Property News

Socialists double down on housing taxation despite already high fiscal burden

Published

2 weeks ago

May 31, 2025

admin

Spanish housing minister Isabel Rodríguez — *Spanish Housing Minister Isabel Rodríguez is leading the taxation drive. Credit: Moncloa/Borja Puig de la Bellacasa*

Despite Spain having one of the highest property tax burdens in Europe—housing-related taxation currently accounts for 3.5% of the country’s GDP—the governing Socialist party (PSOE) is pushing for even higher levies.

In a newly tabled legislative proposal in the Spanish parliament, the Socialists aim to cool a red-hot rental market and increase the supply of affordable homes through a battery of tax-driven measures, including targeting tourist flats, foreign buyers and vacant dwellings.

A legislative push with slim prospects

The new proposal, presented this week in Congress, seeks to promote more affordable rentals by discouraging alternative uses of housing—from short-term tourism to “speculative” holding—through fiscal disincentives. However, the bill has found little support among other parties. Even Sumar, the hard-left coalition partner to PSOE, has described the initiative as underwhelming—not enough to radically shift supply dynamics—and its parliamentary future looks uncertain.

Still, the content of the proposal gives clear insight into PSOE’s approach: intervene through taxation.

Tourist flats, foreign buyers, vacant homes—in the crosshairs

The cornerstone of the bill is a plan to raise the VAT on tourist homes to the general rate of 21%. The objective is to push owners toward the less lucrative but more socially beneficial long-term rental market. According to the Bank of Spain, the profitability of short-term rentals has sparked the reallocation of around 50,000 homes to the tourist market in 2024 alone.

Foreign non-resident buyers, while only responsible for around 8.4% of total home purchases in recent years, are also targeted. PSOE proposes a new tax specifically for extra-EU nationals purchasing property, particularly in high-demand coastal and island regions where the concentration of foreign ownership is highest—such as Alicante (11%) and Málaga (8.5%).

SOCIMIs and empty homes also face hikes

The Socialist bill also revives the idea of tightening the tax regime for Spanish real estate investment trusts (SOCIMIs), which would see their corporate tax rate raised from 15% to 25%, unless they rent housing at regulated, affordable levels.

Other suggested measures include:

Expanding income tax deductions (IRPF) for landlords lowering rents, not just in “stressed” markets but nationwide.
Enhancing tax incentives for energy-efficiency renovations.
Penalising vacant homes with higher taxation—despite the fact that only about 10% of vacant homes are located in major cities where housing scarcity is most acute.

This last measure has drawn criticism for being poorly targeted: “The problem is, houses can’t be moved,” quipped Ángel Gavilán, outgoing Head of Research at the Bank of Spain. According to the bank’s analysis, assigning all short-term rentals and vacant homes to the long-term market would barely house 13–14% of urban households in high-demand cities like Madrid and Barcelona.

A heavy tax load—without proportional housing expenditure

Critics of the plan point out that the state’s tax take from the housing sector already far outweighs its financial support for housing policy. According to the Instituto de Estudios Económicos (IEE), a business-aligned think tank, property-related taxes represent roughly 3.5% of Spain’s GDP, while total public spending on housing and rental subsidies accounts for just 0.5%.

“The data highlight a significant imbalance,” the IEE states. “Housing is a major revenue source for public administrations, with limited reinvestment in housing policy. The state is more inclined to distort the market through tax than to support it structurally.”

An already taxed-to-the-rooftop sector

Spain’s property market is subject to a dense web of taxes across every phase—from land acquisition, permitting, and construction to sales and ownership. These include:

Property Transfer Tax (ITP)
Stamp Duty (AJD)
Capital Gains Tax
Urban Real Estate Tax (IBI)—Spain’s single largest source of real estate tax revenue, with €14 billion collected in 2024
VAT on new homes (€11 billion)
Personal income tax on rental income (€8 billion)
Municipal fees and regional levies including the ICIO (Construction Tax) and building permit charges

According to the IEE, taxes can represent up to 25% of the final price of a subsidised home, distorting both supply and affordability.

