Spain is considering a groundbreaking proposal to impose a tax of up to 100% on properties purchased by non-residents from countries outside the European Union, including the United Kingdom. Prime Minister Pedro Sánchez unveiled the plan, describing it as a necessary response to the country’s escalating housing crisis.
PM Sánchez: “The West faces a decisive challenge: avoiding the creation of a society split between wealthy landlords and struggling tenants."
Sánchez emphasised at an economic forum in Madrid that many properties acquired by non-EU buyers, totalling 27,000 in 2023, were not used as residences but as investments.
The measure aims to prioritise housing availability for residents. While Sánchez did not provide specific details or a timeline for parliamentary approval, his office characterised the proposal as a strategy to limit property acquisitions by non-resident, non-EU foreigners. Spanish law defines non-residents as individuals who spend fewer than 183 days annually in the country.
The proposed tax could equal the full value of a property, aligning with similar policies in countries like Denmark and Canada. However, the government has stressed that the measure will undergo careful analysis before finalisation.
Non-resident buyers account for a notable share of Spain’s property market. In 2023, foreigners purchased 87,000 properties—15% of the total 583,000 transactions—according to the Spanish property registry. This includes buyers from within the EU.
Housing affordability has sparked protests across Spain. Demonstrators decry over tourism and the strain on local housing markets. In areas like Tenerife, signs reading “tourists go home, locals come back” have become common.
Industry and Public Reactions
A veteran real estate agent in Valencia, Simon Creed, said the proposed tax has dominated discussions among property professionals. Currently, buyers in the region—both residents and non-residents—pay a 10% transfer tax, though rates vary by region. “A 100% purchase tax would deter buyers. This could shift the market in favour of EU citizens,” Creed noted, adding, “While the action is needed to increase housing supply, this proposal seems extreme.”
Antonio de la Fuente, managing director at Colliers International Spain, expressed scepticism about the measure’s effectiveness in addressing housing shortages. “The core issue is supply. We need more homes in cities like Madrid, Valencia, and Malaga to accommodate growing populations. This tax would be a drop in the ocean,” he said.
Prospective Buyers Weigh Options
For some foreign buyers, the proposal is a deal-breaker. Michele Hayes, from Manchester, had been house-hunting near Alicante but is now reconsidering. “We might buy before the tax takes effect, but future policies are unpredictable. Selling could become difficult if non-residents are restricted,” she said.
Others, like Martin Craven from London, focus on alternative markets like Cyprus. “This proposal makes Spain look risky. There’s no guarantee they won’t introduce retrospective taxes,” he remarked. Julian, a prospective buyer from Surrey, shared similar concerns. While he empathises with Spain’s housing challenges, such policies could deter those contributing to the local economy.
Housing Tax Proposal
The tax proposal is part of a broader housing strategy Sánchez unveiled. Other measures include tax incentives for landlords offering affordable housing, transferring over 3,000 properties to a public housing agency, and stricter regulations on short-term tourist rentals.
Sánchez also announced plans to abolish the “golden visa” program, which grants residency to individuals purchasing properties worth €500,000 (£428,000) or more.
“It’s unjust that owners of multiple short-term rental properties pay less tax than hotels,” Sánchez argued.
The government’s comprehensive approach addresses housing shortages and affordability while curbing speculative property investments.
Note: Media Outlest Linked Throughout The Article
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