Spain Pushes for 100% Tax on Non-EU Homebuyers Amid Housing Crisis

In an aggressive new move to tackle Spain’s deepening housing crisis, the Socialist-led government of Prime Minister Pedro Sánchez has introduced a proposal to impose a 100% tax on non-European Union citizens who purchase property in the country.

The plan, part of a wider housing reform bill submitted to Parliament on Thursday, aims to ease growing concerns over soaring property prices and shrinking housing availability, particularly in urban hotspots like Madrid and Barcelona.

According to a copy of the bill reviewed by Bloomberg, the measure is designed to introduce “measures that allow access to housing, as we face one of the biggest problems currently facing our society.”

Sánchez had first revealed plans for such a tax back in January, amid mounting criticism over foreign real estate investment driving up housing costs. At the time, he pointed to the increasing number of homes being acquired by international buyers—27,000 of them in 2023 alone. "Foreigners were snapping up homes and profiting from price increases," Sánchez stated.

British nationals remain the leading foreign buyers of Spanish homes, especially in coastal regions like Valencia, Andalusia, and the Balearic Islands. Notably, citizens from other EU countries, including Germany and the Netherlands, would be exempt from the new tax under the proposed law.

Despite the bold intent behind the proposal, its future remains uncertain. Sánchez's current government, a minority coalition formed in 2023, faces significant legislative hurdles. With no outright majority, the administration requires the backing of about eight other parties to pass new laws—support it does not always manage to secure.

The draft legislation does include carve-outs to avoid deterring international professionals and investors. Specifically, the bill notes that “foreign businessmen or professionals working in the country” would not be subject to the new tax, suggesting an effort to safeguard Spain’s appeal to skilled expatriates.

Beyond the homebuyer tax, the housing bill outlines a series of complementary measures aimed at cooling the overheated housing market and expanding affordable living options.

These include increasing the value-added tax (VAT) on short-term rentals and raising levies on listed real estate investment trusts. Additionally, the government seeks to impose a tax on vacant residential properties.

Local authorities are also taking steps to rein in the vacation rental sector. In Barcelona, officials are pushing for a complete ban on short-term rentals by 2029, part of a broader campaign to return residential units to long-term tenants.

The central government is also advocating for a public-private collaboration to build new housing using industrial construction methods. According to the proposal, this approach would significantly cut down on costs and construction time compared to traditional building techniques.

As the housing affordability debate intensifies, the Sánchez administration appears committed to pushing bold—if controversial—solutions. Whether Parliament will ultimately approve the sweeping reforms remains to be seen.

By fLEXI tEAM