Spain will regret its 100 per cent expat property tax

They drive up prices. Rents go through the roof. And the locals can no longer afford a home. The Spanish Prime Minister Pedro Sanchez is so fed up with wealthy expats inflating the property market he is planning a 100 per cent tax on anyone from outside the EU buying a home in Spain. Of course, that might prove popular in the short term – but Spain will pay a high price for slamming the door shut on well-off foreigners. 

Any who dreamt of buying a small place on the Costa del Sol or in the hills of Catalonia can probably forget about it. Very soon they will face a 100 per cent additional tax, a rate of effective stamp duty that even Rachel Reeves might consider a bit steep. Since it can’t be recouped when you sell the property, it will effectively close the Spanish market to foreigners. You either rent or go elsewhere.

Of course, with soaring property prices, and a shortage of places to live, it is easy to see what Sanchez is getting at. People can’t afford housing and rich foreigners are an easy target just as they are in the UK. Even so, it is still a big mistake. 

First, the numbers are tiny. An estimated 27,000 Spanish properties were bought by non-EU residents last year, with the British retirement crowd only a small proportion of that. For a country with a total population of 48 million that is a tiny percentage. Most of them are located in a handful of cities. To pretend driving them out will make any difference to the average Spaniard is just ridiculous. 

Next, the expats bring investment and jobs. Spain has managed to expand significantly faster than the rest of Europe over the last few years, with a 2.7