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Spain is grappling with a housing crisis, prompting Prime Minister Pedro Sánchez to announce bold reforms targeting foreign property buyers, particularly non-EU citizens such as Brits. These reforms include a proposal to impose a tax of up to 100% of the property’s value on non-resident foreign buyers. Currently, taxes for homebuyers in Spain range from 10% to 12%, depending on the region, but Sánchez argued the drastic increase is necessary to “prioritize the availability of housing for residents.” This measure reflects the government’s urgent efforts to curb speculative purchases and ensure homes remain accessible to locals.

Sánchez highlighted that in 2023 alone, non-residents from outside the EU purchased 27,000 properties in Spain. Many of these buyers, he said, acquired homes not to live in but to “speculate.” Such practices, he asserted, exacerbate the country’s housing shortage.

By taxing these purchases heavily, the government aims to discourage foreign investors from exploiting the market for profit while prioritizing affordable housing for Spanish residents. Sánchez made it clear that “in the context of the shortages we are experiencing, we cannot afford” to allow speculative buying to continue unchecked.

Widespread protests in cities such as Barcelona and Alicante have underscored the frustration of Spanish citizens who feel squeezed out of their housing markets. In July, hundreds of demonstrators in Alicante carried banners reading slogans like “Leave our neighborhoods” and “Our home is not the patio of gringos,” expressing anger at the influx of foreign property buyers. Similarly, Barcelona has witnessed rallies against rising rents, overtourism, and the loss of local identity. These protests are a powerful indication of public discontent with housing policies that fail to address the needs of residents.

As part of the reforms, Spain plans to construct 25,000 new homes using €6 billion in public loans and guarantees. These homes will be managed by a newly established Public Housing Company, which Sánchez emphasized will ensure that state-funded housing remains public property indefinitely. He declared that “what is built and rehabilitated with public money will always remain the property of the Spanish people.” This move aims to prevent public housing from being sold to private investors or speculative funds, safeguarding long-term affordability and accessibility for Spanish citizens.

The government also aims to make better use of existing properties by encouraging the rehabilitation of vacant homes. Landlords who renovate empty properties and make them available for long-term rental will receive income tax exemptions, provided they comply with the “Reference Price Index.”

This initiative seeks to expand the supply of affordable rental housing while incentivizing property owners to prioritize stable, long-term tenants over short-term profits. By addressing the issue of vacant properties, the government hopes to ease pressure on the rental market.

Short-term rental platforms like Airbnb have come under scrutiny for their role in exacerbating the housing crisis. Spain’s reforms include taxing short-term rental properties as businesses to ensure landlords pay appropriate taxes. Prime Minister Sánchez criticized the disparity in taxation, stating, “It is not fair that those who have three, four, or five apartments for short-term rent pay less taxes than hotels or workers.” This measure aims to level the playing field and discourage landlords from prioritizing short-term rentals over long-term housing solutions for locals.

Spain’s booming tourism industry has played a significant role in driving up housing costs. In 2022, the country welcomed 42.5 million international visitors in the first half of the year alone, many of whom opted to stay in rental apartments rather than hotels. This trend has incentivized landlords to convert long-term housing into short-term rentals, further reducing the availability of affordable homes for residents. Data shows a 30% increase in tourists staying in rental apartments compared to an 11% rise for hotels, highlighting the impact of tourism on Spain’s housing market.

Major cities like Barcelona and Madrid have borne the brunt of the housing crisis, with rents in these areas rising by 18% in June 2023 compared to the previous year. In Barcelona, housing costs have surged by 68% over the past decade, leaving many locals unable to afford accommodation. These rising costs have fueled resentment among residents, who feel that their neighborhoods are being transformed into tourist hubs at their expense. Protesters have called for stricter regulations to protect local communities and ensure housing remains accessible to those who live and work in the cities.

Prime Minister Sánchez’s vision for housing reform is rooted in the idea that housing is a constitutional right and a fundamental pillar of Spain’s welfare state. By ensuring that public housing remains state-owned and introducing measures to curb speculative investments, the government aims to create a more equitable housing system. “The objective with all these measures is clear,” Sánchez said. “What we want is to protect citizens, to find a better balance between tourism and investment, which are two key activities for our economy.”

At the heart of Spain’s housing reforms is a commitment to balancing the needs of residents with the demands of its thriving tourism industry. Sánchez emphasized the importance of protecting locals from being priced out of their communities while maintaining tourism as a vital part of the economy. He also pledged to introduce new tax reforms to ensure that tourist apartments are taxed appropriately, reflecting their status as businesses. These sweeping changes are part of a broader effort to create a housing system that prioritizes accessibility, affordability, and fairness for all Spaniards.

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