Spain calls for 100% tax charge on property bought by non-EU buyers

Spain is planning to bring in strict legislation for property purchases in an attempt to control the country’s rapidly escalating housing crisis, which has left residents complaining of being unable to afford to buy or rent a property.

Spain is preparing to implement a 100% tax on property purchases made by buyers outside of the EU, in an attempt to better handle the country’s mounting housing crisis, by decreasing foreign purchases.

This is one of 12 measures that Prime Minister Pedro Sánchez has recently introduced in an effort to try to improve the housing crisis.

Spain has been facing a lack of affordable properties to rent or buy, following soaring property prices, exacerbated by rising inflation and interest rates.

The situation has led to anger and discontent among residents, made worse by the lack of the building of new homes which has meant housing demand is considerably outstripping supply, thus pushing prices up further.

Sánchez said in a Madrid economic forum, as reported by The Guardian: “The west faces a decisive challenge: to not become a society divided into two classes, the rich landlords and poor tenants.

“Just to give an idea, in 2023 alone non-European Union residents bought around 27,000 houses and flats in Spain. And they didn’t do it to live in them, they didn’t do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow.”

The Prime Minister emphasised how serious the issue was and what potential economic and social implications could arise if the housing crisis were to continue.

No further information regarding how the proposal would work or when it would be approved and finalised was given.

Other major European economies such as Ireland and the Netherlands, amongst others have also been facing housing crises in the last several months.

Spain’s reputation as popular second-home destination at risk

Spain has long been one of the most popular destinations for second and holiday homes, especially in areas such as Barcelona, Ibiza and Marbella.

A significant portion of the interest comes from US, UK and Moroccan buyers while interest from Venezuelan and Mexican buyers has grown over the past few years.

Opponents of the plan argue that such restrictions could have a major impact on the country’s tourism sector which is a major contributor to the country’s economy.

Other measures proposed to tackle the housing crisis include increasing social housing supply, as well as tightening restrictions on short-term rental apartments.

Sánchez also suggested giving incentives for renovating and renting out available properties at fair prices.