Spain Proposes 100% Tax on Non-EU Property Buyers to Address Housing Crisis
Spain’s Prime Minister Pedro Sánchez has unveiled a bold plan to impose a tax of up to 100% on properties purchased by non-residents from outside the European Union, including the UK. The measure, announced on Monday, aims to combat the nation’s growing housing crisis and prioritize affordable housing for residents.
Speaking at an economic forum in Madrid, Sánchez described the proposal as “unprecedented” and necessary to prevent Spain from becoming a society divided into “rich landlords and poor tenants.”
Housing Crisis and Foreign Buyers
In 2023, non-EU buyers purchased 27,000 properties in Spain, Sánchez noted, adding that many of these purchases were made for profit rather than residency. He argued that this practice exacerbates the housing shortage and contributes to unaffordable prices.
“This is something we cannot allow in the current context of scarcity,” Sánchez said, emphasizing that the move is designed to ensure more homes are available to Spanish residents.
Non-residents are defined in Spain as those who live in the country for fewer than 183 days a year. Currently, they pay 6-10% in property taxes depending on the region and the type of property. The new proposal would dramatically increase this tax burden, aligning Spain with countries like Denmark and Canada, which have introduced similar measures.
The Spanish government has not yet provided details on the implementation timeline or the specific mechanics of the tax. Sánchez’s administration has pledged to finalize the plan “after careful study” and submit it to parliament, where legislative passage could face challenges.
Mixed Reactions from Prospective Buyers
The proposal has already caused concern among prospective foreign buyers, particularly in the UK. Michele Hayes, a 59-year-old from Manchester, had been considering purchasing a retirement home near Alicante. However, the uncertainty surrounding the tax has given her pause.
“We could buy quickly before the tax is introduced, but selling later could become difficult,” Hayes said. “I understand the housing issue, but I wanted to contribute to the local economy.”
Others, like Martin Craven from London, are reconsidering their plans entirely. “I’ll be looking at Cyprus instead,” he said, citing concerns about potential retrospective taxes.
Additional Housing Measures
The tax proposal is part of a broader housing reform package aimed at improving affordability. Other measures include tax breaks for landlords who offer affordable rents, the creation of a public housing body to manage 3,000 properties, and stricter regulations on short-term tourist rentals.
“It isn’t fair that those who own multiple apartments as short-term rentals pay less tax than hotels,” Sánchez said.
While the plan underscores Spain’s commitment to addressing its housing crisis, it remains to be seen how the measures will impact the property market and foreign investment.
