Spain to Put 100% Tax on Properties Bought by Foreigners to Curb Housing Crisis

Over 27,000 homes bought by non-EU residents and tourism-driven demand pushes rents and property prices higher for Spanish citizens.

By Thea Felicity

Jan 14 2025, 09:14 AM EST

SPAIN-ECONOMY-SOCIAL-HOUSING-TOURISM — Tourists queue to enter a restaurant in the old town of the Spanish Basque city of San Sebastian on August 23, 2024. Close to 41 million international tourists are expected to visit Spain this summer in what would set a new record, as local protests against overtourism multiply. If the predictions are correct, the figure would be 13 percent higher than the numbers visiting in summer 2023, which was also a record. ANDER GILLENEA/AFP via Getty Images

After Spain protested the overcrowding of tourists, the government's recent priority was to ensure that overstaying would not be easy. Facing a serious affordability crisis in its housing market, PM Pedro Sánchez has promised a radical solution: tax, as high as 100%, properties acquired by non-EU citizens.

This plan intends to control the increasing cost of housing and rent that has made it difficult for Spaniards, especially younger generations, to afford homes in cities such as Madrid and Barcelona. Still, its prospects in Parliament are uncertain because Sánchez's current coalition government is only a minority.

Skyrocketing housing prices and skyrocketing rents have placed stressful pressure on many Spanish residents, especially in urban and coastal regions. AP News also touched on rental prices that are seriously affected by short-term tourist accommodation. Their spread, in part contributed by the popularity of Airbnb, is considerably pushing up rental prices.

Given the fact that Spain is one of the countries most visited on Earth to account for 88.5 million tourists in 2024 with soaring economy, house shortage continues to fuel protests, even in Barcelona whose city governments would promise to remove short-term tourist letting within the coming years.

Non-EU Residents Buying Properties in Spain

In 2023, ABC News reported that non-EU residents bought 27,000 properties in Spain, many of which are used as investments rather than as primary residences. Sánchez argues that this trend has worsened the housing shortage for locals.

So far, Spain's housing strategy includes constructing more public housing, allocating land to a new public housing agency, and introducing tax incentives for landlords offering affordable rents. Additional reforms aim to simplify construction laws and expand land availability for private development. The new tax measure, although it does not give specific details and timelines, shows that Spain is committed to dealing with the root causes of the crisis.

Spain's Constitution guarantees citizens the right to decent housing, making this challenge both a legal and political priority. Resolving it could bolster Sánchez's coalition and address widespread voter dissatisfaction with the cost of living.