Spain is imposing a tax of up to 100% on foreign property purchases. Prime Minister announced this "unprecedented" measure to address the nation's housing crisis and improve affordability.
In 2023, non-EU residents purchased around 27,000 properties in Spain, primarily for investment, not personal use, according to the government. Sánchez stressed that these practices are unsustainable given the current housing shortage, and the tax will make housing available for residents and deter speculative purchases by foreign investors.
The prime minister did not provide specific details on the implementation or timeline for this tax, but his office indicated that the proposal would be finalised after thorough analysis. The measure will require parliamentary approval, where the government has previously faced challenges in securing sufficient support for legislation. This initiative is one of twelve measures introduced by Sánchez to supposedly enhance housing affordability in Spain. Other proposals include tax exemptions for landlords offering affordable housing, the transfer of over 3,000 homes to a new public housing entity, and stricter regulations with increased taxes on short-term tourist rentals.Sánchez highlighted the disparity in taxation between short-term rental owners and hotels, advocating for a fairer system.
The announcement has prompted a range of responses. Real estate professionals have expressed concerns over the potential impact on the market, particularly in regions popular among foreign buyers. Some agents have noted that the proposal has been a significant topic of discussion among property professionals, emphasising the longstanding interest of British buyers in Spain. They have questioned the fairness of targeting non-EU buyers exclusively and described the measure as extreme. Additionally, prospective buyers from the UK have expressed apprehension, with some reconsidering their plans to invest in Spanish property. Experts are sceptical about the effectiveness of the proposed tax in resolving housing issues, suggesting that increasing housing supply would be a more effective solution to accommodate the growing demand in major cities.
The government's proposal also references similar measures in countries like Denmark and Canada, which have implemented policies to restrict foreign property purchases in efforts to stabilise housing markets. As Spain grapples with rising property prices and a shortage of affordable housing, the proposed tax represents a bold approach to curbing foreign investment and ensuring that housing remains accessible to its residents. The success of this measure will depend on its design, implementation, and the government's ability to navigate the legislative process to bring it into effect.
