British home buyers to face 100% tax in Spain under PM Sanchez's plan
Proposal aimed at placating locals as housing shortage has made homes unaffordable
Prime Minister Pedro Sanchez is trying to reign in surging prices for real estate in Spain, and British citizens looking to buy beach houses in the country are set to bear the brunt of one of his flagship policies.
The Socialist premier surprised property developers and brokers on Monday with a plan to levy a tax of as much as 100 per cent on home purchases by non-resident citizens from outside the European Union.
The proposal, which has yet to pass Spain’s fragmented parliament, is aimed at placating frustrated voters as a housing shortage has made homes unaffordable for many Spaniards. Sanchez claimed foreigners were snapping up properties and speculating on price increases, at the expense of locals.
British citizens are the biggest foreign buyers of Spanish property, mainly in coastal regions such as Valencia, Andalusia and the Balearic Islands, and will be hit by the measure, while Germans, Dutch and other EU citizens will be exempt.
“With years of experience helping Britons relocate to Spain, we know how popular it is for its lifestyle and climate,” said Mauro De Santis Bo, a financial adviser at GSB Wealth, pushing back on Sanchez’s claims that foreigners are betting on price increases. If the initiative becomes law, it “could shift interest toward alternatives like Portugal, Cyprus, or Greece.”
Sanchez said Monday that in 2023, 27,000 non-EU citizens without residence bought property in Spain, although he didn’t distinguish between new builds and existing property. In areas like the Balearic isles, the combination of foreign demand and the use of properties for short-term rentals is pushing up prices for local residents.
But it’s not only British buyers that will be affected. In recent years, a huge influx of wealthy Latin Americans has upended the high-end property market in Madrid, a trend that is widely seen as the driver for a surge in the city’s real estate prices.
To be sure, property purchases by non-EU citizens without residence are a small part of the overall market. Neinor Homes SA, one of Spain’s largest developers, said late Monday that the demographic only accounted for 2% of pre-sales of new property in 2024.
The move also will likely do little to ease shortages in major cities like Madrid and Barcelona. Foreign purchases are highly focused on tourist areas, with the Balearic Islands accounting for one of every three deals, according to research by CaixaBank SA, based on 2022 data. The data also showed that British, Belgians, Germans, Swedes, and French buyers accounted for 37% of all house purchases by foreigners.
The proposal will be sent to Parliament, where Sanchez has repeatedly struggled to pass fiscal legislation as he needs to get at least eight different parties aligned. The initiative is part of a broader housing package, which includes a tax increase for short-term holiday rentals, aligning it with EU directives.
