Is Spain’s “European Florida” under threat? Brits fear housing crackdown

Spain: The “Florida of Europe”

by Lorraine Williamson
Published: Updated:
housing crackdown Spain

For thousands of Brits, Spain has become their equivalent of Florida, offering sunny weather, a relaxed lifestyle, and affordable housing. Popular Mediterranean coastal towns are home to large British communities, many of whom have chosen Spain for retirement or as a base for holiday homes. Pedro Sanchez has introduced measures which place a housing crackdown in Spain.

However, recent news has sent shockwaves through these communities. Reports of Spain’s plans to impose a 100% tax on property purchases by non-EU citizens have sparked widespread concern. The proposal, which aims to make housing more affordable for locals, has dominated headlines in British media, including the Financial Times, BBC, and Bloomberg.

Why foreign buyers choose Spain

Foreign buyers are attracted to Spain for a variety of reasons. Its sunny climate, offering over 300 days of sunshine annually in many regions, is a significant draw. Coastal areas such as the Costa del Sol, Costa Blanca, and the Balearic Islands are particularly popular for their Mediterranean lifestyle, combining relaxed living with stunning sea views.

Spain’s affordability compared to other European destinations is another key factor. Property prices, while rising, remain lower than those in locations such as the French Riviera or Tuscany. This affordability extends beyond housing, with Spain offering a relatively low cost of living, particularly in terms of food, healthcare, and leisure.

Transport links also play a critical role. Spain boasts well-connected international airports in cities like Malaga, Alicante, and Palma de Mallorca, alongside a high-speed rail network that makes travel within the country seamless. This accessibility is vital for second-home owners who frequently travel between their properties and their primary residences.

The country’s healthcare system is another major selling point. Spain’s public and private healthcare services are consistently ranked among the best in Europe, appealing to retirees seeking reliable medical care in their later years.

Cultural and recreational offerings further enhance Spain’s appeal. From world-class golf courses and water sports to festivals, historic cities, and renowned cuisine, the country offers something for everyone. This vibrant mix of leisure opportunities ensures that foreign buyers, whether retirees or holidaymakers, see Spain as an ideal location to invest in a second home.

Proposed tax: Housing crackdown in Spain

The Spanish government, led by Prime Minister Pedro Sánchez, has outlined plans for a punitive property tax targeting non-EU citizens who are not resident in the bloc. According to the Financial Times, the measure is part of a broader initiative to address Spain’s housing crisis, which Sánchez has described as “severe.”

The proposed tax would apply to non-EU buyers, including Brits, whose purchases are often viewed as speculative. Sánchez claims such buyers acquire approximately 27,000 properties annually, contributing to soaring property prices and leaving many locals priced out of the market.

While the proposal still requires parliamentary approval and further analysis, it has already sparked uncertainty among potential buyers and the real estate sector.

Rising property prices: A European problem

The housing affordability crisis is not unique to Spain. Across Europe, property prices have risen by 48% over the past decade, far outpacing household income growth. In Spain, house prices rose 8.3% year-on-year in the third quarter of 2024, according to Eurostat, marking the fastest increase since early 2022.

Non-Spanish buyers accounted for 15% of property transactions in the same quarter, with Brits leading the charge at 8.5%. Other key foreign buyers include Germans, Moroccans, Poles, and Italians, according to the Spanish Land Registrars Association.

Industry concerns and economic impact

While the government argues that the tax could ease housing tensions, experts remain sceptical. Antonio de la Fuente, Director General of Colliers, told the Financial Times that the 27,000 annual purchases by non-EU buyers represent a tiny fraction of Spain’s 26 million homes. He warned that the proposal’s “noise and uncertainty” could deter investors and disrupt the market.

Additionally, foreign buyers contribute significantly to local economies through property taxes, renovations, and tourism. Any decline in international investment could have unintended consequences for regions reliant on these revenues.

The broader debate on housing

Spain’s housing challenges mirror broader tensions between globalisation and local needs. While foreign investment has boosted the economy, it has also exacerbated affordability issues for locals. The government’s proposed measures signal a shift towards prioritising sustainability and equity in the housing market.

As debates continue, the future of Spain’s “European Florida” hangs in the balance. Will the country maintain its allure for Britons and other foreign buyers, or will these policies mark the end of an era?

Also read: Sanchez announces tax exemptions for homeowners

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