Spain, 'Housing Shortage' Pushes 100% Tax on Non-Europeans Buying Homes

Tourism Surge and Foreign Speculation Fuel the Crisis
Prime Minister Sanchez: "Foreign Buyers Purchased 27,000 Properties for Speculation"

The Spanish government, facing a severe housing shortage, has proposed imposing a tax of up to 100% on real estate buyers who are not European Union (EU) citizens or residents.

According to the Associated Press and others on the 15th, Pedro Sanchez, the Spanish Prime Minister from the Socialist Party, announced this measure on the 13th as a solution to the housing shortage and rising rents. The plan is to impose a 'tax bomb' equivalent to the property price on buyers from outside Europe to curb speculative real estate transactions.

In 2003, Prime Minister Sanchez criticized, "There are as many as 27,000 houses or apartments purchased in Spain by non-European residents," adding, "This is not for living purposes but for speculation to make money."

Sanchez did not specify the exact timing for the implementation of this drastic taxation measure. It also requires parliamentary approval, so the feasibility of execution remains low.

In major Spanish cities, as tourism increases, property owners are converting long-term rentals into short-term accommodations, reducing the housing available for residents. This has caused side effects such as rising rents. Last year, Spain had as many as 88.5 million visitors.

Additionally, foreign speculation has further fueled the rise in housing prices. According to real estate information company Idealista, Spain's average rent increased by 11.5% compared to the previous year. By region, Madrid saw a 16.4% increase, Catalonia 12.4%, and Valencia 12.1%. The price of second-hand homes also rose by more than 8% annually, with the housing price increase rate in Barcelona's Sants Montju?c area reaching as high as 19.5%.

As the housing crisis emerged as a serious issue, the Spanish government announced in April last year that it would abolish the so-called 'Golden Visa' system, which grants residency to foreigners who invest a certain amount in real estate. The mayor of Barcelona, a major tourist city, plans to cancel permits for 10,101 apartments registered for short-term rentals like Airbnb by November 2028 to curb rent increases.