Skyrocketing rents and house prices in Barcelona, Madrid and tourist hotspots like the Canaries, where young people’s incomes have failed to keep up, have pushed housing to the top of the political agenda in Spain, just like Ireland. Last year thousands of marchers took to the streets angered by “overtourism” and its effect on the housing market, with Barcelona’s town hall responding by promising to completely eliminate all short-term rentals to tourists.
Now Prime Minister Pedro Sánchez has proposed to clamp down on sales to well-off foreigners, with a 100 per cent tax on property purchases by non-EU buyers. Other proposed measures include higher taxes on Airbnb-style holiday rentals; the transfer of 3,300 homes to a new public housing body; a programme to refurbish vacant housing; and public guarantees for landlords who provide “affordable” rentals. Parliamentary approval may yet, however, prove difficult.
Those non-EU residents, Sánchez claims – including the large contingents of post-Brexit British sun-seeking pensioners (at 8.5 per cent of foreign sales, the largest group of foreign buyers) – bought 27,000 properties in Spain in 2023 not to live in but to make money from.
Sánchez said house prices in Europe had surged 48 per cent in the past decade, double the increase in household income. “The West faces a decisive challenge: not to become a society divided into two classes, that of rich owners and poor tenants,” he added.
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But is Sanchez’s domestically-popular new tax going to kill off the country’s golden goose? Spain welcomed more than 88.5 million tourists in 2024, spending some €109 billion, and accounting for 13 per cent of total GDP. The vast majority of tourists, however, are not house buyers and so should not be discouraged by the new tax. The impact on overall demand and thus on investment in building new homes will be closely watched – as ever with housing policy, there are difficult trade-offs to navigate in making progress.