Spanish Prime Minister Pedro Sánchez has unveiled a bold plan to impose a 100% tax on property purchases by non-European Union residents and non-local buyers. The measure is part of a broader strategy to address the country’s housing crisis, aiming to curb foreign investment in real estate. However, the practical impact of this policy remains uncertain.
The announcement comes shortly after Spain abolished its “Golden Visa” program, which granted residency to non-EU citizens who invested at least €500,000 in Spanish property or businesses. According to Sánchez, non-EU residents purchased approximately 27,000 homes and apartments in Spain in 2023. Out of the total 638,552 property transactions recorded last year, 123,159 were made by foreigners, accounting for 19.3% of the market.
Despite the government’s intentions, experts argue that the new tax is unlikely to significantly reduce property prices, as non-EU buyers represent a relatively small portion of the market. However, in certain regions, particularly coastal areas and islands, foreign buyers dominate the real estate market. For instance, in the Balearic Islands, foreign purchases accounted for 31.5% of transactions in 2023, followed by Valencia (29.2%) and the Canary Islands (28.6%). In contrast, Madrid saw only 6.3% of properties bought by foreigners.
British citizens, who became non-EU residents post-Brexit, lead the list of foreign buyers, followed by Germans, French, Moroccans, and other European nationals. Spain’s move is inspired by similar policies in countries like Denmark and Canada, where restrictions on property purchases by non-residents have been implemented. Canada, for example, has banned non-residents from buying property until 2027.
The proposal has sparked mixed reactions within Spain. A real estate agent in the Balearic Islands criticized the measure, stating that it would not benefit local citizens who are in need of affordable housing rather than luxury properties. Meanwhile, concerns have been raised in the UK, where around 100,000 British retirees reside in Spain. Experts warn that the tax could make it significantly harder for non-EU residents to buy property in Spain and may pave the way for additional taxes in the future.
The proposal still requires parliamentary approval, and its full impact will take time to assess. As Spain grapples with its housing crisis, the effectiveness of this policy in achieving its goals remains to be seen.
