Spain considers imposing up to 100% tax on property purchases by non-EU residents

Taxing up to 100% on properties purchased by non-EU residents: Spain's idea to tackle the housing emergency

The government of Spain proposed a tax that would be up to 100% on the value of real estate purchased by non-residents from non-EU countries, which includes the United Kingdom and the United States. Prime Minister Pedro Sánchez unveiled this measure in order to handle the country’s housing crisis.

The goal: curbing speculation and making housing more accessible

Speaking at an economic forum in Madrid, Sánchez emphasized that the objective is to limit property purchases by foreigners who, according to him, buy homes not to live in them but for speculation. In 2023, about 27,000 properties were acquired by non-EU residents, often for investment purposes rather than residential use.

The new tax aims to open more homes for residents and to shift pressure away from the housing market in light of speculative price gains. Sanchez proposed the new measure as part of growing public unrest over overtourism and a proliferation of short-term rentals. The bill tightens regulation on short-term rentals and charges more taxes so these properties would start paying their dues like businesses in general.

How the real estate market has received it

The receptions towards this proposition are divided. A segment of players within this industry has raised apprehension over the likely consequence such a hefty tax could have on the market, particularly on non-EU buyers. Other experts feel that this is not going to solve the problem of housing in Singapore and that the measure falls behind other more viable alternatives.

The proposal has already raised red flags among possible foreign buyers, with some taking a second look at plans to buy property in Spain. Against the arguments of opposition parties, Sánchez has insisted the measure is indispensable to prevent Spain from becoming a country of rich landlords and poor renters. It remains to be seen if Sánchez can gain the parliamentary vote he needs to push it through.

More measures to make housing more accessible

Other than taxing foreign buyers, the government announced other measures, such as incentives of tax exemptions on landlords offering lower rents, with new houses erected for use by a public housing agency. The bill faces a tough challenge in the parliaments of Sánchez minority government which quite often is short of winning major legislative proposals through parliament votes