Brexit and purchase of rustic properties
The Balearic Islands are considered to be areas of interest for National Defence, in accordance with Law 8/1975, of 12 March, on areas of interest for National Defence, and Regulation 678/1978, which develops this law. As a consequence of these regulations, the acquisition of rustic properties by non European Union or non European Economic Area nationals in the Balearic Islands is subject to prior military authorization.
As is well known, the transition period of the “Brexit”, i.e. the exit of the United Kingdom from the European Union (hereinafter referred to as “EU”), ended on 1 January 2021, when the United Kingdom also ceased to be part of the European Economic Area (hereinafter referred to as “EEA”). As a result, British citizens willing to acquire rustic properties in the Balearic Islands are, as of 1-1-2021, subject to obtaining such prior permission.
The volume of acquisitions of rustic properties by non-EU and non-EEA citizens has been very low in recent years in comparison with the acquisitions by British citizens. For this reason, at Bufete Foz & Asociados we considered that, after so many years of purchase of rustic properties by British citizens, it is convenient to keep in mind that, as from 1-1-2021, British citizens will be excluded from the free acquisition of rustic properties regime that they have been enjoying. Therefore, we would like to inform that the situations and circumstances for which such military permission is required are the following:
In terms of the property to be acquired:
– Rustic properties, whatever their surface area or use is. It should be clarified that although article 37 of the Regulation refers to the acquisition of “ownership of rustic or urban properties”, article 35 of the same regulation establishes the exception of “current urban areas of non-border towns or their current urbanised or expansion areas”, also establishing rules regarding future areas of the same type and, therefore in fact the requirement for military permission is actually restricted only to rustic properties.
With regards to the acquirer:
- Nationals of non-EU or non-EEA countries, irrespective of their percentage share in the acquisition of the property.
- Foreign trading companies, or any other foreign legal entity, whose ownership belongs to non-EU or non-EEA nationals or legal entities.
- Spanish companies whose share capital belongs to non-EU or EEA foreign individuals or legal entities.
With respect to the transactions, Article 37 of the Regulation rules:
- The acquisition, whatever the title of ownership, by foreign individuals or legal entities, of property on rustic or urban land, with or without constructions, or acquisition of construction works of any kind.
- The constitution, transfer and modification of mortgages, encumbrances, easements, liens and other rights over real estate property, in favor of foreign persons.
- The constructions or buildings of any kind, as well as the acquisition of rights over authorizations granted and not executed, when the applicants are foreigners.
In summary, the acquisition by British nationals of property classified as rustic property, either directly or indirectly through a legal person, under the aforesaid conditions, requires the prior permission by the military authority.
The obtaining of such permission entails the preparation and presentation of legal and technical documentation regarding the property to be acquired.
At Bufete Foz & Asociados we have been obtaining such military permissions since 1986, we hold cooperation agreements with the appropriate technicians and we can provide assistance through multilingual and qualified staff to advise our clients on these matters.
This document has been written in January 2021 by our expert Dr. Carles Foz Moreno, and its content is only a brief and informative report on the matter in question, without constituting in any way legal advice on the matter. If you would like more specific information, please contact our qualified professionals at Info@bufetefoz.com
