Pressure on Spain’s housing market has been exacerbated by overtourism and the proliferation of short-term holiday rentals.
Spain is planning to introduce a 100 per cent tax on properties bought by non-EU residents in its latest move to protect the housing market from foreign buyers.
Spanish Prime Minister Pedro Sanchez said the “unprecedented” new tax was needed to solve the country’s housing crisis. In recent years, rents have skyrocketed in Airbnb-dominated cities like Barcelona and Madrid and people’s incomes have failed to keep up.
Pressure on Spain’s housing market has been exacerbated by overtourism and the proliferation of short-term holiday rentals. The country’s Tourism Ministry has just announced that a record 94 million internationaltravellers visited Spainin 2024, the best year for tourism in the country since records started.
As upset over overtourism grows, the government has been pushed into action in an attempt to solve the housing crisis.
How will Spain’s property tax affect foreign buyers?
Non-EU residents bought 27,000 properties “not to live in” but “to make money from” in 2023, Sanchez said. Sales of homes to foreigners, including EU citizens, make up roughly 15 per cent of the housing market according to the Spanish property registry.
The move, Sanchez said, is designed to prioritise homes for residents.
The new tax won’t make it impossible for non-EU residents to buy homes but will likely mean it isn’t financially viable for many considering purchasing a property in the country. Sánchez also didn’t provide a timeline or details on how he plans to implement the tax.
The new tax won’t affect EU residents due to Spain’s obligations as a member of the bloc. And, if you already own a property in the country, you likely won’t be impacted by the new policy. It can’t be taken from you but the government could add extra capital gains taxes in the future.
Spain tackles tourism to solve housing crisis
Spain has already been cracking down on tourism in response to the housing crisis with some cities looking to ban Airbnb-style rentals entirely.
In June last year, Barcelona City Council announced a plan to rid the city of tourist flat licenses by 2028. The city hasn’t actually granted any new licenses since 2014 when it froze the supply at around 10,000 units.
Rental prices have been driven up, in part, because of these short-term contracts mainly offered to tourists. Other measures proposed by the government include higher taxes on these holiday rentals.
Residents of Barcelona have organised protests against overtourism, with around 3,000 people taking to the streets in July last year shouting “tourists go home” and spraying them with water.
Protests have also taken place in the Balearics and Canary Islands. Further actions against high rents in November – though less specifically targeted at tourists – also identified overtourism as a driver.
Rental prices have been driven up, in part, because of these short-term contracts mainly offered to tourists.
At the beginning of this year, Spain made moves to axe its golden visa programme by April. An investment of €500,000 into real estate offers wealthy foreigners the chance to gain residency and live, work and study in the country. Residency in Spain also grants you the right to visa-free travel within the Schengen Area, which includes most of the EU, making this an even more appealing offer.
Like elsewhere in Europe, this scheme has been somewhat too successful driving up property prices in city centres like Barcelona and making housing unaffordable for many local residents.
