Land Grab Law in Spain

The LRAU law

The new LUV law

Latest on the LRAU law: 2007

LRAU law has been changed to a new law: called "LUV". With the new LUV, Townhalls will have to modify their existing general plans to approve any new urban project. Some of the new requirements which the LUV will have to take into account include a landscape study, affordable housing, guarantees of a large enough water supply and allow 10 m2 of green area per resident.

With the main problems with the old law being a lack of information, no fixed costs, short objection times and the unclear plans of what was in place, the new law promises to clarify these points. The solutions proposed by the new law include the following;

PUBLIC INFORMATION

It is obligatory to warn the official owners of any plans to update any area according to the new law.
New means of publishing any information have been incorporated.
Minimum amount of information given out by the builder has been set. ( A clear guideline on what information has to be available to the public )

COSTS and PAYMENT MEANS

Any benefits to the builder are limited.
The highest valuation of the land or the lowest cost of the build become the new selection criteria for any building programme.
Any building work will be auctioned off to ensure the lowest price is achieved.
Improvements in the form of payments.

IMPROVEMENT IN THE OBJECTION TIMES

The presentation of alternatives is extended by 1 month
To opt to pay by land or money changes from 10 days to 2 months

DIFFERENCE IF THERE IS A BUILDING ON THE LAND

Any land which already has a building on it will be treated differently.

The Old LRAU law

This law was passed in 1994 with the intention of facilitating the development of the Valencian Community in terms of construction. It has been successful in many respects. However, especially in recent years, it has been abused by some developers and has caused huge distress to people who have had their land expropriated with little compensation and/or have been obliged to contribute large sums to neighbouring urbanisation infrastructure costs.

The problems to which the current administration of the land laws have given rise were the subject of a large gathering on November 26, which inter alia was addressed by His Excellency, Sir Peter Torry , the Ambassador of Great Britain. The legal, non-profit, action group, Asociación Valenciana de los Derechos Humanos Medioambientales y en contra de los Abusos Urbanisticos (Abusos Urbanisticos No), was formed and registered to provide a coordinated voice to those affected by and concerned about the application of Valencia’s land laws. This includes Valencianos and other Spaniards, and European Citizens as well as residents who originate from many other parts of the world.

Background brief on Valencian Land Laws : February 2004

A Valencia Life article of Saturday, March 08, 2003 (http://www.valencialife.net/) is giving some hope that the legal front may start to shift:

COURT DECISIONS

The Valencian Superior Court of Justice yesterday handed down a decision that in effect nullifies the first action by Valencia Town Hall under the Valencian land laws known as LRAU. It involves a Town Hall decision taken in 1997 over the creation of a large block of dwellings in Orriols. In a reaction to the court findings, the company who appealed the sentence and won the case yesterday – but lost the urbanizing contract in 1997 – now has expressed the belief that the court decision affects all local infrastructure plans as a result. The Urbanizing department of Valencia Town Hall stated the belief that the court decision would not affect any further plans the department has.

The decision of yesterday pointed out that the criteria of adjudication should be under the State Contracts Law and not under the LRAU. This decision goes radically against previous decisions handed down by the same court, and adds to the question of the unconstitutionality of the LRAU. The debate could continue should Valencia Town Hall decide to appeal this latest sentence.

As reported in the CBN 18th April 2003.

For those of you thinking of buying in Valencia but being put off by the LRAU (The Land Grab Law) there is good news. The law has been changed in the following ways.
* Landowners rights must be protected and their legitimate interests guaranteed. To avoid abuse developers must outline the project and cost beforehand.
* Projects will be favoured when they have the support of the majority of landowners as opposed to a private developer and when they have the largest economic benefits for proprietors.
* Town Halls must now establish an economic selection procedure before choosing a developer and must adhere to it at all times. This ensures the impartiality of the council.
* New rules will include more transparency in selection of developers as they will have to adhere to tendering and fair bidding laws.
* The LRAU will now oblige town halls to adjust developments to the real needs of the population as regards social housing policies. New projects must allow space for social housing projects which should reduce speculation as lower profits would be made on any project that is approved.
These changes should take away the real possibility in coastal areas of the LRAU taking away land. It should also allow people to buy with more confidence and without worrying about the small possibility of being affected by the law. Valencia is the real paradise in Spain so come and live here and join the many people already enjoying the delights of the area.

RECOMMENDATIONS IN THE EVENT OF BEING AFFECTED BY THE LRAU

See also: "CONSEJOS para afectados en un programa de urbanización" by Enrique Climent Laguarda, AUN Vice President (in Castellano)

IF DIRECTLY AFFECTED

The advantage promoters and town halls have over property owners is the lack of information owners have on what is going on regarding their property, even when the law is quite clear on the fact that the owners have to be informed on the urbanization plans and how they are going to be affected.
So if you find out your house/ plot of land is going to be affected by a urbanization plan the first thing you must do is visit the “ Urbanismo “ section of your local Town Hall ( you might have to book a personal interview in advance) and ask them what is going on in your zone/partida.
Yes, it seems simple, but you will probably find they are not very cooperative with your case and the information you are given is either very technical or false!.
Remember first to get ready all the documents and legal papers regarding your property:
- “Escritura” de propiedad and “ Declaración de Obra Nueva” if applicable
- The recent IBI and Garbage ( Basura) tax payments receipt
- Cédula de habitabilidad of your property
- Mortgage papers from bank ( the “tasación” papers could be useful, with its current market value).
- Topographic maps of your property and of al the area it covers.
- Nota simple from the you town land registry
- Cédula Urbanística
With this you can basically ask if your property has been affected by any Plan Parcial.
If so, you will need to know in what way you are affected, so you will need them to give you the “ Ficha de Planificación” which gives you the basic information of your area and how they are thinking of urbanizing it.
With this basic information, and if you haven't been sent any letters to your house, you should probably speak with your neighbours and get in contact with a lawyer to discuss the development plans and how to fight them.
What you must know is that the law gives you the possibility to join up with the rest of owners in your area ( between all you must own at least 51% of the land affected) and present an alternative plan to the developers which has preferment adjudication, but remember you have very little time to do it in so contact a lawyer as soon as you can.
The development plans might be in a advanced stage, by this we mean that you might have been sent a petition from the Town Hall for you to give in a certain amount of land and pay a certain amount of money, again you must contact a lawyer to see if you are able to file an appeal to the Town Hall resolution.

