Spain is addressing its housing crisis with several policies, including a potential 100% tax on homes bought by non-EU citizens.
Pedro Sanchez, the President, unveiled the proposal, which aims to tackle the rising cost of housing and high rent prices in Spain. The overall goal, according to Sanchez, is to provide ‘more housing, better regulations, and increased support.
Although the proposal has already been presented, it remains uncertain whether the Spanish parliament will approve the proposed tax increase. This uncertainty arises because Sanchez’s coalition, which presented the proposal, is currently in the minority in parliament.
Spain’s housing crisis explained
Spain is experiencing a significant housing crisis similar to those in other developed countries, such as the United States. Rent prices in cities like Barcelona and Madrid have soared. Meanwhile, wages have stagnated, making it particularly challenging for young people. The cost of purchasing a home has also surged, especially in urban areas and along Spain’s coast.
One of the main driving forces behind the rise of rent prices in Spain is short-term rents that are mainly for non-EU citizens and tourists. This phenomenon has caused the national government to propose measures like the tax raise.
"Spain is planning to introduce a 100% tax on properties which are purchased by non EU residents. That's in a bid to tackle its housing crisis" pic.twitter.com/x6wBy2ZPR8
— Saul Staniforth (@SaulStaniforth) January 14, 2025
Tourism is one of Spain’s main economic strengths. In 2024 alone, they received over 88.5 million tourists. Despite the economic benefits, there is also a downside. Tensions between citizens and non-citizens have risen, as many residents are concerned about rising living costs. This has been exacerbated by platforms like Airbnb, which promote short-term tourist rentals.
This has forced government officials into action. For instance, the local government of Barcelona has already promised to eliminate short-term rents from Airbnb and similar platforms in the future.
Limiting non-EU citizens from buying properties in the country is seen as a mitigating policy
The proposal by Mr. Sanchez is seen as one that could potentially help Spain’s housing crisis. Non-EU citizens purchased 27,000 properties in the country in 2023, but Mr. Sanchez claims they were bought to “earn money off them, and not to live in them.” Despite the plan being presented, there is no clear timeline or details about when the tax increase will come into effect.
Thousands marched through the center of Barcelona holding signs that read ‘Housing is a right, not a business,’ as a crippling housing crisis has been forcing the city’s residents to spend almost 50% of their wages on housing https://t.co/tNx0CUX48Y pic.twitter.com/hx3VtvM0P6
— Reuters (@Reuters) November 23, 2024
Other government proposals include building more public housing to increase accessibility, raising taxes on vacation-related rents to disincentivize short-term rentals, and granting tax-related benefits for property owners who provide affordable housing options in the country. These measures aim to balance the housing market and ensure more sustainable living conditions for residents.
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