Spain’s proposed non-EU buyer restrictions explained
What do the Prime Minister’s proposals mean for non-EU buyers?
4 minutes to read
What do we know?
On 13 January 2025 the Spanish Prime Minister Pedro Sanchez proposed a 100% property tax on non-EU buyers.
The proposal was part of a 12-point plan to tackle housing affordability by building more public housing and increasing taxes on short-term holiday rentals.
On 19 January, six days later, the proposal shifted up a gear to an outright ban.
The government “will propose prohibiting non-EU foreigners from buying houses in our country, when neither they nor their families live here and therefore they are speculating,” Sanchez said Sunday at a Socialist Party rally.
How important are non-EU buyers to the Spanish market?
According to the Spanish Council of Notaries, non-EU residents accounted for around 8,476 of the 350,202 sales recorded in the first half of 2024, equating to 2.4% of sales. By comparison, EU residents (non-Spanish) accounted for some 19,857 or 5.7% of sales.
Both figures exclude EU and non-EU residents now living in Spain as expats who together purchased 40,389 properties in the first half of 2024 or 11.5% of total sales.
Which are the largest non-EU buyer nationalities in Spain?
The key non-resident non-EU buyer groups that would be most affected by any restrictions include UK, US, Norway, Ukraine and Swiss purchasers according to data from the Council of Notaries.
Taking all UK purchases, both resident and non-resident into account, the UK market share has fallen significantly, from almost 10% of all purchases a decade ago to 4.2% in the first half of 2024 according to the Spanish Council of Notaries.
Will the measure be approved?
Prime Minister Sanchez is leading a coalition government with only 179 of the 350-seat chamber, meaning his proposal is unlikely to get approval from the Spanish Congress.
Secondly, if the measures depend on the approval of Autonomous Communities, Spain’s regional governments, the proposal is likely to face stiff opposition, many are right leaning, most notably those in Andalucia, Valencia, Madrid and the Balearics which account for a large proportion of foreign demand.
Thirdly, Spain’s Constitution mandates that the tax system must not have a confiscatory nature, meaning it cannot exhaust the taxpayer's wealth. A 100% tax would likely be challenged in court on constitutional grounds.
Do foreign buyer restrictions ease house price inflation?
Restrictions on foreign buyers are not new. Countries like Switzerland, Singapore, New Zealand, and Canada have implemented various measures, such as higher taxes, outright bans, and limiting property purchases to new homes only.
Analysis of price data suggests these measures have had little impact on house price inflation.
For example, New Zealand introduced a ban on foreign buyers in 2018, with exceptions for Australians and Singaporeans due to separate trade agreements. Before the ban, house prices were rising at a rate of 4% per year, a year later, they were rising at 6% and during the pandemic, annual growth reached a high of 32% as the market reopened.
Increasing levies or imposing bans overlooks the various factors influencing house prices, such as interest rates, supply, economic growth, employment, and demographics.
Foreign buyers, typically affluent, tend to concentrate on exclusive prime areas with many looking to invest in a stable economy, build a business or enjoy the lifestyle supporting the local economy via eating and drinking, shopping and travelling.
What else is behind Spain’s housing affordability crisis?
According to Spain’s Ministry of Housing, residential completions have dramatically decreased from 597,632 just before the 2008 financial crisis to 80,473 in 2023, with only a slight increase in the years following the pandemic.
Based on the latest household survey data from Spain’s National Statistics Office (INE), there were 3.8 million vacant homes across Spain during the last census in 2021. This accounts for approximately 14% of the country's total housing stock. However, in rural areas with populations under 1,000, the vacancy rate increases to 33%.
Source: INE, Population and Housing Censuses 2021
What should non-EU buyers thinking of purchasing in Spain do now?
Firstly, it’s highly unlikely an outright ban will be passed for the reasons given above. Stay informed and sign up to receive our European Residential Update here where we will provide regular updates.
Secondly, for those with European parents or grandparents this could be the time to explore applying for a European passport.
Holding an EU passport would exempt a buyer from any bans in Spain (or other EU countries considering tighter restrictions) and also from the 90 out of 180-day rule.