British expats will be forced to pay 100pc tax on their holiday home in Spain under new measures to fix the country’s housing crisis.
Spanish prime minister, Pedro Sánchez, announced 12 reforms amid an ongoing row over the impact of foreigners on local house prices.
This includes the introduction of a tax for those from outside the European Union (EU) who do not currently live in Spain.
Proposals from the Spanish government suggest this levy could be as high as 100pc of the value of the home, much higher than current rates. Real estate purchases in Spain are currently subject to 10pc tax on newly-built homes and 6pc on old properties.
It was previously announced that the country’s famous “golden visa” scheme will close on April 3 this year, after the Government decided to shut out more expats. The minimum required investment for the visa had been €500,000 (£420,000).
Mr Sánchez accused the 27,000 foreigners from outside the EU who bought homes in Spain in 2023 of purchasing the properties “not to live in them, but to speculate”.
He said that housing was one of the “main challenges” facing the West, and added: “Average house prices in Europe have risen by 48pc in the last decade and it is unbearable.”
The number of Britons officially registered as living in Spain increased from 276,089 in 2017 to 284,037 in 2023, according to the El Padrón registry.
Mr Sánchez’s plan includes several measures to reduce the impact of holiday rental apartments on the property market, after local protests against the effects of “over-tourism”. There will also be a crackdown on fraudulent seasonal holiday lets to lessen the impact of tourism on small Spanish towns.
“There are too many Airbnbs and not enough homes,” Mr Sánchez said.
Flats let out to tourists will be taxed in the same way as hotels, but those letting out their homes for longer periods will benefit from an income tax exemption.
A complete ban on short-term apartments designed for holidaymakers will come into force in Barcelona from November 2028, following a radical announcement from Mayor Jaume Collboni. Málaga has halted new permits in areas considered to have reached a saturation point.
It comes after months of local protests in Spain’s tourist hotspots, including Barcelona and Alicante.
In June last year, protesters in Barcelona highlighted the damage they believe tourists are doing to their city – SOPA Images/LightRocket
In the first half of 2024, more than 42 million tourists visited Spain, including nine million in June alone.
Under the new plans, land will be transferred to a public housing company which will build thousands of affordable houses. Mr Sanchez said that it would incorporate more than 30,000 Sareb homes, relics of the 2008 financial crisis, and that vacant homes would be converted.
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House prices in Spain increased by an annual average of 8.1 per cent in the third quarter of 2024.
The main reason, according to experts, is that demand is by far outstripping supply.
According to the most recent housing census, conducted in 2021, Spain has some 3.8 million empty properties, around 14pc of the country’s entire housing stock.
Spain is not the only country blaming second homes and holiday lets for housing crises.
In 2023, president Emmanuel Macron gave French local authorities the power to charge up to 60pc extra council tax on second homes, in an effort to boost housing supply for locals.
Earlier that year, the government had ordered all French homeowners to tell them whether they owned a second home – or face a €150 fine.
More than 146 councils in the UK have implemented double council tax on second homes since April last year. Some owners have been hit with bills of more than £10,000.
Edinburgh introduced a controversial short-term let licensing scheme from October 2022, which critics have said has dramatically reduced holiday let supply.
The Ministry of Housing is planning to introduce a registration scheme in England in the near future, previously confirming that this will happen “as soon as possible”.