Spain to slap 100% tax on foreign home-buyers in blow to British expat hopefuls

13 January 2025, 16:53

Spain is set to impose a significant new tax on foreigners, including Brits, buying homes in the country as it moves to prioritise housing availability for locals.

Prime Minister Pedro Sánchez announced the new package of measures today.

One of the 12 is the controversial proposal to introduce a tax for non-EU citizens who don’t already live in Spain on buying homes in the country. 

The tax raises the amount when purchasing a property to 100 percent of its value.

House-buyers in the country are currently expected to fork out for costs and taxes worth between 10 and 12% of the house price, depending on its location. 

Mr Sanchez said that the new levy would help “prioritise the availability of housing for residents”.

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Mr Sánchez also accused the 27,000 foreigners from outside the EU who purchased homes in Spain in 2023 of buying the properties “not to live in them, but to speculate”. 

He added that house prices are one of Europe’s “main challenges, adding that “average house prices in Europe have risen by 48% in the last decade and it is unbearable.”

It comes after the Spanish prime minister announced plans to end the so-called 'golden visa' scheme in a blow to thousands of British expats.

It is set to end on April 3 this year as part of efforts to prioritise affordable housing for Spaniards. The scheme currently allows non-EU citizens who invest around half a million euros in Spanish property to live and work there for three years. 

The minimum required investment for the visa was €500,000 (£420,000).

Mr Sanchez said last April: "Today, 94 out of every 100 such visas are linked to real estate investment... in major cities like Barcelona, Madrid, Malaga, Alicante, Valencia or Palma de Mallorca that are facing a highly stressed market and where it's almost impossible to find decent housing for those who already live, work and pay their taxes there."

The scheme was rolled out in Spain in a bid to bolster their economy in the wake of the global financial crisis.Wealthy foreigners, many of whom were Brits, were encouraged to invest in Spanish real estate.

But it came under increasing pressure from the EU after Brexit, which marked the end of freedom of movement.

The number of Brits officially registered as living in Spain has still increased since the UK left the EU, surging from 276,089 in 2017 to 284,037 in 2023, according to the El Padrón registry.

Barcelona mayor Jaume Collboni has also vowed to end short-term tourist lets in the country’s most-visited city within five years amid the crackdown on  mass tourism. 

He told a news conference in June he does not plan to renew any of the 10,101 tourist licences granted to landlords when they expire in November 2028.

 Mr Collboni said the apartments, advertised on sites such as Airbnb and Homeaway, would be available to locals instead.

The boom in short-term rentals in Barcelona by foreign tourists meant some residents could not afford an apartment after rents rose 68% in the past 10 years and the cost of buying a house rose by 38%, Mr Collboni said.