Conclusion: more revenue or better housing?

While the PSOE initiative clearly aims to address housing-access woes, its reliance on new and higher taxes has sparked debate about fairness, effectiveness, and whether policymakers are genuinely tackling the roots of Spain’s housing shortage—or simply squeezing more out of an already overtaxed sector. Whether the bill succeeds or not, the discussion over how to balance fiscal policy and social outcomes in housing is set to remain centre stage.

Up Next

Strong Start To The Year For Spanish Home Sales With Notable Regional Differences

Don't Miss

Nine Out Of Ten Property Developments Miss Deadlines Due To Poor Data Management

Click to comment

Latest

Why The Spanish Government Wants A New Housing-Database To Challenge The Private Property Portals

Published

2 days ago

June 11, 2025

SPI News

why-the-spanish-government-wants-a-new-housing-database-to-challenge-the-private-property-portals

Spain’s government is proposing a “public and reliable database” for housing prices, both for purchase and rent—a move squarely aimed at breaking the dominance of private property portals.

Prime Minister Pedro Sánchez has called for this new official resource to counter what he describes as the “opacity” of the current market, and the “dubious reliability” of data provided by leading platforms like Idealista and Fotocasa.

A battle over property market data

The timing of this announcement is no coincidence. In recent months, differences in housing data have led to a very public clash between Spain’s official narrative and the information circulated by private property websites. For example, while the Ministry of Housing cites official figures showing rent prices are falling in so-called high-pressure areas (down 3.7% in certain Catalonian municipalities and 6.4% in Barcelona, according to the Catalan housing institute INCASOL), Idealista claims the opposite: that rental prices are at historic highs and continuing to rise at a double-digit pace.

With such opposing narratives, trusting any single source becomes a challenge not just for policy makers, but for the public trying to make sense of the real estate market.

How would this new database work?

In practice, the government already publishes a wide range of housing data. Relevant agencies provide statistics for both sales and lettings. In fact, the Ministry of Housing recently introduced the State Reference System for Rental Prices (SERPAV), designed to generate market rental prices using tax data on occupied dwellings and their characteristics. This index is now used as the benchmark for rent controls in parts of Catalonia and the Basque Country.

So why a new tool now? The SERPAV’s biggest shortcoming is timing: it relies on tax return data, meaning there’s always a significant lag—the prices reflected can be up to a year old. Moreover, it only covers landlords who are individuals, excluding properties held by companies and organisations.

The government plans to create a database using regional data on rental deposits, as is the practice for INCASOL’s figures. Because landlords are legally required to register deposits, these records should—in theory—provide up-to-date information. However, the system is not foolproof: payments made in cash to avoid regulation can skew the numbers, and deposit data, like all data, can be massaged.

What about house sales prices?

Sales price data is, if anything, even more abundant. The National Institute of Statistics (INE) and the Ministry of Housing both publish regular reports on transaction volumes and price movements. The registrars and notaries also provide monthly updates, including breakdowns by foreign buyers and other details.

In contrast, property portals such as Idealista and Fotocasa base their numbers on listings, rather than final transaction values. This has some drawbacks: offer prices may not reflect final sale or rental prices, and negotiation can—at least in theory—drive those numbers down. Yet in hot markets, discounts are rare, so portals’ numbers tend to track reality more closely. As things stand, the government already has the best database when it comes to home sales and prices.

A monopoly on market information?

Sánchez argues that consolidating the various streams of public data into a single, transparent and up-to-date platform would help end the “monopoly” of the private portals. Critics counter that competing datasets encourage scrutiny, and that portal data (though imperfect) can complement official sources, especially as all major real estate valuation companies (like Tinsa and Sociedad de Tasación) use their own proprietary indices.

