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FOCUS: Why Madrid’s regional elections are so important to Spanish politics

The leadership of Spain’s wealthiest region is at stake but the vote could also have national ramifications. Here's why the experts believe that “more than a just region is at stake" with Madrid's upcoming elections.

FOCUS: Why Madrid's regional elections are so important to Spanish politics
Four of the six candidates of Madrid's regional elections: PSOE's Ángel Gabilondo, PP's Isabel Díaz Ayuso, Unidas Podemos's Pablo Iglesias and Vox's Rocío Monasterio. Photos: AFP

The snap election in the Madrid region, which will take place on May 4th, was called last month by regional leader Isabel Díaz Ayuso, a rising star of the right-wing Popular Party (PP), after breaking up her ruling coalition with the centrist Ciudadanos.

Ever since, the battle for Madrid has been dominating Spanish headlines for weeks before the campaign formally opened on April 18th.

In a sign of the ballot’s importance, Pablo Iglesias, leader of far-left Podemos, stepped down as a deputy prime minister in Sanchez’s coalition government to run as the party’s candidate.

“More than a just region is at stake,” said University of Zaragoza political scientist Cristina Monge.

“It’s also the party leaders taking part, the issues and the media coverage all of which evokes a national election campaign.”

Ever since the poll was announced, Sanchez has joined a weekly rally in Madrid alongside Socialist candidate Angel Gabilondo, a dour former education minister.

With the Socialists unlikely to oust the PP from power, Sánchez has focused on warning voters against the “threat” posed by Vox, the far-right faction which propped up Ayuso’s previous government and looking to make further inroads next week.

Polls show the PP, which has run the region for over 25 years, winning most seats but falling short of an absolute majority, meaning it will likely fall back on the support of Vox to govern.

A man attends a far-right party VOX campaign meeting at the bullring in San Sebastian de los Reyes, near Madrid,  ahead of regional elections in Madrid. Photo: OSCAR DEL POZO/AFP

‘Freedom’ 

Pablo Simon, a political analyst at Madrid’s Carlos III University, said Sánchez’s involvement could be “a double-edged sword” in that it “doesn’t necessarily mobilise the left but definitely mobilises voters on the right” who fiercely oppose his leftist government.

And Ayuso has made criticism of Sánchez’s handling of the pandemic a focus of her campaign, prompting Gabilondo to remind her last week that he was actually the party’s candidate.

Adopting “freedom” as her slogan, she has consistently fought the Sanchez government’s instructions, instead imposing one of Spain’s loosest curfews and defying recommendations to shut bars and restaurants.

“Ayuso benefits from her strong opposition to the Spanish government over the coronavirus issue, which favours the PP” in this vote, said Antonio Barroso of Teneo consultants.

But Sánchez will have to pay the price for getting personally involved in the campaign, analysts warn.

If the PP gains further ground in Madrid, it will take advantage of that on the national political scene where it serves as Spain’s main opposition — and will “hold him responsible”, Simon said.

But Barroso said a victory for Ayuso after running such a hardline campaign could open an “internal fracture” within the PP which has become more centrist in recent months under current leader Pablo Casado.

Such a fracture “could favour Sánchez”, making him appear like “a moderate” to centrist voters, Barroso said.

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PROPERTY

Why Spain is unlikely to ever ban foreigners from buying property

After several regions around Spain have attempted to bring in limits on property purchases by foreigners, members of Spain's government coalition have even started floating the idea of an outright ban at a national level.

Why Spain is unlikely to ever ban foreigners from buying property

In recent years several regions around Spain have attempted to put limits on foreigners buying homes and clamped down on tourist rentals. These are mainly in areas traditionally popular with foreigners, and many have become places with highly inflationary property markets.

In 2022 Canary nationalist political party Nueva Canarias demanded the regional government address the large number of property purchases by non-residents in the archipelago, and even suggested a limit on the number of properties that can be bought by foreigners altogether in the popular holiday islands.

READ ALSO: Will Spain’s Canary Islands limit sale of properties to foreigners?

Property prices have surged across Spain in recent years, sparked in part by an influx of post-pandemic purchases by foreigners, as well as tourist accommodation geared towards wealthy remote workers and digital nomads pushing up rental prices and pricing out locals. Increasingly, landlords will buy properties with the aim of converting them into Airbnbs, thus removing them from the pool of available (and affordable) housing stock for locals.

