Ashfords Solicitors - Beware The Spanish "Land Grab"!

Many holiday programmes, magazines and newspapers have published articles about "Land Grab" in Spain. Headlines and quotes from angry property owners describe how they are being forced to hand over all or part of their land to the local government. They explain how these property owners are obliged to pay substantial amounts of money to the local government towards new infrastructure, mains water and drainage, which they are often unable to afford.

The Facts

The majority of the controversy and press coverage relates to those affected by a law which came into force in the Valencian region in 1994. It is called the "Ley 6/1994 Reguladora de la Actividad Urbanística de la Comunidad Valenciana" translated as "Law 6/1994 Regulating Development Activity in the Valencian Region" otherwise known as LRAU.

Although various regions in Spain have adopted similar urban planning regulations, the application of this specific law is limited to the Valencian region of Spain i.e. Alicante, Castellón and Valencia. If your property, or the property which you are interested in purchasing, is not located in these areas, then this law does not apply to you.

This law allows local authorities, under certain circumstances, to force owners of rural property to give up some of their land for development and to contribute towards the costs of installing new infrastructure. In places that have experienced significant growth and where new housing is required, agricultural land and Brownfield sites are often reclassified by the local authorities as suitable for development. It is argued by authorities that this reclassification is in the public interest.

The reasons behind the legislation are clear. The LRAU can prevent owners of rural property from standing in the way of development which would benefit the community as a whole by improving services or creating affordable housing.

However it is argued by action groups and Spanish landowners that this law has been abused by greedy Spanish Developers and local authorities. In some cases, they complain that the new properties are not affordable to the average Spaniard and instead the properties are marketed outside of Spain and sold to foreign purchasers. The groups argue that the only people to benefit are the Spanish authorities and the Developers.

During the last few years, delegates of the European Commission have visited the Valencian region to investigate the complaints. As a result of the "Fourtou" Report issued by the European Commission in December 2005, the Valencian Government made some changes by introducing the Ley Urbanística Valenciana (LUV), translated as Valencian Urbanistic law. However these changes were considered to be largely ineffective and recently the European Parliament urged the Spanish authorities and regional governments, in particular the Valencian Government to "recognise the individual's legitimate right to his legally acquired property and to establish in law more precisely defined criteria regarding the application of Article 33 of the Spanish Constitution concerning the public interest, in order to prevent and forbid the abuse of people's rights by decisions of local and regional authorities".

So it is all doom and gloom for Spanish Property purchasers?

Not at all. Firstly, this particular law, which is at the core of the controversy, applies only to the Valencian region. Secondly, the law affects "Rural" land and "Land for Development". Therefore, if you are planning on purchasing an off-plan property on an urbanisation or a re-sale on an established urbanisation, in most cases, the land will have already been reclassified as urban or developed. If the land is classed as "Urban", you will not be affected by the law and so you should ask your lawyer to confirm the classification of the land for you.

"Fincas" and Rural Land

People purchasing on these types of land should carry out investigations to find out what the approved development plan is for the area, whether their property will be affected and if so, within what time period. Alternatively, we can carry out these investigations for you. Properties, which fall into this category, are often called "Fincas". If there is a programme establishing urban development of the area, independent legal advice should be sought.

Final Points

You should always seek independent legal advice from a Spanish property specialist before you sign any contracts or pay any sums of money in relation to a Spanish property. Make sure your lawyer is independent and confirms in writing what he will do for you. If you don't, then you will have little or no recourse if things go wrong!

Whilst we hope that this article will be of assistance to you, it is intended to provide only general guidance on Spanish law and is no substitute for specific advice in relation to the circumstances of a particular case, which we are happy to provide

6th November 2007

Beware The Spanish "Land Grab"!

Introduction