MADRID, March 27 (Reuters) - Spanish Prime Minister Pedro Sanchez's plan to tax non-European Union property buyers up to 100% of the value of the purchase has stalled due to difficulties in gaining the needed support from political minorities, a government source said.
The plan, which was unveiled in January 2025 and made headlines around the world, aimed to reduce competition for local buyers from higher-income foreign purchasers in a country facing a severe housing shortage.
The world's second-most visited country after France is also among the European nations where public anger is most acute over affordable housing shortages, with rental supply halving since the pandemic.
Sanchez, a socialist, told a political rally days after announcing the measure his intention was to effectively ban non-EU property buyers "since they only do so to speculate".
Despite the headlines the bill generated when it was announced a year ago, it still had not been debated by March 2026, parliamentary documents showed.
FRAGMENTED PARLIAMENT HAMPERS DECISION MAKING
The Socialist-led minority government relies on a patchwork of smaller parties who support legislation on a case-by-case basis and has found it increasingly hard to gain support for legislation as Sanchez's term progresses.
A senior government source, who asked to remain anonymous, said new taxes are among the most difficult issues on which to gain majority support.
Right-wing Catalan separatist party Junts, which recently withdrew its support for the government, opposes the tax.
"The government has chosen to limit, ban and penalize instead of addressing the real issue: a lack of housing supply," Junts lawmaker Marta Madrenas said.
Far-left Podemos on the other hand said the government lacked the "political courage" to ban all purchases of houses not intended for residential use.
The government source said it would continue to raise the 100% tax for debate in Congress, but the measure was not included in a second housing bill put up for debate last year to regulate short-term rents.
With elections slated for August 2027 at the latest, the government now risks running out of road.
IMF SAYS SPAIN NEEDS MORE SUPPLY
The IMF warned in a report last Friday that Spain must address double‑digit house price increases that are driven by strong demand and population growth through immigration, with a sharp increase in housing supply.
Early data suggests last year's announcement had little immediate impact on the property market.
Foreigners made up 20% of all buyers last year, unchanged from a year earlier. Britons remained the largest group of foreign purchasers, at around 8%, preliminary official data showed.
"The announcement created uncertainty, triggered a surge in legal and tax inquiries, and brought forward some purchases that were already well advanced," Paloma Perez, CEO of luxury real estate firm Dils Lucas Fox said. "However, it did not spark a big buying spree among non‑residents, as it unsettled some high-net-worth international buyers who value legal certainty".
(Reporting by Corina Pons, editing by Aislinn Laing and Sharon Singleton)
