Posted By Global Banking and Finance Review
Posted on January 20, 2025
MADRID (Reuters) - Spanish Prime Minister Pedro Sanchez said he would propose to ban purchasers from outside the European Union from buying properties, as the government seeks to curb rising housing prices, which have become an increasing source of friction.
"We will propose to ban these non-EU foreigners who are not residents, and their relatives, from buying houses in our country since they only do so to speculate," Sanchez said at a political rally in Plasencia, in western Spain, on Sunday.
Sanchez on Jan. 13 unveiled a proposal to tax by up to 100% the acquisitions of property by non-EU citizens not living in Spain as part of a series of measures seeking to boost supply and reduce demand for housing in the country.
A source close to Sanchez played down the suggestion of a ban, saying the plan remained to discourage these acquisitions through increased tax rates.
Either potential change would need to pass the lower house where Sanchez's minority government faces a constant struggle to pass any bill.
Either way, there will be damage to Spain's reputation, said real estate company CBRE. "All factors related to regulatory and juridical changes are discouraging investors," said Paloma Relinque, CBRE's executive corporate director for Spain.
Housing has become a major issue in Spain as it struggles to balance promoting tourism, a key driver of its economy, with concerns over high rents due to gentrification and landlords shifting to more lucrative, short-term tourist rentals, especially in urban and coastal areas.
The country's Central Bank recently estimated there could be a deficit of half a million houses in Spain by the end of this year.
Targeting non-resident foreigner buyers, who tend to buy second homes particularly in beach resorts, would have a limited effect on the housing market as a whole, a spokesperson for real estate developer Gilmar said.
Non-EU residents represent about 23,000 of the almost 700,000 homes bought and sold every year in the country, Sanchez said during the rally.
(Reporting by Inti Landauro, David Latona and Corina Pons, editing by Aislinn Laing and Sharon Singleton)
