Spanish politicians have announced plans to charge 100% tax on properties purchased by non-residents from outside the European Union. Since Brexit, that now includes people from the United Kingdom – one of the demographics that particularly love visiting and moving to Spain.
The measure is designed to address a spiralling accommodation crisis in the southern European nation – one that has seen tourists blamed and even attacked for distorting the housing market through their take-up of short-term rentals.
A divided society?
The idea is that charging 100% tax on the value of properties bought by non-EU citizens in Spain would curb their enthusiasm for Spanish home ownership and therefore calm the market, giving local citizens more chance of affording somewhere to live. Prime Minister Pedro Sánchez, told economists in Madrid that part of the problem is that many of those are “not to live in” but “to make money from”, as they are often second homes that are rented out for vacationers.
Introducing the strategy, Sánchez said it was an “unprecedented” way to address the issue. “The West faces a decisive challenge,” he said. “To not become a society divided into two classes, the rich landlords and poor tenants.”
Are non-EU citizens really the problem?
Some stakeholders are questioning the viability and potential impact of the move. Spanish property registry figures show that sales to foreigners, including EU citizens, do compose 15% of the Spanish housing market – or 87,000 out of 583,000 transactions. But non-EU residents were behind only 27,000 of those in 2023, meaning the vast majority of the problem comes from non-Spanish EU buyers, not people from outside the bloc.
What’s more, Antonio de la Fuente, managing director at Colliers International Spain, told BBC World Business Report that internal Spanish migration, or the “rural exodus” towards the big economic hubs such as Madrid and Barcelona is just as problematic, if not more, than tourist rentals and second homes.
“We all agree we are in a problem of not enough supply and we need to produce new supply to give people migrating from other parts of Spain to big cities like Madrid, Valencia, [and] Malaga a new home,” he said.
Counterproductive?
And the Associated Press cited Joan Carlos Amaro, a property market analyst and economics professor at the Esade Business School in Barcelona, who said that disincentivising people from looking at Spanish real estate, whether to live in or to rent out, could have counterproductive or unintended consequences.
“Anything that puts up barriers and stops the market from functioning ends up hurting everyone,” he said. “These foreigners that come, they spend money, the houses they live in have to be built and that creates jobs.”
The BBC has already reported potential British buyers turning their sights elsewhere, such as Cyprus, due to the potential tax hike and fear of other retrospective measures that could negatively impact their pockets.
