Chris Clover of CSN News says that the proposed housing measures by the government are alarming and ambiguous. They could create chaos and will not solve the crisis.

I’m a Marbella real estate specialist with over 50 years of experience. Therefore, it is my duty to give a response to the Prime Minister Pedro Sanchez plans to tackle the housing crisis.

Among the 12 measures outlined this month, the proposal to increase the fiscal cost of property purchases by non-EU residents to ‘up to 100% of the value of the property’ is particularly concerning.

The wording of the warning is alarming as well as ambiguous. And, specifically, the reference to ‘100% of the value’ leaves significant room for interpretation. 

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This is a conflict with the existing legislation, because these taxes are under the jurisdiction and control of Spain’s 17 autonomous regional governments, not Madrid.

A lack of clarity could create confusion in the marketplace.

The Prime Minister’s assertion that non-EU residents are buying properties in Spain ‘not to live in, but to speculate and make money’ is an oversimplification that fails to reflect the realities of the market. 

While there are a few cities where speculative activities may cause overtourism problems, the vast majority (of non-EU buyers) purchase homes to use personally, often as a second home or third residence. 

Most of these buyers are also important contributors to the Spanish Economy through tourism, construction and property maintenance.

In places like Marbella, this ‘residential tourism’ sustains numerous sectors, creating jobs and fostering economic growth. 

To label these buyers as ‘evil speculators’ is not only misleading but risks alienating a segment of the market that brings substantial financial benefits to Spain.

The justification for the proposed measure – that it will alleviate the housing shortage for lower and middle-income Spaniards – is simply not supported by evidence. 

Even the 27,000 buyers affected by the estimate from the government represents less that 4% of the total market. 

The housing crisis cannot be solved by such restrictions. It requires systemic measures, including increased housing stock, affordable rental programs and targeted subsidies.

While the proposal may only be a ‘floating an idea’, and considered highly unlikely to succeed, its announcement alone with a mere ‘threat’ of restrictions could disrupt the market.

This could lead to:

• Demand for Property: Non EU buyers may rush into purchasing properties before any restrictions are enacted. This can lead to a temporary increase in demand, and an inflation of prices.
• Market Uncertainty. On the other side, the proposal’s potential restrictions and ambiguity could discourage institutional and individual investors, creating uncertainty in the market.

The proposed VAT on short term rental contracts is another addition to the already complex web that restricts this sector.

Although the intention to reduce the shortage of rental properties for long-term is valid, the cumulative effect of the national, regional and local regulations discourages the investment of rental properties. 

As the regulatory environment continues tighten, buyers considering purchasing properties for short-term rentals should proceed cautiously.

The proposed measures are not well-reasoned policies. They are a populist reaction to the housing crisis, and a way to appeal to the extreme Left of the coalition. 

These proposals may not be the best way to address the housing crisis, but they could do more harm than good. 

Spain’s reputation for being a desirable destination for foreign investors and the impact of negative impacts on the real estate sector, economic growth, cannot be ignored.

In order to truly address the crisis, government officials should concentrate on increasing housing supply, encouraging long-term rental, and making local rentals affordable. 

It is not a solution to alienate non-EU purchasers, who are important for the Spanish economy.

Christopher Clover has been the managing director of Panorama Properties since 1970, the oldest established real estate agency in Marbella.