Pedro Sánchez Unveils Housing and Tax Reform Proposals

Spain’s Prime Minister, Pedro Sánchez, has announced a series of proposed measures aimed at addressing housing shortages and curbing speculative property investments by foreign buyers. These measures, which are yet to be approved by Congress, include tax increases for non-resident property owners, reclassification of tourist rental properties, and initiatives to expand affordable housing options.

Key Proposals for Non-Resident Property Owners

1. Higher Taxes for Non-EU Non-Residents
   Sánchez has proposed increasing to 100% the property taxes for non-EU non-residents who do not live in Spain. This is designed to discourage speculative purchases and prioritise housing for residents.

   In 2023 alone, non-EU non-residents purchased approximately 27,000 properties, many for investment purposes. Sánchez highlighted that such speculative activity exacerbates the housing crisis and must be addressed.

2. Reclassification of Tourist Properties
   A fiscal reform is planned to treat tourist rental properties as commercial businesses. This would require owners to pay taxes, including VAT, similar to hotels.

   The reform also includes:

   • Increased enforcement against illegal or fraudulent short-term rentals.
   • A new fund to support local and regional governments in conducting property inspections.

3. Adjustments to Wealth and Rental Taxes

   • Wealth Tax: Proposals to reduce exemptions for non-residents are under consideration.
   • Rental Income Tax Incentives: A proposed 100% exemption on rental income tax (IRPF) for property owners who lease homes under affordable housing guidelines.

Proposed Measures to Address Housing Shortages

Sánchez outlined several initiatives aimed at increasing the availability of affordable housing for Spanish residents:

• Rehabilitation of Vacant Homes: Financial aid for homeowners who renovate empty properties and lease them affordably for at least five years.
• State-Owned Housing Projects: A new public housing entity will focus on building and managing affordable rental units. Over 30,000 homes from Sareb are expected to be integrated into this initiative, with 13,000 ready for immediate use.
• Public Rental Guarantees: A government-backed system to protect landlords and tenants in affordable rental agreements, particularly targeting renters under 35.

Important Notes: Proposals, Not Law

These measures are still in the proposal stage and must pass through Congress to become law. This process involves legislative scrutiny, potential amendments, and approval, which could take several months. As of now, the proposals are not enforceable, and their final form may differ from the initial announcements.

How This Could Affect You

If approved, these reforms could significantly impact non-resident property buyers and owners in Spain. Whether you’re considering a property purchase or already own property in Spain, understanding these potential changes is crucial.

For more information on how these proposed measures might affect you, contact Platinum Legal Spain.
Our experienced legal professionals can provide tailored advice and support to ensure you remain informed and prepared for any developments.