Spain plans to introduce a tax as high as 100% on real estate purchases by non-residents from non-EU countries, including the UK, in an effort to address the nation’s housing crisis.
This initiative is part of a broader package of reforms announced by Spanish Prime Minister Pedro Sánchez on Monday, aimed at easing escalating frustrations over the unaffordable housing prices affecting many Spaniards.
Highlighting the widespread issue, Sánchez pointed out that housing prices in Europe have surged by 48% over the last ten years, significantly outstripping the rise in household incomes.
“The West faces a decisive challenge: to not become a society divided into two classes, the rich landlords and poor tenants,” he told an economic forum in Madrid.
Included in the proposed reforms are plans to increase the social housing stock, encourage the renovation and rental of vacant properties at reasonable rates, and impose stricter controls on short-term rentals.
In stark contrast to other European countries, only 2.5% of Spain’s housing is designated as social housing, a figure significantly lower than that of France or the Netherlands, according to Sánchez.
However, the proposal that has drawn international attention is the crackdown on property purchases by non-EU foreigners.
Spain, a favored destination for non-EU residents seeking holiday homes from the UK, US, and Morocco, sees significant property investments in areas like Ibiza, Marbella, and Barcelona.
Sánchez called the up to 100% tax rate “unprecedented” in Spain, noting that in 2023 alone, non-EU residents acquired approximately 27,000 residential units primarily for investment rather than habitation.
Sánchez did not provide specific details on the implementation of this tax or its timeline for being presented to parliament for approval.
Despite the government’s historical difficulties in passing legislation, one analyst suggested to the Financial Times that the objective might be to dissuade foreign investment by creating “uncertainty and noise” around a policy that may have little chance of enactment.
The new policies also target tourist apartments, often accused of diminishing the available rental stock and driving up local housing costs.
Sánchez stated that tighter regulations and increased taxes on these tourist properties are necessary. “It is unfair for those who own three, four, five apartments for short-term rental to pay less tax than hotels,” Sánchez said.
