The Spanish government is moving to curb foreigners' purchases of real estate and curb the spread of short-term rentals. It's part of a series of measures that authorities say are necessary to ease a painful housing crisis that is fast becoming one of Europe's worst. .
Spanish Prime Minister Pedro Sánchez said Wednesday that his government will seek a landmark 100% tax on property purchases by buyers outside the European Union, announced last week to quell anger and protests in Spain. It's part of a broader plan. Cities across Spain are holding protests over a lack of affordable housing. He went even further on Sunday, announcing a total ban on foreigners buying property in Spain, which he later reversed.
Americans have been struggling with an affordable housing crisis for years, and now major European cities are struggling with similar problems. Housing costs are the largest household expense across the European Union, with rents rising on average by nearly 20% and house prices rising by nearly 50%, twice the average household income, over the past decade.
The intensity varies from country to country, but there are commonalities: the commodification of housing, the rise of short-term rental platforms like Airbnb, and the so-called golden visa programs in Spain and neighboring countries that have attracted buyers to jump on board. there is. Provide housing in exchange for a visa.
Russia's invasion of Ukraine caused the prices of building materials and energy to soar, and housing construction across Europe plummeted, adding to the burden. High interest rates imposed by the European Central Bank to curb inflation have hit real estate markets across Europe.
From Spain to Sweden, housing shortages and slowing wage growth are making access to affordable housing even more difficult. The problem is so serious that European Commission President Ursula von der Leyen recently appointed a Housing Czar to facilitate the search for solutions in Europe.
In Spain, Sanchez warned that housing was one of Europe's biggest risks. “This is one of the main challenges facing European societies, including Spain,” he told a conference in Madrid last week, calling affordable housing a “right” and a “pillar of the welfare state.” declared that it must be done.
“We are facing a serious problem with huge social and economic consequences, and require a decisive response from society as a whole and public authorities at the forefront,” he added.
It is unclear whether Sanchez's proposal will become law. The 12 new measures outlined by the prime minister last week include tax breaks for landlords to lower rents and proposals to build thousands of low-cost homes across Spain. Sánchez said Spain had the lowest share of affordable housing among European countries, a problem that arose after the previous government allowed the sale of many homes to private investors.
Sanchez said he would push for the recently created public housing company to be prioritized over private investors in purchasing homes and land. Any bill would need to pass Spain's lower house of parliament, where Mr Sanchez's minority party has struggled to pass it.
But Sánchez's proposal shows how important housing is at a time when Spain is in the midst of a crisis, including efforts to recover from devastating floods.
The urgency is growing as street protests become more frequent.
Short-term rentals are booming in popular vacation spots, where locals are targeting tourists due to a lack of housing. In November, tens of thousands of Spaniards filled the streets of Barcelona in search of a solution. The mayor announced that by 2028, all 10,000 permits granted to apartment owners to convert them into short-term rentals for tourists will be withdrawn.
Thousands of people have taken to the streets in Madrid in recent months in search of more affordable housing amid rising rents. “Housing is a right, not a business,” the crowd chanted.
European governments facing similar backlash are also trying to find their own solutions. Greece has announced it will freeze licenses for new short-term rentals in central Athens in 2025, putting rental prices out of reach for many Greeks who have moved in recent years as buildings have been renovated for tourists. are.
In Germany, the government collapsed in December and the construction industry is facing its worst crisis in a generation, with billions proposed by the previous government to support developers in Europe's largest economy. Questions arose about the euro-wide bailout package. Prominent construction and real estate companies have filed for bankruptcy one after another, putting pressure on supply.
And the French government says it wants to build 30,000 homes in priority areas, mainly in areas where factories are being built. Some towns, such as Lyon and Toulouse, are building low-cost apartments on top of existing buildings. The city of Paris is considering whether to convert unused office space into housing.
“Western countries face a decisive challenge if they want to avoid becoming a society divided into two classes: wealthy landowners and poor peasants,” Sanchez said in Madrid last week.