This comes after Spain’s other archipelago, the Balearic Islands, also started this same debate in November 2022, with the regional Senate agreeing to discuss solutions.

In the two decades from 2000-2020, the islands’ population grew by 50 percent – rising from 823,000 to 1,223,000 inhabitants. Around a third (32.67 percent) of property purchases in the Balearics are made by foreigners, and of those 57.4 percent are residents, while the remaining 42.6 percent are non-residents.

National ban?

But it’s not just a regional issue. In 2024, the debate rumbles on in parts of Spain particularly affected by foreign home owners and members of the Spanish government are even proposing similar measures at a national level. Though, it should be said, no policy has been decided on yet, and any move such as a ban (in whatever form, on whatever type of property) or even a limit would likely face fierce opposition from the main opposition parties, notably the centre-right Partido Popular (PP).

Sumar, the far-left junior coalition partner in the Spanish government, has even gone as far as proposing a three year ban on the purchase of housing by investment funds and non-residents in Spain.

This was recently outlined in a (for now) non-legislative proposal that was presented to the Spanish Congress’ Housing Commission. It was roundly rejected with the vote of, among others, its coalition partner in government, the Socialists (PSOE). That’s not to say the PSOE is totally against the idea, however.

Socialist Minister for Housing Isabel María Pérez said of the plans: “We agree on the philosophy of the proposal, but with nuances,” she said. “We have submitted an amendment but we think it will not be accepted, so we will not be able to support this bill,” she added.

So, from that we can take that the junior partner in the Spanish government wants to ban non-residents and investment funds from buying property in Spain, and the senior partner (Prime Minister Pedro Sánchez’s party, no less) supports the principle but not the practicalities.

READ ALSO: Spain’s new housing minister vows to protect second homeowners

The argument against

Clearly, non-resident foreigners buying up property in Spain, particularly in its space starved archipelagos, contributes to price inflation, saturates the market, and plays a role in pricing locals out of their own neighbourhoods.

However, it’s not that simple. Clearly, there is a difference between a non-resident foreigner buying a holiday home (perhaps to rent out as tourist accommodation for half the year) and a resident foreigner buying property to live in.

READ ALSO: How important are foreign second homeowners to Spain?

This difference has, for now, been reflected in proposed limits at both the regional and national level, rather than outright bans.

However, foreign home owners in Spain also make a huge contribution to the Spanish economy. In 2022 foreigners with a second home in Spain contributed €6.35 billion to Spanish GDP and generated more than 105,000 jobs in the tourism sector, according to the study “The economic impact of residential tourism in Spain” done for the Spanish Association of Developers and Builders (APCE) by PricewaterhouseCoopers (PwC).

The financial contribution made by these second-home owners in Spain is clearly significant. In fact, experts point out that the money brought into the Spanish coffers by foreign homeowners even outstrips some major industries.

“The contribution of residential tourism to GDP is triple that of the textile industry, double that of the timber industry and the same as the manufacture of pharmaceutical products in Spain,” Anna Merino, director of the Economics team at PwC, said when presenting the study. Every euro spent by ‘residential tourists’ adds €2.34 to Spanish GDP. On top of this direct contribution to the Spanish economy, the surrounding economic activity associated with the spending generated 105,600 full-time jobs in 2022.

So, there’s clearly an economic argument against banning foreign property purchases completely.

In the case of the Balearic Islands specifically, the proposals have met some opposition. The Balearics, which generates 35 percent of its GDP from tourism, according to figures from Caixa Bank, has long been a holiday or second-home hub for wealthy foreigners.

On this point, right-wing Popular Party member Sebastià Sagreras suggested in the regional parliament back in 2022 that conflating the foreign-buyer property market with local shortages is unhelpful, adding that the properties bought by foreigners, often worth more than a million euros, “do not compete” with those that cost €200,000 or €250,000 and are largely bought or rented by national residents.

Is it even legally possible?

Denmark, Malta and the Aland Islands in Finland all have restrictions on how non-resident foreigners can buy properties in their territories. However, they introduced these before entering the EU and these limits were factored in and accepted by Brussels. For Spain to do this, it would be much more difficult.

For local authorities in both the Balearic and the Canary Islands it could prove difficult to go against the EU’s legal principles of the free movement of people and capital, experts say.

This means that other potential solutions may be needed. Though there doesn’t seem to be a national level ban on foreigners from buying properties in Spain anytime soon, several regions have been attempting to do it for a couple of years, at least for non-residents, and even the national government is beginning to try and do something about it.

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