Spain is actively working on a series of initiatives aimed at alleviating its emerging housing crisis, including a proposed tax of up to 100% on properties purchased by non-EU citizens and non-residents.
The announcement came from Spanish Prime Minister Pedro Sánchez this week, as he emphasized the need to improve housing affordability and tackle exorbitant rental rates in the country. He asserted that the key objectives would be to increase “housing availability, establish better regulations, and provide enhanced support.”
Sánchez cautioned against the risk of societal division into rich landlords and struggling tenants, signaling the urgent need for a comprehensive solution.
Nevertheless, the fate of this proposal remains uncertain as it must secure approval in the parliament dominated by Sánchez’s minority coalition. Here’s a closer look at the situation:
Spain is currently facing a significant housing affordability challenge, akin to many affluent countries. Escalating rents are particularly problematic in major urban centers like Madrid and Barcelona, where salaries have not kept pace, especially among younger individuals. In addition, property prices continue to rise, particularly in metropolitan areas and along the coast.
The surge in rental costs has also been exacerbated by short-term rental contracts, primarily catering to tourists. Spain ranks among the highest globally for tourist influx, welcoming over 88.5 million visitors in 2024 alone, and tourism is a crucial pillar of its economy.
However, the negative impacts of mass tourism have at times sparked tensions between locals and visitors, who are concerned about increasing living expenses, the rise of short-term rentals through platforms such as Airbnb, and dwindling water supplies in certain regions like the Canary and Balearic Islands.
Protests erupted across Spain last year, with citizens expressing their displeasure over the consequences of tourism and soaring rents. In a decisive move, the municipal government in Barcelona has committed to phasing out short-term rentals entirely in the coming years.
Spanish Housing Minister Isabel Rodríguez remarked this week, “Citizens expect decisive measures from us,” in reference to the government’s housing strategy.
Addressing foreign property purchases, Spain aims to restrain the number of homes acquired by non-EU buyers through significant tax hikes reaching 100% on properties purchased by those outside the EU. This measure targets investors often drawn to vacation homes.
Sánchez did not detail a timeline or implementation strategy for this taxation initiative.
Real estate agent Sarah Conroy, who has been active in the luxury Marbella market for over 30 years, called the potential tax “massive.” While she refrained from sharing specific statistics about her non-EU clientele, she noted that they include British buyers in the post-Brexit landscape, alongside clients from Saudi Arabia and Dubai.
“They need to act because people living here simply cannot afford to rent anything due to skyrocketing prices,” Conroy commented. “In my experience, around 80% of my sales are to individuals purchasing second homes.”
Previously, Spain announced the discontinuation of its “golden visa” program, which allowed wealthy non-EU individuals to obtain residency through real estate investments exceeding 500,000 euros (approximately 515,000 dollars).
Joan Carlos Amaro, a real estate analyst and economics professor at Esade Business School in Barcelona, expressed skepticism about whether the tax would lead to more affordable housing for middle-class Spaniards. “Increased barriers often disrupt market functionality and ultimately impact everyone adversely,” he stated.
Amaro further described Sánchez’s initiative as potentially more political than economically sound.
In addition to this taxation proposal, Spain is looking to expand public housing, with plans to allocate approximately 2 million square meters (21.5 million square feet) of residential land to a newly established public housing agency.
Other presented measures encompass increased taxes on holiday rentals, tax incentives and protections for landlords who support affordable housing, as well as efforts to amend legislative processes to accelerate construction and enhance land availability for private projects.
Housing has taken on heightened political significance in Spain, especially with escalating living costs fueling dissatisfaction among voters in various affluent nations, including the U.S.
As a prominent figure in Europe’s Socialist leadership, resolving the housing issue is vital for Sánchez to maintain his left-wing minority coalition after his recent re-election for another four-year term in 2023. Moreover, under the Spanish Constitution, citizens are entitled to a “decent and adequate” home, which places a responsibility on the government to uphold this right for its citizens.
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