MADRID (AP) — Spain plans a series of measures to meet its brewing housing crisisincluding a tax of up to 100% on properties purchased by people who are neither citizens nor residents of the European Union.
Spanish Prime Minister Pedro Sánchez this week announced a plan to tackle housing affordability and high rents in the southern European country. He said the overall goal was to provide “more housing, better regulation and more aid.”
“The West faces a decisive challenge: not to become a society divided into two classes, the rich owners and the poor tenants,” Sánchez said in announcing the plan.
However, it remains to be determined whether the project presented by Sánchez’s minority coalition will be adopted in Parliament. Here’s a look at what’s happening:
The housing affordability crisis in Spain
Like most rich countries, Spain is grappling with a growing housing affordability problem. Soaring rents are particularly bad in cities like Barcelona and Madrid, where incomes have failed to keep up, particularly for young people. Housing prices are also rising steadily, especially in cities and coastal areas.
Rental prices have also been pushed up by short-term contracts mainly offered to tourists. Spain welcomes more tourists than almost any country in the world, having welcomed more than 88.5 million visitors in 2024. Tourism is one of the country’s main economic drivers.
The negative aspects of mass tourism have sometimes caused tensions between visitors and residents concerned about rising costs, the proliferation of short-term rentals on platforms like Airbnb, and water supplies that may be limited in some areas. of the country, particularly in the Canaries and Balearic Islands.
Last year, protesters took to the streets repeatedly across the country to express their frustrations with growing tourism and high rents. Barcelona City Hall has committed to completely eliminating all short-term rentals to tourists in the years to come.
“What citizens expect from us is action,” Spanish Housing Minister Isabel Rodríguez told reporters on Tuesday about the project.
Stop foreigners from buying houses in Spain
Spain plans to limit the number of homes bought by foreigners by increasing taxes up to 100% on properties bought by people who are not EU citizens and do not reside in an EU country – often buyers of investment or vacation properties.
Sánchez did not provide a timeline or details on how he plans to implement the tax.
“It would be huge,” said Sarah Conroy, an English estate agent who has worked in real estate in the high-end Marbella market in southern Spain for more than three decades. She did not give figures for how many non-EU customers she had, but said they included post-Brexit British buyers as well as customers from Saudi Arabia and Dubai.
“They have to do something because the people who live here can’t really rent anything because it’s too expensive,” Conroy said. “Personally, about 80% of the people I sell to buy a second home. »
Last year, Spain announced that it abandoning its so-called “golden visa” program which allows wealthy individuals from outside the EU to obtain a residence permit by investing more than half a million euros (about $515,000) in real estate.
Joan Carlos Amaro, real estate analyst and economics professor at Esade Business School, said that even though Spain suffers from a housing crisis, he does not see how the tax will lead property owners or developers to guarantee that these normally high-end properties end up in the hands of middle-class Spaniards.
“Anything that puts up barriers and prevents the market from functioning ends up harming everyone,” Amaro said in Barcelona. “These foreigners who come, they spend money, the houses they live in have to be built and that creates jobs.”
Amaro added that he saw it as more of a political decision than one based on a strong economic rationale.
Some of the other proposed measures
Spain plans to build more social housing and allocate around 2 million square meters (21.5 million square feet) of residential land to a new public housing agency.
Other proposed measures include higher taxes on vacation rentals, tax breaks and protections for landlords who provide affordable housing, and changes to laws to speed up construction processes and increase the availability of land for private construction.
Why is housing politically important in Spain?
Rising cost of living sparks voter discontent in many rich countries in recent years, including the United States.
But as one of Europe’s leading socialist politicians, the housing crisis is a crucial issue Sánchez must address as he tries to keep his left-wing minority coalition afloat after winning another four-term term. years in 2023.
Furthermore, according to the Spanish Constitution, all Spaniards have the right to enjoy “decent and adequate” housing. In theory at least, the government has a duty to enable citizens to exercise this right.
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Wilson contributed from Barcelona.
