Mathew Wood, our real estate expert from Hola Properties – headquartered in Lanjarón – explains the proposed restrictions on non-EU property purchases in Spain.
For many years, Spain has been a dream destination for foreigners investing in property. The sunny Mediterranean lifestyle, charming towns, and diverse cities have drawn people globally to buy holiday homes or settle down permanently. However, a new proposal from the Spanish government is shaking things up, especially for non-EU buyers.
Under the proposed measures, non-EU citizens – including Brits – could face significant restrictions on purchasing property in Spain unless they already reside in the country. Let’s break down what’s being proposed, the causes, and what it could mean – for the property market and those hoping to buy in Spain.
What’s being proposed?
The Spanish government, led by Prime Minister Pedro Sánchez, is considering a set of regulations that aim to:
- Restrict non-EU citizens from buying second homes unless they live in Spain. This would apply to many British nationals who, post-Brexit, are no longer considered EU citizens.
- Impose a 100% tax on property purchases by non-EU buyers who don’t reside in Spain. Essentially, this doubles the cost of acquiring a property for those affected.
- Introduce stricter regulations for tourist apartments. This includes properties used for short-term rentals through platforms like Airbnb, aiming to reduce the strain on local housing markets.
Why is this happening?
The government’s stated goal is to tackle Spain’s housing crisis. In popular regions such as Andalusia, Catalonia, and the Balearic Islands, rising property prices have made it increasingly difficult for locals to afford homes. Many blame foreign investment for inflating prices, especially in tourist hotspots.
Tourist apartments are a particular point of contention. In cities including Barcelona and Malaga, the proliferation of short-term rentals has led to dwindling long-term rental options and skyrocketing rents. Local residents are frequently priced out of their own neighborhoods, leading to growing frustration and calls for action.
By targeting non-EU buyers and tourist rentals, the government aims to ease these pressures, prioritising housing access for locals over foreign investment.
What do critics say?
Unsurprisingly, the proposal has sparked backlash from various quarters. Critics argue that the measures are overly punitive and could have unintended consequences, including:
- Deterring investment: Foreign property buyers contribute significantly to Spain’s economy, from the initial purchase to ongoing spending in local communities. Critics warn that a 100% tax and strict residency requirements could scare off investors, particularly retirees from countries like the UK.
- Xenophobia concerns: The proposed tax has been labeled as discriminatory by some, with accusations that it unfairly targets non-EU nationals. Some have ironically suggested it is another of those famed “Brexit benefits”.
- Economic impact: Some experts caution that limiting foreign property purchases could hurt the construction and real estate industries, especially in regions that rely heavily on overseas buyers.
How could this affect you?
If you’re a non-EU citizen considering buying property in Spain, these proposals could make the process far more complicated and costly. Here’s what you need to know:
- Residency may become essential: Non-residents may no longer be able to purchase second homes. If living in Spain full-time isn’t part of your plan, buying property could be off the table.
- Higher costs: The proposed 100% tax would effectively double the price of any property purchase for non-residents. For example, a €200,000 home could cost €400,000 under these new rules.
- Tourist rentals are in question: If you were hoping to offset your investment by renting your property on a short-term basis, stricter regulations could limit or even eliminate that option.
What is the market impact?
It’s difficult to predict exactly how these measures will impact Spain’s property market, but some trends seem likely.
- Reduced demand in popular areas: Coastal regions such as the Costa Tropical, Costa del Sol, and the Balearic Islands may see a decline in foreign buyers, potentially cooling property prices.
- Increased focus on residency: More non-EU buyers may pursue residency options, such as Spain’s Non-Lucrative Visa, which grants residency to those with a minimum income or savings.
- Shift in tourist acommodation: With stricter controls on tourist rentals, traditional long-term rentals and hotels may become more prominent.
The bigger picture
The debate over these proposals reflects broader tensions between economic growth and local well-being. On one hand, foreign investment has been a bonus for Spain’s economy, particularly when recovering from the 2008 financial crisis. On the other hand, unchecked investment has contributed to housing shortages and rising costs for locals.
The government’s challenge is to strike the right balance. Whether these measures will be achieved remains to be seen.
What’s next?
For now, these proposals are just that – proposals. They would need to go through the legislative process before becoming law. In the meantime, it’s worth keeping a close eye on developments, especially if you’re considering buying property in Spain.
If you’re already navigating the Spanish property market or thinking about it, now might be a good time to seek advice from a trusted local real estate expert. Understanding the potential changes and how they might affect your plans is key to making informed decisions.
