Spain plans 100% tax for foreign home buyers

The Spanish government has proposed introducing up to a 100% tax on the purchase of housing for citizens of countries outside the European Union, such as the United Kingdom. At the Madrid Economic Forum, Prime Minister Pedro Sanchez said that the increase in housing prices over the past ten years has amounted to 48%, which significantly exceeds the increase in household incomes. "We must prevent the division of society into rich property owners and poor tenants," he stressed.

In 2023, foreigners from countries outside the EU purchased about 27,000 properties in Spain, mainly in popular tourist areas such as Ibiza, Marbella and Barcelona. Sanchez noted that these purchases are often used for speculation, which exacerbates the housing shortage. In addition, the government intends to tighten the rules for short-term rentals through travel platforms and increase taxes for owners of such apartments to equalize them with hotels.

Compared with other EU countries, only 2.5% of housing in Spain is classified as social housing, which is significantly less than in France (17%) or the Netherlands (30%). Similar problems with foreign investment in real estate were observed in Canada, where a temporary ban on the purchase of housing by foreigners was introduced in 2023, which helped stabilize the market.In 2023, foreigners from countries outside the EU purchased about 27,000 properties in Spain.

Expert opinions and reactions

Experts evaluate Sanchez's initiative ambiguously. Economist Carlos Herrera notes: "Such measures may deter foreign investors, which will reduce the number of speculative transactions, but will lead to a slowdown in the pace of new housing construction." At the same time, representatives of the real estate market warn that a high tax for citizens of countries outside the EU may provoke a sharp drop in investment in regions dependent on tourism.

Unlike Spain, countries like Germany prefer to regulate the market through rental restrictions. For example, in Berlin, a ceiling on rental prices was introduced in 2021, which reduced the cost of housing by 11% per year. However, such measures were accompanied by protests from property owners, which highlights the difficulty of balancing housing affordability and investor interests.

The implementation of the new proposals in Spain, including a tax of up to 100%, remains questionable, but it is clear that the government is committed to profound changes in the real estate sector.