Spain Proposes 100% Tax on Homes Bought by Non-EU Residents: What It Means

Spain Proposes 100% Tax on Homes Bought by Non-EU Residents: What It Means for British Nationals

Spain is taking bold steps to address its growing housing crisis, with Prime Minister Pedro Sánchez unveiling a controversial plan that includes a tax of up to 100% on properties purchased by non-European Union residents such as UK citizens.

The move is part of a broader strategy to tackle skyrocketing rents, rising home prices, and housing shortages, particularly in major cities and popular tourist destinations.

While the proposal has drawn widespread attention, its passage through Parliament is uncertain, as Sánchez’s left-wing coalition holds a minority position.

Here’s what you need to know about the plan and how it could impact British nationals in Spain.

The Roots of Spain’s Housing Crisis

Like many wealthy nations, Spain faces a severe housing affordability problem. In cities like Barcelona and Madrid, rent increases have far outpaced wages, making it particularly challenging for young people to secure housing.

The surge in short-term rentals, primarily catering to tourists, has added to the strain. With Spain welcoming over 88.5 million visitors in 2024 the demand for tourist accommodations has driven rental prices even higher.

The phenomenon of “overtourism” has fueled tensions between residents and visitors, particularly in high-demand areas like the Canary and Balearic Islands. Concerns about inflated rental costs, the proliferation of short-term rental platforms like Airbnb, and even water shortages have led to protests in cities across the country.

Barcelona, in particular, has been at the forefront of the resistance, with local authorities pledging to phase out all short-term tourist rentals in the coming years.

A Focus on Foreign Homebuyers

A key element of Sánchez’s housing reform is a proposed tax of up to 100% on homes purchased by non-EU residents. Non-EU residents purchased 27,000 properties in Spain in 2023, Prime Minister Sánchez stated during an economic forum in Madrid, emphasising that these properties were bought “not to live in” but “to generate profit.”

The plan aims to limit the number of homes being purchased by foreign investors, particularly in areas where locals are struggling to find affordable housing. However, Sánchez has yet to provide details on how the tax would be implemented or a timeline for its introduction.

The proposed tax is part of a larger package of reforms, including:

Higher taxes on holiday rentals discourage the conversion of long-term housing into tourist accommodations.
Tax breaks for landlords who offer affordable housing in high-rent areas, incentivising more sustainable rental practices.

These measures are designed to address the immediate challenges of housing affordability while also fostering long-term solutions for residents.

What It Means for Brits in Spain

British expats, many of whom own holiday homes or investment properties in Spain, could face significant changes if the tax is implemented. While the exact impact will depend on the final details of the law, British property buyers may find the Spanish market less attractive, especially if they are not planning to use the property as a primary residence. The extreme increase in property taxes in Spain could discourage UK buyers, potentially leading them to consider alternatives such as Greece.

For those already living in Spain, the reforms may lead to greater availability of rental properties and potentially more affordable housing options in the future.

If the measure is approved, non-EU residents including UK citizens could face taxes equal to the entire value of the property, effectively doubling the overall cost.

As one of Europe’s leading Socialist leaders, Sánchez is under pressure to deliver meaningful solutions to the housing crisis while maintaining the stability of his fragile coalition government. Having secured another four-year term in 2023, addressing housing affordability is critical to his political agenda.

Whether the proposed measures will gain sufficient support in Parliament remains to be seen. However, they signal a bold attempt to confront Spain’s housing challenges head-on and could set a precedent for other countries grappling with similar issues.

Do you have plans to purchase property in Spain? Talk to us in the comment section below. Or if you need more advice on the above, contact us for further travel & immigration advice.

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Charlie

Travel and Immigration Writer and Client Relationship Manager at IaM (Immigration and Migration)

Spain Proposes 100% Tax on Homes Bought by Non-EU Residents: What It Means for British Nationals