Spain could impose a 100 percent tax on foreign property buyers as tourism drives up housing costs
Spain is planning a series of measures to tackle its growing housing crisis, including up to 100 percent tax on properties bought by people outside the European Union.
Spanish Prime Minister Pedro Sánchez announced this week a plan to address housing affordability and high rents in the southern European nation. He said the overall aim was to provide “more housing, better regulation and more assistance”.
However, it remains unclear whether the plan put forward by Sánchez’s minority coalition will pass parliament.
Here’s a look at what’s going on:
Housing affordability crisis in Spain
Like most rich countries, Spain faces a growing housing affordability problem. Skyrocketing rents are particularly acute in cities like Barcelona and Madrid, where incomes have failed to keep up, especially for young people. Apartment prices are also constantly increasing, especially in cities and on the coast.
Rental prices are also boosted by short-term contracts offered mainly to tourists. Spain has more tourists than almost any country in the world, receiving more than 88.5 million visitors in 2024. Tourism is one of the country’s key economic drivers.
The negative aspects of mass tourism occasionally cause tensions between visitors and residents worried about rising costs, the proliferation of short-term rentals on platforms like Airbnb and water supplies that can be stretched in some parts of the country, including the Canary Islands and the Balearic Islands.
Last year, protesters took to the streets on various occasions across the country to express their frustrations with the growth of tourism and high rents. Barcelona City Hall has promised to completely abolish all short-term rentals to tourists in the coming years.
“What citizens expect from us here is action,” Spain’s Housing Minister Isabel Rodríguez told reporters Tuesday of the plan.
Peter Waldkirch, director of Abundant Housing Vancouver, talks to BC Today guest host Dan Burritt about how the home flip tax is linked to the province’s affordability crisis, while BC Real Estate Association Chief Economist Brendon Ogmundson talks about the unintended consequences of the tax’s introduction.
Encouraging foreigners to buy houses in Spain
Spain plans to limit the number of homes bought by foreigners by raising taxes on properties bought by people outside the European Union to 100 percent.
Non-EU residents bought 27,000 properties in Spain in 2023, Sánchez said when announcing the plan, “not to live in them” but “to make money from them”.
Sánchez did not provide a timeline or details on how he plans to implement the tax.
Some of the other measures that have been proposed
Spain plans to build more public housing and allocate around two million square meters of residential land to a newly established public housing agency.
Other proposed measures include higher taxes on vacation rentals, tax credits and protections for landlords who offer affordable housing, and changes to laws to speed up construction processes and increase the availability of land for private development.
Why is housing politically important in Spain?
The rising cost of living has fueled voter discontent in many rich countries in recent years, including the United States.
But as one of Europe’s leading socialist politicians, the housing crisis is a key issue for Sánchez to tackle as he tries to maintain his leftist minority coalition after winning another four-year term in 2023.
Also, according to the Spanish constitution, all Spaniards have the right to enjoy a “decent and adequate” home. At least in theory, the government has a duty to enable citizens to exercise that right.
