(MENAFN- Live Mint) Spain is preparing to implement a range of measures to tackle its growing housing crisis, including a potential tax of up to 100% on properties purchased by individuals who are neither citizens nor residents of the European Union.
The housing shortage has sparked significant opposition to foreign buyers, who are often concentrated in popular tourist destinations and high-demand central areas.
This week, Spanish Prime Minister Pedro Sánchez unveiled the strategy to address the country's high rents and housing affordability in Southern Europe. "More housing, better regulation and greater aid" was the overarching objective, he said.
As he unveiled the idea, Sánchez stated, "The West faces a decisive challenge: To avoid becoming a society divided into two classes, the rich landlords and the poor tenants."
“What citizens expect from us here is action,” Spanish housing minister Isabel Rodríguez told reporters on Tuesday about the plan.
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The tax would apply to non-resident buyers from outside the EU, who are often buyers of investment or vacation properties. The measure still needs to pass Parliament.
According to the Spanish property registration, the overall number of sales to foreigners, including those from within the EU, accounts for about 15% of the Spanish housing market, or 87,000 out of 583,000 sales in 2023.
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In recent years, the rising cost of living has fueled voter discontent in many wealthy nations, including the United States.
For Pedro Sánchez, one of Europe's leading Socialist politicians, the housing crisis is a key issue he must address. As he seeks to maintain his left-wing minority coalition after securing another four-year term in 2023, resolving the housing shortage is essential to ensuring political stability.
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Spain's housing market experienced a dramatic boom and bust around the global financial crisis. From 1995 to 2008, prices and construction tripled, before falling by a third through 2015, according to the European Central Bank. The price collapse resulted in sluggish construction as developers worked off excess inventory from the boom years.
British buyers' share of Spain's housing market drops sharply, hit by Brexit
British buyers , once the most active in Spain, have seen their market share decline, further impacted by Brexit. In 2015, over 20% of homes purchased by foreigners were bought by Brits, but by the third quarter of 2024, this had dropped to just 8.5%, according to Estadistica Registral Inmobiliaria data.
Spain recently ended its "golden visa" program, which granted residency to non-EU nationals investing over €500,000 in real estate.
With inputs from AP, Bloomberg
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