Spain plans to impose taxes of up to 100% on real estate value. Property purchased by a non-resident in a country outside the EU, such as the UK.
Announcing the measures, Prime Minister Pedro Sánchez said “unprecedented” action was needed to tackle the country’s housing crisis.
“The West faces a decisive challenge. That is, to avoid having a society divided into two classes: rich landowners and poor tenant farmers,” he said.
Non-EU residents bought 27,000 properties in Spain in 2023, he told an economic forum in Madrid, not “to live” but “to make money from them”.
He added, “In the shortage situation we are in, (we) clearly cannot allow it.”
Spain’s prime minister said the measures were designed to prioritize affordable housing for residents.
Sánchez did not provide further details on how the tax would work or a timeline for submitting it to Congress for approval. He often had difficulty gathering enough votes to pass legislation.
His office described the proposed legislation as a way to restrict home purchases by “non-resident non-EU foreigners.” In Spain, you are classified as a non-resident if you: You live in the country less than 183 days a year.
He added, “The tax burden to be paid at the time of purchase will increase by up to 100% of the property value in line with countries such as Denmark and Canada.”
Currently, non-residents can expect to pay between 6 and 10 percent in taxes on the value of their property, depending on the location and whether the property is new or not.
The Spanish government said the proposal would be finalized “after careful study”.
Potential buyers in the UK told BBC News the offer had made them think twice about buying in Spain.
Michele Hayes, from Manchester, who had spent her weekend house hunting south of Alicante, wanted a property where her family could visit and spend time during her retirement.
“You can look at a purchase quickly before taxes come in, but you never know what’s going to happen,” she said.
“It can be difficult to sell vacation homes to non-residents, especially those in tourist areas, if they are no longer available for sale.”
The 59-year-old said she sympathized with their housing problems but wanted to help the local economy and asked: “How many Spanish office workers want to live in a villa in this tourist area anyway?”
Martin Craven, from London, said he was considering buying in Spain this year.
The 62-year-old said: “I would never consider trying to sign up before this tax because who knows what else it could do, whether it’s a retroactive tax or a tax on existing owners.”
“For now, let’s look at Cyprus instead.”
Julian, 54, from Surrey, had chosen Spain as his first choice to buy a holiday home but said it now “looks riskier” than other countries.
“I want to travel four to six months a year, spend money, buy food and drinks, and pay taxes,” the 54-year-old said.
“Here in the UK we also have problems with landlords buying multiple properties and evicting the rest, but this policy is missing out on those of us who want to spend our money in the UK.”
It is one of 12 planned measures announced by Spain’s prime minister on Monday aimed at improving housing affordability in Spain.
Other measures announced include a tax exemption for landlords who provide affordable housing, the transfer of more than 3,000 homes to a new public housing authority, and increased regulations and tax increases for tourist apartments.
“It’s unfair that people who own three, four or five apartments in short-term rentals pay less in taxes than they do in hotels,” Sanchez said.
