SPAIN IS PLANNING to introduce a 100% tax rate on homes purchased by non-EU residents as part of a suite of measures to address the housing crisis.

The leftist government unveiled the plans yesterday, which encompass a building boom and tax hikes on the owners of tourist rentals.

They aim to offer more social housing, improve regulation and provide more support to renters, Socialist Prime Minister Pedro Sanchez told an economic forum in Madrid.

Supply is lagging far behind demand in the sector that consistently ranks among top concerns in Spain, scarred by a market bust that accompanied the 2008 global financial crisis.

New homes put on the market have trickled to around 90,000 per year as the country records 300,000 new households, Sanchez said.

The prime minister announced the transfer of two million square metres of land to a newly created public company to construct “thousands and thousands” of affordable social housing units.

Social housing makes up only 2.5% of Spain’s total stock, whereas in EU peers France and the Netherlands it is 14% and 34% respectively, Sanchez said.

The premier announced higher taxes and tighter regulation for tourist apartments, often blamed for reducing the availability of residential properties and causing rents to spike in the world’s second most-visited country.

“It is not fair that those who own three, four, five apartments for short-term rental pay less tax than hotels,” Sanchez said.

Sanchez also promised a tax exemption for owners who rent their properties according to the official index, even in areas not declared under market tension.

His government passed a flagship housing law in 2023 aiming to boost the construction of social housing, cap rents in areas under the greatest market pressure and inflict penalties on owners who leave their properties unoccupied.

But rents have continued to climb, increasing by 11% in 2024 according to real estate portal Idealista.

The specific of the 12 proposals have not yet been disclosed in full, but they will need parliamentary approval to be passed into law.

Since Brexit, British people with homes in Spain have been restricted to stays of a maximum of 90 days in every 180-day period, unless they are registered as tax residents.

It was an unwelcome consequence of the referendum for those who previously enjoyed freedom of movement.

Meanwhile, Spaniards and other European Union nationals can stay in Britain for up to 180 days without a visa.

The limit on the length of time Brits can now stay has affected retired people as well as young people looking to work remotely from Spain for extended periods.

With reporting by AFP