for tourist stays at present. The proposal concerns residential property, not entry or holiday stays. Existing owners are not affected by any expropriation; the draft mainly describes future purchases.

Why could the plan fail under EU law?

Article 63 of the Treaty on the Functioning of the European Union (TFEU) generally prohibits restrictions on the movement of capital between member states. According to the interpretation of the European Court of Justice (ECJ), the purchase and sale of property falls within this economic freedom.

The Canary Islands rely on Article 349 TFEU, which takes account of the special conditions of the outermost regions. The government also demands respect for the general interest, non-discrimination and proportionality. An updated legal opinion identifies restrictions on second homes, holiday rentals and tax measures as possible approaches.

The principle of proportionality requires proof that no less restrictive alternatives exist. The European Commission or the ECJ could classify state subsidies, the expansion of social housing or tax incentives as milder measures.

Which precedent is particularly relevant for the Canary Islands?

The Flemish Region of Belgium adopted strict rules in 2009 that made the purchase of land and homes in certain municipalities conditional on proof of a “sufficient connection” to the place concerned. On 8 May 2013, in joined cases C-197/11 and C-203/11, the ECJ ruled that the Flemish restrictions infringed fundamental EU freedoms.

The Court accepted that providing housing for low-income and local population groups was a legitimate objective. However, it questioned whether the requirement of a strong, long-standing connection to the municipality was a proportionate means of achieving it.

The judges argued that the measure could exclude buyers who urgently need housing for professional or family reasons, while allowing speculative purchases by wealthy people with local connections.

What applies to buyers and owners today?

The Spanish Council of Ministers has not yet approved the Canary Islands proposal. According to the available report, the draft was not included in the most recent housing decrees. No exact voting or commencement date has been published.

This means that neither the ten-year rule nor the two-home limit, the voiding of sales or a general purchase ban currently applies. Specific prices, fees, forms and application deadlines are also still unknown.

The autonomous region is responsible for housing and spatial planning policy, but it can neither change EU law nor impose a restriction on cross-border property purchases on its own. The Spanish state would have to pass the necessary legislation.

What happens next?

In parallel, the Canary Islands government is pursuing measures to expand supply: Decreto-ley 3/2025 is intended to speed up building permits and allow certain changes of use of tourist or tertiary land, provided that subsidised or affordable housing is created.

No specific total costs or financing plans are given for the mere proposal. The Canary Islands do not participate directly in the EU Council in the EU legislative process. The current position remains: a political and legal initiative, but no home purchase ban in force.