Staff Reporter
AS a real estate expert in Marbella with over five decades of experience, I feel compelled to respond to Prime Minister Pedro Sanchez’ plans for tackling the housing crisis.
Among the 12 measures outlined this month, the proposal to increase the fiscal cost of property purchases by non-EU residents to ‘up to 100% of the value of the property’ is particularly concerning.
For starters, the wording is both alarming and ambiguous. And, specifically, the reference to ‘100% of the value’ leaves significant room for interpretation.
If this refers to property transfer taxes, as I believe, it conflicts with existing regulations, with these taxes falling under the jurisdiction of Spain’s 17 autonomous regions, not Madrid.
The lack of clarity in this statement therefore risks creating unnecessary confusion in the market.
The Prime Minister’s assertion that non-EU residents are buying properties in Spain ‘not to live in, but to speculate and make money’ is an oversimplification that fails to reflect the realities of the market.
While speculative activity may occur in a few city centres causing over-tourism issues, the vast majority of non-EU buyers are purchasing homes for personal use, often as second or third residences.
Furthermore, most of these buyers contribute significantly to the Spanish economy through tourism, construction, and property maintenance.
In places like Marbella, this ‘residential tourism’ sustains numerous sectors, creating jobs and fostering economic growth.
To label these buyers as ‘evil speculators’ is not only misleading but risks alienating a segment of the market that brings substantial financial benefits to Spain.
The justification for the proposed measure – that it will alleviate the housing shortage for lower and middle-income Spaniards – is simply not supported by evidence.
Even the government’s estimate of 27,000 affected buyers represents less than 4% of the market.
Such restrictions are therefore unlikely to meaningfully address the housing crisis, which requires systemic solutions such as increased housing supply, affordable rental programs, and targeted subsidies.
While the proposal may only be a ‘floating an idea’, and considered highly unlikely to succeed, its announcement alone with a mere ‘threat’ of restrictions could disrupt the market.
It could actually lead to:
- Increased Demand: Non-EU buyers may rush to purchase properties before any restrictive measures are enacted, leading to a temporary surge in demand and inflated prices
- Market Uncertainty: On the flip side, the proposal’s ambiguity and potential restrictions could deter individual and institutional investors, creating hesitation in the market
The proposed VAT on short-term rental contracts adds to an already complex web of restrictions targeting this sector.
While the intent to address the shortage of long-term rental properties is valid, the cumulative impact of national, regional, and local regulations is discouraging investment in rental properties altogether.
Buyers considering properties for short-term rental purposes should proceed with caution, as the regulatory environment continues to tighten.
In conclusion, the proposed measures, particularly the one targeting non-EU property buyers, is a classic populist response to the housing shortage and an appeal to the extreme left-wing of the coalition government rather than a well-reasoned policy.
While addressing the housing crisis is an urgent priority, these proposals risk doing more harm than good.
The negative implications for the real estate market, economic growth, and Spain’s reputation as an attractive destination for foreign investment cannot be ignored.
To genuinely address the crisis, the government should focus on increasing the housing supply, incentivizing long-term rentals, and ensuring affordability for local residents.
Alienating non-EU buyers, who contribute significantly to Spain’s economy, is not the solution.
Christopher Clover is the Managing Director of Panorama Properties, Marbella’s Longest Established Real Estate Agency, in the city since 1970.
In any case, the properties of owners/potential owners who the proposed measures are targeting are very unlikely to ever be on the market as rentals- and if by chance they are, they certainly won’t be affordable – except by renters who are well off.