Adam Neale (Columnist)
SPAIN’S proposed new housing law, unveiled by PSOE on May 22, 2025, is a political stunt dressed up as reform – and a dangerous one at that.
Market-wrecking, tourist-scaring, and outright baffling in parts, the law seems designed to crash and burn – but not before doing serious damage.
Let’s start with the basics. Yes, Spain has a housing crisis. Young people can’t move out, rents are soaring, and not enough affordable homes are being built. The crisis has mobilised hundreds of thousands across the country.
So what does the government do? Proposes a half-baked Frankenstein of a law that is as incoherent as it is provocative.
There are a few proposals that, on paper, make sense: tax breaks for landlords offering below-market rents (up to 100%), a VAT increase on tourist rentals to match hotel rules, and taxes on empty homes. But it quickly veers into absurdity.
The worst part? A 100% property tax hike on non-EU buyers. Yes, really. That means Americans and Brits – who make up the lion’s share of foreign buyers – would effectively pay double the price of an EU citizen for the exact same home. A €1 million villa would suddenly cost €2 million. It’s not a ban – but it might as well be.
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Even stranger, the law exempts new-builds from this “supertax,” making it a gift to developers while hammering the resale market. And commercial real estate? Also untouched. Why? No explanation.
According to Idealista, 81.4% of foreign purchases are second-hand homes. So this law targets the bulk of foreign buyers – and by extension, the tens of thousands of Spanish jobs they indirectly support: builders, cleaners, estate agents, waiters, plumbers, taxi drivers. The ripple effect would devastate the Costa property economy.
But here’s the kicker – this law probably won’t pass. It faces opposition from both right and left, and would likely be struck down in the Senate or killed in court for violating EU rules. So why propose it?
Simple: political theatre. Sanchez needs a scapegoat for the housing crisis, and he’s chosen ‘wealthy’ non-EU buyers. EU citizens are protected, so he targets Americans and Brits instead. It’s populist, it’s performative, and it’s perilous.
Sanchez could be using the outrageous tax proposal as a bargaining chip – a decoy to distract from more palatable measures like Airbnb VAT hikes, rent controls or SOCIMI tax changes. He wins even if it fails. It’s strategy – not substance.
But it’s a dangerous game. Even if this absurd law never sees the light of day, it sends a chilling message: Spain is unpredictable, even hostile, to investment. That alone could scare buyers away and freeze the market.
It’s one thing to lose a vote. It’s another to torch investor confidence for the sake of a headline. If the government really wanted to fix housing, it would build more homes – not pick fights with those buying the ones that already exist.
