The Spanish government intends to address the housing crisis by imposing a 100% tax on homes purchased by foreigners.

• The Spanish government is considering a 100% tax on homes purchased by non-EU citizens as a way to address the country's persistent housing crisis.
• On Monday, Spanish Prime Minister Pedro Sanchez presented a plan to address the housing shortage, high rents, and increasing house prices in the country. Foreign home buyers and mass tourism were identified as factors contributing to the housing pressures.

The Spanish government is considering a 100% tax on homes purchased by non-EU citizens as a way to address the country's persistent housing crisis.

On Monday, Spanish Prime Minister Pedro Sanchez presented a plan to address the housing shortage, high rents, and increasing house prices in the country. Foreign home buyers and mass tourism were identified as factors contributing to the housing pressures.

At a forum, Sanchez, the socialist leader, stated that access to housing is a significant challenge for Spanish society and that there is a risk of community division.

Not becoming a society divided into two classes, with rich owners and poor tenants, is a decisive challenge for the West, as housing prices in Europe have increased by 48% in the last decade, almost twice as much as household income, he stated.

The government reported that a serious problem with significant social and economic consequences necessitates a prompt and collective response from society, with public institutions taking the lead.

Sanchez announced 12 reforms to tackle the crisis, including taxing tourism apartments as businesses and imposing a 100% tax on non-EU residents' home purchases.

He stated that such changes would make housing more accessible and affordable across Spain.

In 2023, 27,000 apartments in Spain were bought by non-EU residents, not for living purposes but for speculation and profit-making. This was revealed by Sanchez during a forum on housing in Madrid, where he emphasized the scarcity of housing and the need for responsible investment.

"We want foreign investment to be productive, encourage innovation, and create new jobs, not just serve for speculation, as if it were a financial asset or bank deposit," he stated.

Sanchez, the leader of the Spanish Socialist Workers' Party and a coalition government that includes the far-left Sumar party, introduced measures to offer tax relief to landlords who provide affordable rents and provide more protection for existing tenants.

He declared plans to construct additional public housing and preserve existing social housing as state property. Additionally, a program will be initiated to renovate vacant homes and make them available for rent at affordable rates, he stated.

The prime minister did not disclose any additional information on the tax on non-EU home buyers or reveal when such plans would be presented to parliament for approval.

Last year, the government declared its intention to restrict foreign home ownership by abolishing the "Golden Visa" program, which was introduced in 2013 and granted residency rights to foreigners who invested in Spanish real estate worth at least 500,000 euros (around $513,000).

The housing shortages and increasing prices, along with the perception that holiday home owners and rentals are contributing to the issue, have sparked a strong public response and unrest in tourist areas in Spain, including the south coast, Canary Islands, and cities such as Barcelona and Alicante.

Local residents are calling for action against "over-tourism" after reports of tourists being told to "go home" and incidents of foreign visitors being squirted with water pistols.

Despite being heavily dependent on tourism for economic growth and job creation, with the sector contributing over 13% to GDP and providing around three million jobs, Spain's economy experienced a significant boost in the first 11 months of 2024, with international tourist arrivals reaching an unprecedented high of 88.5 million, according to data from Spain's National Institute of Statistics, INE.

High accommodation occupation rates are also driving record investments in hotels, according to Maartje Wijffelaars, senior euro zone economist at Rabobank, who stated this in analysis last September.

The tourism sector in Spain is projected to lose some steam, causing GDP growth to soften somewhat in the future. However, growth is expected to remain strong and higher than in the eurozone, with a projected GDP growth rate of 2.7% in 2024, 1.9% in 2025, and 1.5% in 2026.

In 2024, the largest number of visitors to Spain in the first 11 months were tourists from the U.K. (17.5 million), followed by travelers from France (12.2 million) and Germany, according to INE.

The percentage of tourists staying in "market" accommodations, such as hotels, hostels, and rented tourist apartments, as their primary place to stay increased by 8.0% year-on-year. Specifically, hotel usage grew by 5.7%, while rental housing saw a significant increase of 24.5%.

The number of people using "non-market accommodation," such as private homes and rooms rented via home-sharing sites like Airbnb, increased by 18.8% in the 11 months to November.