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Andorra puts a brake on the purchase of houses by foreigners

Andorra has decided to give a definitive "no" to foreigners who want to buy houses in its small territory. The government of the Pyrenean country is taking strong measures to address the growing problem of real estate speculation and high rental prices. In order to protect its citizens, a moratorium on the purchase of housing by foreigners has been announced. This measure, approved by the General Council of the Principality, temporarily suspends foreign investment authorizations in real estate, with a minimum duration of three months.

Apart from the moratorium, a tax on foreign investment in real estate is currently being developed, which could reach 10% and would be applied once a law has been designed in this regard. At the same time, another tax is being worked on that will be levied on home sales “before a certain period”, which could be 10 years, but it is still under negotiation.

As the Government explained in a statement, the main objective of this strategy is to combat the rise in prices in the real estate market and guarantee more equitable access to housing. It is important to mention that, during the coronavirus pandemic, Andorra decided to freeze the price of rentals, a measure that is currently being maintained and is expected to be thawed gradually. However, this decision has not had the desired impact, as it has caused a reduction in the supply of rentals and, therefore, an increase in prices.

The money raised through these taxes is planned to be used for the creation of a public rental housing park, as well as for the creation of infrastructure and economic diversification programs. The Government of Andorra recognizes that construction is one of the most developed activities in the country and seeks to promote other sectors to ensure sustainable growth.

With the ban on foreigners, Andorra joins the list of countries that have banned the purchase of housing for non-residents for the same reason: Canada did it earlier this year and New Zealand in 2018. Other countries, such as Denmark, Malta or Switzerland, limit the access of foreign public to the purchase of properties on their territory.

In Spain, last year 13.75% of housing purchases were made by citizens of other countries, thus reaching the maximum level of the historical series, according to data from Registrars of Spain. Currently, only the Balearic Islands has come out with the intention of proposing this measure given the exorbitant prices of their apartments, however, there were not the significant advances that have been made so far.