100% purchase tax for foreigners in Spain. What is behind the Prime Minister's statement?

Prime Minister Pedro Sanchez announced on Monday (1/13/25) that his government plans to impose.

In the statement, Sanchez did not provide full details, leaving the market uncertain. What do we know about the statement as of today? Will the law have a retroactive effect? Will the law apply to all regions of Spain? Will it affect both first- and second-hand apartments, will it affect non-resident European passport holders, and will it even be approved by parliament?

As mentioned, the Spanish Prime Minister stated that his government plans to continue with strict and aggressive legislative measures on the housing market to control the country's increasing housing crisis. A crisis caused by the plight of residents,

However, it is still unclear whether the plan presented by Sanchez's coalition will be approved by parliament, and there are still many question marks over how the law will be implemented. In addition to the statement, Sanchez's office said, "the purchase tax will increase to up to 100% for foreign residents, in line with countries such as Denmark and Canada." It is still unclear how the law will affect European citizenship holders who are not residents of Spain. At this point, it seems this is mainly a political spin designed to please coalition partners and divert criticism of Sanchez's government through other channels. In any case, this decision must pass the parliament in which the left wing of the political map, which is outside the coalition but may support and even demand that socialist measures of this type be tightened.

If the law goes into effect, will the purchase tax apply to all regions of Spain and to first-hand and second-hand apartments?

Spain comprises 17 provinces, with each province determining the amount of the local.

Foreign investors are to blame for the price increase.

According to Prime Minister Pedro Sanchez, what could help make housing more affordable and accessible to the Spanish middle class is to increase taxes on foreign property buyers who are not residents of Spain or the European Union. He claims that foreigners who purchase properties in the country, especially in areas of demand for investment purposes, are one of the main factors driving up prices and creating shortages in the Spanish real estate market.

Where do foreign investors come from, and what are their preferred investment areas?

Sanchez claimed that non-EU foreigners purchased

As expected, British buyers lead the table with 38% of property purchases by foreign residents, with 3,480 properties in 2023. The British like to buy mainly in the coastal area, Costa del Sol, Costa Blanc, and the Murcia region. They are followed by Americans who purchased 695 properties during 2023.

However, it seems that this is not where the problem of property supply in the Spanish market is focused. According to the data, the housing crisis is occurring in urban and sought-after areas such as Barcelona, Madrid, Malaga, and Valencia, where the percentage of purchases by the British is low. Therefore, the data does not support the claim that the British are a significant factor in raising housing costs for locals.

What are the chances that this plan will be implemented and become law?

At this stage, it appears that the Spanish Prime Minister is trying to produce a declaration of intentions and political statements to stop demand, create uncertainty, and please his coalition partners. The high purchase tax may harm the Spanish economy, so at this stage, it seems that the chance of the law coming into full force is not great. Despite this, the announcement itself has many effects, whether it is buyers who plan to buy and try to bring the purchase forward, which may lead to an immediate jump in price. In contrast, other buyers may give up and look for other destinations that give them more certainty.

We will continue to update as things become more apparent.