UK residents planning to buy a holiday home in Spain have been warned they could be hit with a 100% tax rise as the country tries to tackle its housing shortage.
Public anger is growing in Spain and other European countries as locals are being priced out of home ownership by rents driven up by gentrification and landlords shifting to more lucrative, short-term tourist rentals, especially in urban and coastal areas.
In Barcelona, there have been protests over soaring housing costs, with some residents saying it is becoming unliveable, prompting the mayor to vow to abolish short-term holiday lets.
Spain’s Prime Minister Pedro Sanchez told an event on affordable housing on Monday the West faced a challenge – “to not become a society divided into two classes, the rich landlords and the poor tenants”.
Property prices had increased by 48% in the past decade in Europe, he added.
Spain has long been a popular destination for holiday home buyers trying to move permanently to a sunnier climate, especially among those from the UK, looking to buy properties in places such as Ibiza, Marbella and Barcelona.
Its popularity has helped to push up Spanish property values over many years.
People from outside the EU, including the post-Brexit UK, bought 27,000 houses a year in Spain, Mr Sanchez said.
El Pais reported that Spain’s Executive intends to limit the purchase of housing by non-resident non-EU citizens by increasing the tax levy they must pay when buying a house to 100%.
It was not exactly clear how the tax would be levied but the Financial Times reported that Spain’s housing ministry said the new measure would be introduced by modifying stamp duty or via a special tax.
His comments came amid a raft of measures designed to tackle to what El Pais reported him as saying was “one of the main challenges of European and Spanish societies: access to housing”.
It included proposals to change the tax regulations around tourist accommodation.
In an attack on people who bought property to speculate and in doing so reduced the supply of homes for people to live in, in some areas, he said: “They didn’t do it to live in them, they didn’t do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow.”
Mr Sanchez said that holiday rentals should pay tax “like a business”, as “it isn’t fair that those who have three, four or five apartments as short-term rentals pay less tax than hotels or workers”.
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In the third quarter of 2024, non-Spaniards including EU citizens bought 24,700 properties in Spain, accounting for 15% of all real estate purchases in the country, the Financial Times said, citing data from Spain’s Association of Registrars.
The largest group of non-Spanish buyers were those from the UK, who made up 8.5% of buyers.
The chances of the proposal becoming law are limited because Mr Sanchez faces a constant struggle to earn the votes he needs to reach a majority in Spain’s divided parliament.