“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,” said Sanchez at a political rally in Plasencia, western Spain.
Non-EU residents represent around 23,000 of the almost 700,000 homes bought and sold every year in the country, Sanchez said at the rally.
Of these, Brits are the biggest group: 18 per cent of the 400,000 property transactions registered between 2016 and beginning of 2024 were from UK buyers, El Pais reports.
According to the Bank of Spain’s estimates, the country has a deficit of 600,000 homes, with supply failing to match rising demand, pushing up prices and worsening access to housing.
Sanchez’s proposal aims to prioritise housing for residents and limit speculative transactions.
As part of these measures, Sanchez unveiled plans to introduce a tax surcharge on the existing Property Transfer Tax (ITP) of up to 100 per cent on non-EU, non-resident buyers.
“To clarify, the ITP is a tax applied when ownership of a property changes hands, triggered by transactions involving both movable and immovable assets,” explains Patricia Casaburi, managing director of Global Citizen Solutions, an organisation which helps people buy and move abroad.
“Such a measure would mark a significant shift in Spain’s approach to property ownership, with potential ramifications beyond the real estate market with a focus on non-EU-buyers.”
What’s the likelihood of the ban coming into force?
Spain’s Prime Minister Pedro Sanchez
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Sanchez’s proposal does not come out of the blue. This month, the government terminated its Golden Visa programme, effective from April 3.
Previously, the scheme had allowed homebuyers to acquire Spanish residency after five years, and Spanish citizenship after 10.
Foreigners, El Pais points out, already pay more than twice as much tax as Spanish nationals for their properties in the country.
According to statistics from the Consejo General del Notariado, nationals paid an average of €1,659 per square metre in the first half of 2024, while foreigners paid €3,379.
“I think the severity of the suggestion was a surprise, but there’s always been noise in Spain. There will always be noise in Spain. There’s noise in the UK, there’s noise in Portugal, there’s noise in Italy.
“This is a problem that every popular destination is wrestling with,” says Philip Harvey, senior partner at buying advisors Property Vision.
“Neither my clients who currently live or have homes there, nor the agent population in the areas that we cover on the south coast, believe that this will get any traction…It’s a great sound bite, but until you actually hear what’s going to come through in terms of legislation, [the proposal] can be considerably watered down to the actual plans that come forward. I think it’s a typical populist uttering.”
Harvey and Casaburi both highlight that the specifics of the proposal to impose a surcharge on the ITP —like whether the transfer tax itself will be raised, or whether it will be a capital addition to the purchase price of a property— are yet to be clarified.
What Sanchez proposes, and, crucially, whether it will be passed through congress, remain unclear.
“There is undoubtedly enough support that something is going to change,” Harvey adds.
“Our guess —and our colleagues in the south of Spain’s best guess— is that it will be something to do with holiday rentals and Airbnb, and that they will be treated like other businesses…
“I think there are going to be massive consequences for anybody who’s on a buy-to-let trajectory. It’s highly likely that there are going to be changes, and it’s not going to be a market in which lots of buy-to-lets happen in the future.”
What does the announcement mean for Brits looking to buy in Spain?
Nerja, Andalusia
David Bagnall/REX/Shutterstock
According to Casaburi, the uncertainty around the ITP has started to raise concern amongst investors and property experts.
“It is important to note that this is currently a political proposal,” she says. “At this stage, there is no reason for British buyers to put their plans on hold.”
She adds: “There are no concrete legislative measures in place, and any potential changes would need to go through the full legislative process in congress.
“For now, our advice to prospective buyers is to stay informed and monitor any updates regarding the bill’s progress.”
Paloma Perez Bravo, CEO of Spain Sotheby’s International Realty, is also doubtful that current plans would be passed.
Having consulted a legal and tax advisor, she cautioned that the planned tax increase “conflicts with EU law”, while the authority to change ITP on resale properties lies with the autonomous communities.
“Given that many of these regions are governed by the People’s Party, it is unlikely they would support a measure that directly impacts their budgets.”
Perez Bravo says that her office remains encouraging of foreign buyers.
“We have reassured our clients, clarifying that out of the 35 announced measures, none have been implemented to date. Moreover, this specific measure is not retroactive.
“We continue to encourage transactions, as Spain remains one of the most attractive investment destinations.”
Harvey also takes a more optimistic view. He says his clients —who are primarily lifestyle buyers purchasing at the £2m to £2.5m mark— have not pulled out of any deals.
“They expect it will blow over,” he says. “They’re lifestyle buyers, not investment buyers. They want to get on with it…none of them believe it will in its current suggested form.”
How does it affect British homeowners in Spain?
Harvey says most of his clients are lifestyle buyers
AFP via Getty Images
Harvey’s view is that his clients value their life in Spain more than the value of their property asset.
“They love Spain. Emotionally, they’re invested in Spain. They understand the noise and constant issues that there are between locals, state and nationals, and they accept it.
“[For a lifestyle buyer], it doesn’t necessarily matter whether the value of their asset goes up or down, as long as they’re enjoying it.”
Instead, the main concern for existing owners is what will happen when they come to sell.
At a higher price point, the ban on foreign buyers risks limiting their resale market. “That’s the potential big hit,” says Harvey.
Would a ban help solve Spain’s housing crisis?
While commentators agree on the need to tackle Spain’s housing crisis, some aren’t convinced that taxing foreign buyers will do enough to combat the shortage of available properties.
As Consejo General del Notariado’s figures show, foreign buyers are spending considerably more than their Spanish counterparts, representing a different section of the market.
“The market at the top is very different to the market at the bottom,” says Harvey.
“You can extract some tax from the people buying at the top and put that into lower value houses. But by not getting people to buy isn’t automatically going to release opportunities for low-income families to purchase.”
Instead, a crackdown on short-term lets, Harvey suggests, may have a bigger impact on the long-term rental market.
Casaburi is concerned that a ban on foreign buyers may have wider ramifications.
“A tax of this magnitude risks discouraging foreign investment, which has historically been an important driver of Spain’s economy.
“The proposal could also ripple through sectors such as tourism, particularly in the wake of Spain’s decision to end the Golden Visa program in April 2025.
“While addressing housing shortages is a pressing priority, introducing such restrictive task could risk reducing the influx of capital needed to fund new housing developments and infrastructure.
“Striking the right balance between protecting local housing availability and maintaining Spain’s appeal as a destination for global investment is critical for long-term economic sustainability.”
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