IF YOU ARE SUSPICIOUS THAT YOU MIGHT BE AFFECTED

Be certain you have all the documents (named above) pertaining to your property in hand and up to date.
Contact neighbours and find out if they have heard anything.
If your property is on “ Rústico” land and you are told the General Development Plan ( PGOU) has been changed in your town, like before go to the Town Hall, Urbansimo-Sección de Obras, and ask for the Cédula Urbanistica and Ficha de Planificación of your property.
If your land has been changed to Urbanizable land you will probably be directly affected soon, so get legal advice as soon as possible.
The ways in which you could be affected are very numerous, the expiry dates very short, and it is difficult to explain how to act under the circumstances, as the land laws are complex and the Town Halls are not very cooperative, so if you have all your legal documents up to date and legal help it will be easier to try to have a say in the development in your area.

Extract from “The European Property Owners in Spain” – by Per Svensson, www.fipe.org

Over the last 40 years, 1,5 million families from Northern Europe have bought a home in Spain, almost all of them coming from the present member countries of the EU or EES. They normally buy some 5 years before retirement, with the intention to use the property for vacations the first years, and more or less permanent living thereafter. Due to various reasons, some connected with the legislation in their home country, others with Spain; the end result is that only 20% of them become residents in Spain, half of them with a formal residence permit (tarjeta comunitaria) and the rest within the limits of the permitted tourist stay. People from Northern Europe also buy properties in other southern countries, but Spain accounts for 90% of the foreign owners.
Previously many foreigners bought individual plots and built their own houses. With the rising costs of land and construction, there are today almost no new urbanisations for plots, and almost all foreigners buy semidetached houses or apartments (95%).
The average investment in the purchase is today 200.000 Euro. With 100.000 new foreign buyers per year in Spain over the last 6 years this means an annual investment of 200.000 million Euro. In addition comes the yearly spending by the foreign owners for maintenance, taxes, equipment, consume, car and travel in Spain. We estimate an annual average of 12.000 Euro per year, multiplied by 1.5 million properties = 18.000 million Euro per year. A great part of the total tourist income from Spain. In the coastal areas almost the total economy depends on the foreign owners. It has recently been estimated 90% for the municipality of Denia.
The foreign owners hardly create any costs for Spain; they pay for all they get.
Several investigations point to the probability that this great movement of people from north to south in Europe will continue and increase in the years to come. We are addressing a social phenomenon within the Community area of such extension and importance, that it is high time for the organs of the Union to take a permanent interest in it.

The dangers and problems

In the period up to 1990, most of the foreigners bought some land and built their own house. In the Valencia region existed a great number of illegal urbanisations, land developments without any planning approval and without the infrastructure foreseen in the national law on urbanising. It is estimated that 2/3 of the developments from this period and in this region were done outside the law. One of the main reasons was that most of the smaller coastal municipalities had no general plans, and without a general plan could not be approved an urbanisation plan.
When the first organisation for the foreign property buyers and owners in Spain was started in 1982 by the author of this report, the Institute for Foreign Property Owners, we found that the situation of illegality continued. We denounced the illegality and demanded protection and information for the foreign buyers from the government. Our protests and proposals met with little response from the administration, and we brought the situation to the attention of the European Parliament that appointed MEP Edward Macmillan-Scott as rapporteur. His report resulted in the excellent law decree 515 of 1989, defending the rights of the property buyers, and a demand to all municipalities that they elaborate general plans.
The LRAU was from the outset meant as a mean to overcome the widespread urbanistic illegality in the Valencia region. But lately property speculators and operators have used the dangerous figure of the “agente urbanizadora” for personal benefits, abusing the democratic rights of many smaller landowners. It was necessary to denounce this abuse and organise a resistance against the law, and the association “Abusos Urbanisticos NO” has done an extraordinary job.
As long as we have a residue of the urbanistic illegality, and a law permitting abuse, this problem will continue. Since the aim of the government is to reduce the urbanisations with one family houses on larger plot, occupying much land, and promote a more dense construction with semidetached houses and apartment blocks, there are also coming many plans for part changes in existing, legal urbanisations, affecting existing homes.
Please do not be put off by the horror stories of the LRAU law. With all our sales we strongly recommend, to the point of insisting, that you use a lawyer to purchase and he/she will make all necessary searches and enquiries to safeguard your purchase. There are also insurance policies available to protect against the law.

With all the press coverage on the law, now is probably the safest time to buy.

We will endeavour to keep you informed of any further information we can find on the LRAU law and how it is affecting clients.

As of October 2005 we have still had no problems whatsoever with any of our property sales and still maintain: If you use a solicitor and ask the right questions, you shouldnt have any problems.

If you have any information you would like to share with us regarding the law, please mail us at info@buyinland.com

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