Spain is planning a series of measures to tackle the looming housing crisis, including a tax of up to 100 percent on properties bought by non-EU citizens.
Spanish Prime Minister Pedro Sánchez announced this week a plan to address housing affordability and high rents in the southern European country. He said the overall goal was to provide “more housing, better regulation and more help.”
However, it remains unclear whether Sánchez’s minority coalition plan will be approved in parliament.
Here’s a look at what’s happening:
Spain’s housing affordability crisis
Like most rich countries, Spain is grappling with a growing housing affordability problem. Rents are rising particularly sharply in cities like Barcelona and Madrid, where the incomes of young people in particular cannot keep up. Property prices are also steadily rising, particularly in cities and coastal areas.
Short-term contracts, which are offered primarily to tourists, have also driven up rental prices. Spain will receive more tourists than almost any other country in the world, with more than 88.5 million visitors in 2024. Tourism is one of the country’s most important economic drivers.
The negative aspects of mass tourism have at times caused tensions between visitors and residents, who worry about rising costs, the proliferation of short-term rentals on platforms such as Airbnb and the possible shortage of water supplies in some parts of the country, including the Canary Islands and Balearic Islands.
Over the past year, protesters have taken to the streets across the country to express their frustration with growing tourism and high rents. Barcelona City Hall has pledged to completely eliminate all short-term rentals to tourists in the coming years.
“What citizens here expect from us is action,” Spanish Housing Minister Isabel Rodríguez told reporters on Tuesday about the plan.
Peter Waldkirch, director of Abundant Housing Vancouver, tells BC Today guest host Dan Burritt how the home flipping tax is linked to the province’s affordability crisis, while Brendon Ogmundson, chief economist for the BC Real Estate Association, explains the unintended consequences of imposing the tax .
Prevent foreigners from buying houses in Spain
Spain plans to limit the number of property purchases by foreigners by increasing taxes on properties purchased by non-EU citizens by up to 100 percent.
Non-EU citizens would have bought 27,000 properties in Spain in 2023, Sánchez said as he announced the plan, “not to live in them” but “to make money from them.”
Sánchez did not provide a timeline or details on how he plans to implement the tax.
Some of the other proposed measures
Spain plans to build more social housing and hand over around two million square meters of residential land to a newly founded public housing company.
Other proposed measures include higher taxes on vacation rentals, tax breaks and protections for landlords offering affordable housing, as well as legislative changes to speed up construction processes and expand the availability of land for private development.
Why is housing politically important in Spain?
The rising cost of living has led to voter dissatisfaction in many wealthy countries in recent years, including the United States.
But as one of Europe’s leading socialist politicians, the housing crisis is a crucial issue for Sánchez to resolve as he tries to keep his left-wing minority coalition afloat after winning another four-year term in 2023.
Furthermore, according to the Spanish Constitution, all Spaniards have the right to a “decent and adequate” home. At least in theory, the government has a duty to enable citizens to exercise this right.
