IN MADRID – A British estate agent has warned that Spanish government plans to impose a tax of up to 100 per cent on homes bought by Britons and other residents from countries outside the EU could shatter his business and damage confidence in buying holiday homes in the Iberian nation.

The Spanish prime minister, Pedro Sánchez, announced the tax as the government sought to quell mounting anger over the cost of renting homes which has soared beyond the reach of many Spaniards, sparking protests.

However, property experts say that if the law is passed it could devastate British confidence in buying a holiday home in Spain, which has been a dream for many in the UK for decades.

“If it means 100 per cent tax on purchase or even a staggering amount up to 100 per cent, then it kills 80 per cent of my business. We brought millions of investment into Spain last year and tax,” Graham Hunt, a British estate agent who runs Valencia Property in Valencia, said.

Mr Hunt, who is from Liverpool and has lived in Spain for 25 years, said it may scare off Britons who were considering buying a villa on the Spanish Costas.

The British have long been the largest group of foreign nationals buying property in Spain, mostly in the Costa del Sol, the Costa Blanca, Barcelona and the Balearic Islands.

In the first half of 2024, Britons bought 38 per cent of all homes purchased by foreign buyers, followed by United States buyers, according to figures from property notaries.

“Even the idea of this law should bring into focus two things: the folly of Brexit and even if you are ever going to come and live here or have a holiday home, then do it now as this [law] will take months,” Mr Hunt told The i Paper.

However, he said he doubted Spain’s minority left-wing coalition government would be able to pass a new law to introduce the tax because they depended on an unstable group of small regional parties to govern.

Prime minister Sánchez has said many of the Britons and other non-EU nationals who bought homes in Spain did not do this to live in them.

“Just to give an idea, in 2023 alone non-European Union residents bought around 27,000 houses and flats in Spain. And they didn’t do it to live in them, they didn’t do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow,” he said.

Mark Stucklin, a British property expert who edits the Spanish Property Insight website, which analyses the sector, dismissed those claims about Britons as “industrial-strength disinformation”.

He told The i Paper: “[Sánchez] accuses [Britons] of buying properties in Spain ‘not to live in, not for their families to live, but primarily to speculate, just to make money.

“This is so far from the truth it’s mind-boggling. This is industrial-strength disinformation from the [Prime Minister] of Spain. One Hundred per cent of British families buy holiday homes on the Costa Blanca, Costa Calida and Costa del Sol, purchased for lifestyle reasons and, in many cases, as a place to retire to.

“They certainly won’t make money in the short term, which is the point of speculation. In many, if not most, cases they will end up financially worse off as a result of buying a home in Spain.”

Sánchez did not offer more details on how the plan would work or when it would be finalised and sent to parliament for approval.

Sánchez introduced the proposed tax as part of a raft of measures designed to deal with the housing crisis at a business meeting on Monday.

He took aim at tourist flats, which have been blamed for pushing up housing prices in Spain and sparked a series of protests across the country last year.

Sánchez promised to tighten regulations on these rentals and increase taxes.