The bottom line

This move is about more than just numbers. With housing affordability and the effectiveness of new regulations under intense debate, whoever controls the narrative of house prices and rents wields significant power. The government’s new database, if done right, could help provide clarity—but only if it’s seen as credible, timely, and as nuanced as the marketplace itself. Until then, Spain’s public and private property data will continue to duel for the public’s trust—and for the headlines.

Balearics

Residential construction lifts Balearic economy in early 2025

Published

6 days ago

June 7, 2025

admin

The Balearic Islands are off to a strong economic start in 2025, powered by a growing construction sector and supported by record-breaking tourism and employment figures. According to the May edition of the Momento Económico report from the Regional Government’s Directorate General for Economy and Statistics, residential development is boomin—particularly in the Pitiusas and Menorca—reinvigorating an already resilient economy.

Residential construction rebounds sharply

The number of residential building permits issued in the Balearics rose by 27.6% year-on-year in the first quarter of 2025, with March alone seeing a 67.9% increase compared to 2024. This level of activity hasn’t been seen since 2021—considered one of the best years for the construction sector in the past decade.

The revival comes as a welcome driver for the region’s economic outlook. Growth has been forecast at 2.7% for the year, outpacing the predicted Spanish average of 2.6% and the European Union’s modest 1.1%. While the regional government remains cautious amid more optimistic predictions by private analysts, momentum appears strong in key sub-sectors of the economy.

Tourism remains a vital engine

The report details a healthy expansion in the all-important services sector, which grew by 3.7% year-on-year in Q1. Tourism continues to be the pillar of this performance. Between January and March, the Balearic Islands welcomed 1.28 million visitors—2.6% more than the same period last year. Average stays remained steady at 6.6 days.

Spending metrics also suggest a higher-value visitor profile:

Total tourist expenditure: €1.32 billion (+5.7%)
Average spend per tourist: €1,026 (+3.0%)
Daily expenditure per tourist: €155 (+7.2%)

With early data indicating robust seasonal bookings for the upcoming quarters, tourism is set to reaffirm its role as a key pillar of Balearic prosperity.

Industrial sector joins the party

Less dominant but increasingly relevant, industry also saw notable expansion during the first quarter, with production levels climbing in tandem with rising demand.

Inflation, however, remains a point of pressure. While headline prices are edging higher across Spain, the Balearics are leading the charge. Core inflation stood at 3.0% in April, well above the national average of 2.4%, further widening the region’s price differential.

Employment reaches historical highs

Possibly the most bullish signal: employment is at an all-time high. Social Security affiliations rose to 574,166 in April—an historic record for that month, representing a 3.4% year-on-year improvement.

Construction and services are the top job creators, though even the agricultural sector, which saw a slight annual drop of 1.1%, posted its third-best April result since 2009.

A strong foundation for the year ahead

The convergence of robust residential development, thriving tourism, expanding industry, and record employment positions the Balearic economy on exceptionally strong footing heading into the second half of 2025. Still, the government’s economic office is urging caution in the face of mounting inflation and broader geopolitical uncertainties.

Balearics

Construction Boom Drives Balearic Economy In Early 2025

Published

6 days ago

June 7, 2025

SPI News

Home » Construction boom drives Balearic economy in early 2025

Residential construction rebounds sharply

Tourism remains a vital engine

Spending metrics also suggest a higher-value visitor profile:

Total tourist expenditure: €1.32 billion (+5.7%)
Average spend per tourist: €1,026 (+3.0%)
Daily expenditure per tourist: €155 (+7.2%)

With early data indicating robust seasonal bookings for the upcoming quarters, tourism is set to reaffirm its role as a key pillar of Balearic prosperity.

Industrial sector joins the party

Less dominant but increasingly relevant, industry also saw notable expansion during the first quarter, with production levels climbing in tandem with rising demand.

Employment reaches historical highs

Construction and services are the top job creators, though even the agricultural sector, which saw a slight annual drop of 1.1%, posted its third-best April result since 2009.