Spain could impose 100% tax on foreign home buyers as tourism drives up housing costs
Spain is planning a series of measures to tackle its burgeoning housing crisis, including a tax of up to 100 percent on properties bought by non-European Union citizens.
Spanish Prime Minister Pedro Sánchez announced the plan this week to tackle housing shortages and high rents in the southern European country. He said the overall goal is to provide “more housing, better regulations and more help.”
However, it is not clear whether the plan put forward by Sánchez's minority party will be passed in parliament.
Here's a look at what's going on:
Spain's housing crisis
Like many wealthy countries, Spain is suffering from a housing crisis. Rising rents are particularly difficult in cities like Barcelona and Madrid, where incomes have failed to keep up, especially for young people. House prices also rose slightly, especially in cities and coastal areas.
Rental prices are also boosted by short-term contracts offered to tourists. Spain sees more tourists than any other country in the world, with more than 88.5 million visitors by 2024. Tourism is one of the leading economic factors of the country.
The negative aspects of mass tourism have caused tension at times between tourists and residents concerned about rising costs, the proliferation of short-term rental properties on platforms such as Airbnb, and water supplies that could be extended to other parts of the country, including the Canary and Balearic Islands.
Last year, protesters took to the streets at different times across the country to express their displeasure with the growth of tourism and the tax being paid. Barcelona city hall has promised to completely eliminate all short-term rentals for tourists in the coming years.
“What citizens expect from us here is action,” Spanish Housing Minister Isabel Rodríguez told reporters on Tuesday about the plan.
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Preventing foreigners from buying houses in Spain
Spain plans to reduce the number of houses bought by foreigners by raising taxes on properties bought by non-European Union citizens by up to 100 percent.
Non-EU citizens bought 27,000 properties in Spain by 2023, Sánchez said when announcing the plan, “not to live” but “to make money.”
Sánchez did not provide a timeline or details on how he plans to implement the tax.
Some of the measures have been put in place
Spain plans to build more public housing and allocate an estimated two million dwellings to a newly built public housing agency.
Other proposed measures include higher taxes on vacation rentals, tax breaks and protections for landlords who provide affordable housing, as well as amending regulations to speed up construction processes and increase the availability of private construction land.
Why is housing important in Spain's politics?
The rising cost of living has fueled voter dissatisfaction in many wealthy countries in recent years, including the United States.
But as one of Europe's leading Socialist politicians, the housing crisis is a key question for Sánchez to tackle as he tries to keep his leftist coalition going after winning another four-year term in 2023.
And, according to the Spanish Constitution, all Spaniards have the right to enjoy a “decent and decent” home. In theory, at least, the government has a duty to allow citizens to exercise that right.
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