Understanding The Proposed 'Non Resident Buyers from Outside of the EU' Property Tax:

The "Spanish dream" of owning a property in Spain hit the headlines recently, after a proposed property tax was presented by the Spanish Prime Minister. An increased tax on property purchases for non residents who live outside of the EU.

This news caused concern amongst those of us from outside of the EU who are looking to purchase property in Spain. However, it isn't always easy to find trustworthy information regarding such topics as this. So we headed straight for the ever reliable Spanish Property Insight, for their help and guidance with this topic. They have gathered data and information which helped us to look into this proposal a little closer.

The Proposal:

At the start of the year the Spanish Government stated that they plan to impose a higher tax of up to 100% on property purchases by non-resident buyers from outside of the European Union. The Spanish Government called these buyers "speculators" who they claim are exacerbating the housing crisis by driving up the property prices for local residents.

The Data:

According to the government 27,000 homes were purchased by non-resident buyers from outside of the EU in 2023. However, Spanish notary figures show that 18,648 homes were purchased by this group. 

Furthermore, the figures also show that over the past decade this segments (non residents from outside of the EU) level of investment has been slowly shrinking, with 2023 figures being the lowest outside of the pandemic years of 2020 and 2021.

A declining growth pattern is in direct opposition with the Spanish Governments claims that this segment is the driving force behind the housing crisis:

In 2023 non residents from outside of the European Union represented 14% of the total foreign buyer market. This is a decline from the high of 25% in 2014 and 2015. 
The total foreign market, which is dominated by EU expats from countries such as France and Germany, has grown much faster.

In 2023, there were 623,000 home sales in Spain. The non residents from outside of the EU segment had a share of just 2.99% which is the smallest share, with 79% being local buyers, and 18% being foreign buyers:

According to regional data, British buyers concentrate in coastal regions such as the Costa del Sol, Costa Blanca and Murcia, in urbanisations that cater to the international buyer. All of which are locations that do not typically overlap with the regions experiencing house shortages.

In fact, in the specific locations that are suffering the most, the number of non-residents from outside of the EU is too small to create an impact. Furthermore, the property purchases appear to be larger villas and second homes close to the coast, not the affordable housing stock within the cities.

What Does It Mean?

In conclusion, the data shows that non-resident buyers from outside of the European Union play a minor role in the Spanish housing market. The market share for this segment is not only small, but is actually declining.  The data also shows that the property being purchased by this segment focuses on the Costas, well away from the areas experiencing the housing crisis.

Ultimately, the Spanish Governments portrayal of this segment as "spectators" that are driving up the housing costs for locals is not supported by the evidence.  Therefore a high taxation or total ban for this segment seems both disproportionate and misaligned from the realities of the Spanish property market. 

In our opinion, it could be said that the above data speaks for itself. In addition to this, the many processes that would have to be navigated in order to bring this proposal, or any proposal like this, into place could be lengthy.

We endeavour to keep on top of the information as it comes in, and update and inform our customers as soon as we can, with accurate and reliable information. Stay posted for further updates as they come in regarding this proposed tax increase.

In the meantime if you have any questions or queries, please don't hesitate to get in touch here, or call us on 0161 870 2276.

*All images, and data in this article have been sourced from Spanish Property Insight, with permission.*