Spain Proposes Unprecedented Tax on Non-EU Real Estate Buyers to Combat Housing Crisis
Spain announced a significant new tax aimed at real estate purchased by nonresidents from outside the EU, specifically targeting countries like the UK. This tax could reach as high as 100%, part of a broader strategy proposed by Prime Minister Pedro Sánchez to address the country's escalating housing crisis. At a recent economic forum in Madrid, Sánchez highlighted the urgency of the situation, noting that housing prices across Europe have surged by 48% over the past decade, dramatically outpacing household incomes.
The proposed measures, unveiled on Monday, are designed to respond to growing frustration over soaring housing costs, which many citizens find increasingly unattainable. Sánchez warned that without action, society risks becoming sharply divided between wealthy landlords and struggling tenants.
Among the new initiatives, the government plans to increase the availability of social housing. Currently, only 25% of Spain's housing is classified as social housing—a stark contrast to nations like France and the Netherlands. To enhance rental affordability, incentives will also be provided to those who renovate and rent out vacant properties.
However, it was the announcement concerning a crackdown on foreign buyers from outside the EU that captured global attention. Spain has long been a favored location for overseas investors, particularly for holiday homes in popular areas such as Ibiza, Marbella, and Barcelona. In 2023 alone, approximately 27,000 houses and flats were acquired by non-EU residents, many of whom are seen as speculators rather than long-term occupants or families seeking residences.
Sánchez referred to the proposed tax as unprecedented in the history of Spain, leveraging this shift to combat the current housing shortage. While he did not provide specifics about implementing the tax or the timeline for parliamentary approval, analysts suggest the intention may be to create uncertainty among foreign investors, potentially deterring them from future purchases.
In addition to targeting external buyers, the government's new slate of measures also seeks to regulate tourist flats that contribute to the diminished rental supply, making life even more challenging for locals. Sánchez indicated that there will be increased scrutiny on these rentals and a rise in the taxes they incur, stating that it is unjust for owners of multiple short-term rental properties to pay less tax than traditional hotels.
Sánchez emphasized the pressing need for society to confront the growing imbalance between escalating housing prices and stagnant household incomes. He called for a collective response from public institutions, arguing it is vital to address the "serious problem" with widespread social and economic consequences. This multi-faceted approach could redefine Spain's real estate landscape and provide relief for a struggling population.
Related Sources: