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President of the Spanish Government Pedro Sánchez has delivered a shocking blow by announcing on Monday January 13 that going forward, non-residents from countries outside of the EU, which of course includes the UK, could soon face huge tax bills if they decide to buy a home in Spain.

 

In a bold move aimed at tackling Spain’s housing crisis, President Sánchez announced a series of sweeping measures, one of which could see British buyers forking out for additional costs equivalent to 100% of the property’s tax value.

 

“For them, the tax burden will be up to 100% of the value of the property,” Sánchez explained.

 

This announcement comes as Spain grapples with skyrocketing housing prices and a severe shortage of affordable homes, especially for younger Spanish citizens. Sánchez made it clear that the new measures are intended to curb property speculation by foreign investors, which he claims is exacerbating the housing crunch.

 

“In 2023 alone, non-EU residents bought 27,000 houses and flats. Not to live in them, they did it mainly to speculate. To make money from them. Something that we cannot afford in the context of scarcity we are experiencing,” the President added.

 

The tax, which the president himself described as “unprecedented”, mirrors similar policies already implemented in countries like Denmark and Canada and aims to discourage non-resident foreigners from buying up properties that they will never live in. According to Sánchez, limiting the influence of speculative buyers will create more housing for permanent residents and reduce upward pressure on prices.

 

British buyers, despite Brexit and the 90-day rule limiting their time in Spain, remain the largest non-EU group, comprising 8.37% of foreign property demand in 2023. Germans, Moroccans and Romanians also feature prominently among international buyers.

 

Recent data shows that foreign buyers made up nearly 15% of property transactions in Spain between April and June 2023. While EU citizens still dominate the market, non-EU investors are increasingly using Spain as a lucrative market for speculation, buying properties not as homes but as financial assets.

 

The proposed tax hike is part of a broader set of housing reforms designed to make homes more affordable and accessible for Spanish citizens.

 

Sánchez also outlined plans to tighten regulations on seasonal rentals, which are often blamed for driving up prices in tourist hotspots, and an income tax exemption for landlords who rent out their properties as affordable housing.

 

Spain’s housing crisis has reached critical levels but if enforced, the legislation would deal a significant blow to Britons dreaming of owning holiday homes in Spain. Like so many policies designed with the right intentions, this latest proposal could end up doing more harm than good, especially considering that visitors from the UK are still the biggest spenders in many parts of Spain.

 

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