a) Real Estate Speculation: Policies That Favour Corporate Buyers
Over the last 15 years, more than one million homes in Spain have been purchased by companies. That’s nearly 12% of all property sales. And six out of every ten of those company purchases took place in already highly pressured coastal areas like Catalonia, Valencia, Andalusia, Murcia, and the Balearic Islands.
These aren’t just one-off real estate purchases, many of these acquisitions come from large investment funds, real estate companies, and corporate landlords (including investment trusts and tourism operators) who target coastal properties for their long-term returns. Many wealthy individuals also use corporate structures to benefit from tax breaks that aren’t available to private citizens.
And here lies one of the contradictions: while there are increasing restrictions on individuals buying holiday homes or letting them out short-term, there’s very little regulation stopping companies from buying large volumes of homes, even in areas with housing shortages. In some places like Madrid, companies even benefit from lower property transfer taxes!
b) Education and Skills: A Disconnect Between Schools and the Local Economy
The economy along Spain’s coast is undeniably international. Foreigners bring enormous spending power. Their money is not just spent on real estate purchases but through their need for renovations, interior design, furniture, decor, trades, landscaping, legal and financial services, healthcare, wellness treatments, and much more.
However, many local school systems have not kept pace with what the economy requires. In areas like the Valencian Community or the Balearic Islands, more time is often spent learning regional languages than global ones like English, German, Dutch, or French—languages which are essential in the service economy. Meanwhile, there’s still a lack of focus on digital literacy, entrepreneurship, and modern customer service skills. These are all vital for the kinds of small businesses that could help the Spanish thrive in international coastal communities.
Without these skills, local residents can miss out on valuable opportunities, and the ability to raise their own economic standing.
c) The Reluctance to Rent or Sell to Fellow Spaniards
There’s also a social and cultural dimension. Many Spanish property owners openly admit that they prefer to rent or sell to foreigners. This is often due to concerns over the risks they perceive when dealing with Spanish tenants or buyers, for example late rental payments, damage to property, difficulties in eviction, and complicated mortgage processes.
Foreign buyers, on the other hand, tend to be cash buyers and are seen as more straightforward in transactions. While not universally true, this perception can lead to a vicious cycle, where Spaniards are locked out of local housing not just by price, but by trust and preference.
d) Hiring Dynamics: Locals Losing Out on Local Jobs
In expat-heavy areas, it’s not uncommon to see businesses hire foreigners rather than local Spanish workers. But this isn’t simply about exclusion. Often, it comes down to expectations, communication, and perceived professionalism.
Many foreign business owners, particularly from Northern and Western Europe, bring with them a different service culture. They prioritize punctuality, responsiveness, initiative, and consistent attention to client needs. When employers don’t see those traits reflected consistently in the local workforce, they may understandably look elsewhere.
Yet this presents both a challenge and an opportunity for locals. Because what’s often overlooked is the enormous purchasing power that can be unlocked by integrating into this international service economy. Many foreigners who buy or live on the coast have large budgets. They spend on home renovations, medical care, beauty treatments, legal help, real estate services, cars, clothing, insurance, and more. These needs are ongoing, and year-round.
If locals can bridge the gap with improved language skills, tech skills, and customer service, they will open the door to an affluent market that is deeply rooted in the area. There is genuine, long-term economic opportunity here for anyone who can meet the expectations of this client base. In fact, small, well-run local businesses that offer high-quality, reliable service are often the most successful in foreign-dominated markets. The demand is there. What’s needed is better preparation to meet it.
With greater skills comes greater earning potential, and therefore a larger budget for housing.
e) Local and Regional Government: High Revenues, Low Commitment to Housing Solutions
Local and Regional Government are not powerless in this crisis; they are, in fact, one of the biggest beneficiaries of the coastal property boom.
Regional and local governments earn substantial income from property sales. This is especially true in Spain’s coastal towns, which see large transaction amounts every year. Yet despite these consistent revenues, little is being done to help ease the housing crisis.
When a resale home is sold, the regional government typically collects between 7% and 10% in transfer tax (ITP), depending on the region. On a €300,000 resale home, this is €21,000 to €30,000 per transaction. With tens of thousands of homes changing hands each year on the coast of Spain, this adds up to many billions of Euros in regional tax revenue annually.
At the local level, municipalities collect several direct taxes and fees like Plusvalía (usually between €2,000 and €6,000), IBI (Annual Property Tax) typically €500 to €1,500 per year per property, Permits and Fees, etc.
A single home sale can bring in €5,000 to €10,000 or more for the local town hall.
So more and more people are asking, “where is all the money going”?
In many urbanizations, residents still rely on septic tanks because no sewage network has ever been installed. Stormwater drainage is absent in many areas. Many residential streets go years without seeing any road cleaning or maintenance whatsoever.
Despite a strong and growing tax base, coastal municipalities rarely invest in affordable housing, community infrastructure, or programs to train locals to access better-paying jobs. This disconnect between revenue collection and local investment is a source of frustration. Residents and long-term property owners aren’t just asking for favours; they’re asking for accountability and a return on their tax contributions.
Is it fair to say that Spain’s housing crisis is caused solely by foreigners or tourists?
The truth, it seems, is that many of the policies and practices contributing to the housing problems are homegrown. Tax advantages for corporate investors, gaps in the education system, hiring mismatches, inconsistent public investment, and lack of social housing – these are all areas Spain can influence and improve.
I wouldn’t be so quick to blame foreigners – the very people that often uplift areas that have been struggling financially for decades. I would say we need to rebalance the system so that locals have a fairer shot at living and thriving in their own communities. With the right leadership and focus, Spain can absolutely welcome investment but also provide opportunities for the people who live in the coastal towns.
