Madrid

The proposal, unveiled in January 2025 to considerable international attention, was designed to ease pressure on local buyers by curbing competition from wealthier foreign purchasers, at a time when Spain is grappling with a severe housing shortage.

Rental supply has halved since the pandemic, and public frustration over housing affordability is among the most acute in Europe. Prime Minister Sánchez, a socialist, declared at a political rally that his intention was to effectively ban non-EU buyers, accusing them of purchasing property purely to speculate.

Despite the global headlines the announcement generated, the bill had not been debated in parliament by March 2026. Spain’s fragmented legislature has proved a persistent obstacle. The Socialist-led minority government relies on a shifting coalition of smaller parties, each of which must be won over on a case-by-case basis. A senior government source, speaking anonymously, acknowledged that securing majority support for new taxes is particularly difficult, Reuters reports.

Opposition has come from contrasting directions. The right-wing Catalan separatist party Junts, which recently withdrew its broader backing for the government, opposes the tax altogether, arguing that the real problem is insufficient housing supply rather than foreign ownership. Meanwhile, the far-left Podemos criticised the government from the other side, accusing it of lacking the political courage to go further and ban all purchases of homes not intended for residential use.

The government has indicated it will continue to push for the tax to be debated in Congress, though the measure was notably absent from a second housing bill introduced last year to regulate short-term rentals. With a general election due by August 2027 at the latest, time is running short.

The International Monetary Fund added its voice to the debate last week, warning in a report that Spain must urgently address double-digit house price increases driven by strong demand and rising immigration. The IMF’s prescription focused on substantially increasing housing supply rather than restricting foreign buyers.

Early evidence suggests the original announcement had little discernible effect on the property market. Foreigners accounted for 20% of all purchases last year, unchanged from the previous year, with UK nationals remaining the largest group of foreign buyers at around 8%, according to preliminary official figures.