On January 13, 2025, Spanish Prime Minister Pedro Sánchez unveiled a 12-point plan aimed at addressing Spain’s housing crisis and improving access to affordable housing.
There are two points that need to be clarified about what he said…
- The first is that all the measures he announced are still proposals and not yet law. Many remain subject to parliamentary approval.
- The second is that in Spain, Sanchez’s announcement was interpreted as a doubling of the existing 6.5% purchase tax for non-resident, non-EU property buyers. They would pay 13% of the value of their purchase in tax. He did NOT, as reported in the international press, announce a 100% tax on property purchases by foreign buyers.
However, Sanchez has not clarified his statement so we are in limbo about his intentions.
Here is a summary of the 12 proposals made by the Spanish PM…
1. Establishment of a Public Housing Company: The government has transferred over 3,300 homes and two million square meters of residential land to a newly created public housing entity. Additionally, more than 30,000 properties from the SAREB (Spain’s “bad bank”) will be incorporated, with 13,000 available immediately.
2. Priority in Purchasing Properties and Land: This public housing company will have preferential rights to acquire properties and land, aiming to prevent public assets from falling into the hands of speculators.
3. Permanent Public Ownership of State-Built Housing: All housing constructed by the state will remain indefinitely under public ownership, ensuring that publicly funded properties do not end up with private speculators.
4. Promotion of Modular and Industrialised Construction: A strategic plan (PERTE) will be launched to modernise the construction sector, focusing on modular and industrialised building methods to reduce costs and construction times.
5. Public Rental Guarantees: A public guarantee system will be established to protect both landlords and tenants participating in affordable rental schemes, reducing risks and encouraging participation.
6. Rehabilitation of Vacant Homes: A new program will support the renovation of vacant homes, provided they are rented out at affordable rates for a minimum of five years.
7. Income Tax Exemptions for Affordable Rentals: Subject to parliamentary approval, landlords who rent their properties in line with the Reference Price Index will receive a 100% exemption on personal income tax (IRPF), even if the property is not located in a designated high-demand area.
8. Taxation of Tourist Apartments: Tourist rental properties in high-demand areas will be taxed as businesses, making them subject to value-added tax (VAT), to address the proliferation of short-term rentals reducing housing availability. In the Canary Islands VVs already have to pay IGIC, the Canarian equivalent of this tax
9. Reform of SOCIMI Tax Advantages: Tax benefits for SOCIMIs (Real Estate Investment Trusts) will be restructured to apply only to those promoting affordable rental housing. This is to prevent large financial entities from buying up Spanish residential property in low-tax trusts and charging high rents.
10. Increased Taxes on Non-EU Foreign Buyers: Non-resident, non-EU nationals purchasing property in Spain will face increased taxes, again to curb speculative investments and prioritize housing for residents.
11. Enhanced Regulation Against Seasonal Rental Fraud: Regulations will be tightened to combat fraud in seasonal rentals, including increased inspections to identify illegal tourist accommodations.
12. New State Housing Plan: A new housing plan will be implemented in 2026, expanding assistance for housing access, with particular attention to young people, the elderly, and individuals with disabilities.
As with all proposals announced made by Spanish politicians, it remains to be seen whether they will be modified before coming into force, and whether they will make it through parliament. As things stand, the proposals remain to vague to really assess so we have to wait and see if they have any effect on the Las Palmas property market.