Spain’s Bold Plan: 100% Tax Hike for Non-EU Home Buyers Amid Exploding Housing Crisis
Spain is considering a 100% tax increase on property purchases by non-EU residents in an effort to address the country’s growing housing crisis. This proposal has sparked widespread public anger as locals face rising housing costs, driven by gentrification and the shift of properties to short-term tourist rentals.
Public Outcry Over Soaring Housing Costs
In major urban and coastal areas, such as Barcelona, protests have erupted over the unaffordability of housing. Residents claim that the city is becoming increasingly unlivable due to the surge in property prices and rents. In response, Barcelona’s mayor has pledged to eliminate short-term holiday lets.
Prime Minister Pedro Sanchez addressed the issue at a recent affordable housing event, warning of a societal divide between wealthy landlords and struggling tenants. He noted that property prices in Europe have risen by 48% over the past decade, contributing to the housing crisis.
Impact on Non-EU Buyers
Spain has long been a favored destination for holiday home buyers, particularly from the UK, seeking to enjoy a sunnier climate in locations such as Ibiza, Marbella, and Barcelona. This demand has driven up property values over the years.
Sanchez revealed that non-EU citizens, including post-Brexit UK residents, purchase around 27,000 homes annually in Spain. The proposed tax increase aims to curb this trend by significantly raising the costs for non-resident buyers.
Proposed Tax Measures
El Pais reported that the Spanish government plans to impose a 100% tax increase on non-resident non-EU buyers through adjustments in stamp duty or the introduction of a special tax. The exact mechanism of this tax increase remains unclear.
This measure is part of a broader initiative to tackle housing accessibility, which Sanchez described as “one of the main challenges of European and Spanish societies.” The government also intends to reform tax regulations around tourist accommodations to ensure fairer taxation.
Targeting Property Speculation
Sanchez criticized individuals who purchase properties solely for speculative purposes, reducing the availability of homes for residents. He argued that such practices exacerbate the housing shortage and should not be allowed in the current context.
He further proposed that holiday rentals be taxed as businesses, highlighting the unfairness of those who own multiple short-term rental properties paying less tax than hotels or regular workers.
Challenges in Implementing the Proposal
While the proposal aims to address the housing crisis, its chances of becoming law are uncertain. Sanchez faces significant challenges in garnering the necessary parliamentary support in Spain’s fragmented political landscape.
Growing Demand from Foreign Buyers
In the third quarter of 2024, non-Spaniards, including EU citizens, purchased 24,700 properties in Spain, making up 15% of all real estate transactions, according to Spain’s Association of Registrars. UK buyers accounted for 8.5% of these purchases, highlighting the strong demand from foreign investors.
As Spain grapples with its housing crisis, the proposed tax hike on non-EU home buyers reflects a broader effort to prioritize affordable housing for locals and curb speculative property investments.
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