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Spain plans to introduce a 100 percent property purchase tax for buyers from non-EU countries such as the United Kingdom in a bid to improve housing affordability by discouraging overseas purchases.
Prime Minister Pedro Sánchez announced a plan for a punitive property tax, which would apply to non-EU citizens who are not residents of the bloc, as part of a series of measures aimed at tackling the “severe” housing crisis.
Spain is one of many European countries facing growing public anger over the difficulty of finding affordable housing to buy or rent as property prices soar and new construction lags far behind demand.
“The West is facing a decisive challenge: not to become a society divided into two classes, rich landlords and poor tenants,” Sánchez said as he presented the set of 12 measures.
Spain has long been a popular destination for holiday home buyers and people looking to permanently relocate to a sunnier climate, which has helped property values rise steadily over many years.
The government’s proposals come as prices in places from Madrid to Mallorca have risen due to a new wave of well-off foreigners from the US, Mexico and Venezuela. They complement the British, who are the pillars of the property market on some parts of the south coast and are no longer EU citizens because Brexit.
Sánchez’s Socialist-led government said it would “restrict” property purchases by non-EU citizens who do not live in the bloc by ordering them to pay tax up to “100 percent of the property’s value”.
Property buyers in Spain are potentially subject to several taxes depending on whether they are buying a new build or an existing home.
Rates vary by region, but as a rough guide real estate agents say the total tax bill can currently be between 7 percent and 12 percent of a property’s value. The Spanish Ministry of Housing announced that the new measure will be introduced by changing the stamp or through a special tax.
The prime minister said non-EU residents were buying 27,000 houses a year in Spain, adding that these were “mostly for speculation”.
The government said its proposal would only be finalized “after careful study”. To become law, it would also need to be approved by the Spanish parliament, where Sánchez faces a constant battle to muster the votes needed to achieve a majority.
Antonio de la Fuente, managing director of real estate group Colliers, said the proposal was unlikely to ease “strains” on the property market, noting that 27,000 annual property purchases by non-EU residents compared with a total of 26 million homes in Spain. “That’s a drop in the bucket,” he said.
He expressed doubt that the measure would ever become law, but predicted that the “uncertainty and noise” created by the proposal would prompt some individual and institutional property investors to turn away from Spain and look elsewhere.
In the third quarter of 2024, non-Spaniards, including EU citizens, bought 24,700 properties in Spain, accounting for 15 percent of all property purchases in the country.
The largest group of non-Spanish buyers was the British, who accounted for 8.5 percent of all overseas business. Germans follow, then Moroccans, then Poles and Italians, according to data from the Spanish Association of Registrars.
Underscoring the continental scale of the housing problem, Sánchez said house prices in Europe had risen 48 percent in the past decade, almost double the increase in household incomes over the same period.
“We are facing a serious problem with enormous social and economic implications, which requires a decisive response from society as a whole with public institutions at the forefront.”
Other measures proposed by Sánchez include higher taxes on Airbnb-style rentals; transfer of 3,300 homes to a new public housing authority; renovation program of vacant apartments; and public guarantees for landlords who provided “affordable” rents.