New Housing Law 2025 Spain

On January 13, 2025, Spanish Prime Minister Pedro Sánchez announced a new law proposal to address Spain housing crisis, including a controversial measure to rise 100% tax on property purchases by non-EU residents.

These proposed housing initiatives in Spain have the potential to transform the landscape of Marbella property Market. Discover the implications of these changes for your situation.

Pedro Sánchez announces measure in response to anger over rising housing costs in Spain.

The President announces 12 new measures to strengthen the right to affordable housing. The announcement by Spain’s Prime Minister, Pedro Sánchez detailed a range of proposed measures intended to tackle the persistent and severe housing crisis in the country, as well as the rising long-term rental prices throughout the country.

Proposals, not Legislation yet.

Although many of his arguments are valid and reasonable, his declaration concerning the intention to raise the tax on property acquisitions by non-EU foreigners signifies a move towards enacting legislation by a government under considerable strain from its coalition partners and contending with various pressing political issues, including challenges in obtaining approval for its own legislative initiatives.

What non-eu residents need to know?

Increased taxes for non-residents and non-EU nationals buying property in Spain.  Pedro Sanchez is planning a 100% tax rate on homebuyers from overseas in an effort to tackle the country’s housing crisis, by decreasing foreign purchases. If they used to pay 7% (in Andalucia), in case the law is approved in the parliament they would pay 14% in taxes.

The suggested policy to impose fiscal restrictions on property purchases by non-residents and non-EU members, while concerning, is far from guaranteed to receive approval. The process of drafting the legislative text is expected to take several months. However, the mere announcement of such a measure has the potential to disrupt the market in two significant ways:

• Firstly, it may lead to a surge in demand from prospective buyers outside the EU who wish to acquire properties in Spain before any such restrictive legislation is enacted, assuming the government manages to secure the necessary approvals.
• Conversely, this situation could also generate confusion and uncertainty within the market, potentially discouraging both individual and institutional investors from pursuing property acquisitions in Spain.

It is important to note that this measure is anticipated to affect only approximately 27,000 buyers, which constitutes around 4% of total residential sales in Spain. Furthermore, many of these properties are primarily intended for personal holiday use rather than for tourist rentals or real estate speculation, as suggested by Sanchez. Therefore, it is highly questionable whether this proposed legislation would significantly enhance the availability of housing for long-term rentals under any circumstances.

Increased taxes on rental properties

In light of the recently announced tax increases for short-term rental properties, which include the addition of VAT to short-term rental agreements, this development represents the latest in a series of measures implemented over the past few years aimed at discouraging tourist rentals. Such actions are perceived as contributing factors to the significant shortage of long-term rental properties and the rising rental prices in various regions across the country.

Short-term rentals are now subject to stringent regulations and oversight from the European Union, the national government, regional authorities, and local administrations, alongside rigorous tax enforcement. Consequently, Prime Minister Sanchez’s declaration regarding the introduction of VAT on tourist or short-term rentals comes as no surprise.

In addition, from January 2025, a new index will come into effect for price controls for landlords: that will limit these increases to a percentage lower than the Consumer Price Index (CPI). Owners of flats in high-demand areas will not be able to increase the rent for their leased properties.

For several months, we have been advising prospective property buyers about these escalating regulations, noting that even homeowners’ associations can restrict short-term rentals within their communities. Therefore, any investment in apartments or villas intended for short-term rental purposes should be approached with caution, considering the ongoing and evolving nature of these restrictions.

We at LuxuryForSale.Properties don’t think that proposal will go ahead. Pedro Sánchez will not obtain the necessary parliamentary support; But the announcement may (or may not) have negative repercussions on the real estate market in the short term. Then the market will return to your usual pace.

Interested on buying a luxury property in Marbella, Costa del Sol?

At LuxuryForSale.Properties, We offer unparalleled services, connecting discerning clients with prestigious properties. With expertise, professionalism, and personalized attention, We ensure seamless transactions, showcasing exclusive properties that define Marbella’s opulent lifestyle. Feel free to contact us to know more about the new law.