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Spain plans to impose a 100% real estate tax on buyers from non-EU countries such as the UK to discourage foreigners from buying and thereby improve housing affordability.
Prime Minister Pedro Sánchez has announced plans for a punitive property tax that will apply to non-EU citizens who are not EU residents, as part of a series of measures aimed at tackling a “severe” housing crisis.
Spain is one of many European countries experiencing growing anger over the difficulty of finding affordable housing to buy or rent as property prices soar and new construction lags far behind demand.
“The West faces a decisive challenge: not to become a society divided into two classes, rich landowners and poor tenant farmers,” Sanchez said when unveiling the 12 measures.
Spain has long been a popular destination for holiday home buyers and people looking to permanently relocate to a sunny climate.
The government proposal comes as house prices rise in places from Madrid to Mallorca, driven in part by a new wave of wealthy foreigners from the United States, Mexico and Venezuela. They are in addition to the British, who are the backbone of some coastal property markets but are now non-EU citizens due to Brexit.
Sanchez’s Socialist government said it would “restrict” the purchase of real estate by non-EU citizens who do not live in the EU, requiring the tax they pay when purchasing property to increase to “up to 100% of the property value.”
The Prime Minister said that non-EU residents buy 27,000 houses in Spain every year, adding that these houses are “mainly used for speculation”.
Home buyers in Spain may need to pay a number of taxes, depending on whether they are buying a new build or an existing home.
Tax rates vary by region, but real estate agents say as a rough guide, the total tax could be between 7% and 12% of the property’s value. Sanchez did not specify which tax he was referring to.
The government said the proposal would only be finalized “after careful study”. To become law, it will also need approval from Spain’s parliament, where Sanchez faces a long struggle to cobble together the votes he needs to secure a majority.
In the third quarter of 2024, non-Spaniards purchased 24,700 properties in Spain, accounting for 15% of all real estate purchases in the country.
The largest group of non-Spanish buyers are British, accounting for 8.5% of all foreign transactions. They are followed by Germans, then Moroccans, then Poles and Italians, according to the Spanish Association of Registrars.
Sánchez highlighted the seriousness of the continent’s housing problem, saying that house prices in Europe have soared 48% in the past decade, almost twice the increase in household income over the same period.
“We are facing a serious problem with huge social and economic implications that requires a resolute response from society as a whole and from public institutions.”
