Land Grab and Spain
Over the past few years Spain has developed an appallingly bad name for the safety of its property. ‘Land Grab’ has become a phrase on everyone’s lips and has struck fear into the hearts of many potential buyers – and not a few property owners currently living here. It has been the subject of newspaper columns, nationally and internationally, and has been investigated in numerous television programmes.
For the Spanish, ‘Land Grab’ has been a publicity disaster of epic proportions and one that has done tremendous harm. And yet, it has rarely been rebutted effectively by the Spanish government, whilst much of what has been written about it has rarely done the subject justice.
Without doubt, there have been appalling abuses within Spain, where land has been ‘grabbed’ from owners, so that it could be developed – often for fabulous profit. This has occurred in some prime coastal areas, where ‘developers’ have been able to obtain agricultural land extremely cheaply. Often helped by self-interested and corrupt local officials, the land ‘grabbed’ has then been re-designated as building land, allowing it to be developed into housing estates or golf courses. Meanwhile, the existing owners of properties on the ‘grabbed’ land have had to contribute massive sums towards infrastructure costs (roads, mains water, electricty etc.), whilst often losing a chunk of their own land.
As a potential buyer of a property in Spain, this is unnerving in the extreme! Indeed, it brings into question the very thought of buying property safely in the country.
However, time and again, when ‘Land Grab’ has been publicised, it is obvious that many of the property owners affected had bought unknowingly on Rustico land and (with amazing frequency) without the benefit of advice from a competent, independent lawyer. To some extent, they have been the author of their own misfortunes.
In fact, it is safe to buy property in Spain – but only certain types. And that is the ‘rub’. Spain is not like the UK and has existing property that varies from completely legal and safe to legal but subject to potential liabilities and property that is completely illegal. In the UK, by comparison, property is either legal – or demolished as soon as it is found to be illegal. There are no grey areas. In Spain, there are – and as a buyer it is imperative that you buy a fully legal property or know that you are buying a property that is not (or that may be subject to potential liabilities in the future).
In short, this complicated area can be summarised by stating that, before you buy, you must know exactly the implications of what you are buying. Far too often people buy property in Spain without having first investigated, for themselves, the basics of Spanish land law. They are then, all too easily, often let down badly by greedy and corrupt professionals who operate a conspiracy of silence – or who are, at best, ‘economical with the truth’.
Critically, as a potential buyer, you need to know that there are three basic land designations that, in general, define a property’s legality and any potential liabilities:
Urbano (Building) Land. This is clearly designated as such and usually (but not always) includes large estates with villas and pools etc. together with villages and towns. Property within this designation cannot be ‘land grabbed’ if it has been fully urbanised.
Rustico Land. This is all land not included in the above. Rustic land obviously makes up the vast, vast majority of all the land in Spain. Some part of it, at any stage, however may be re-designated as Urbanisable (see below). This is particularly true in high development potential areas such as those close to the coast or, perhaps, near to a booming town or village. If the designation is changed then ‘Land Grab’ and all the liabilities inherent in contributing to a first world infrastructure may occur.
Urbanisable. This is Iand that was Rustico but where the designation has been changed. It is effectively the transition period between the land being Rustico and Urbano. Any buyer or owner of property in Spain has to be very careful as he will have a significant liability, as a property owner, to contribute to new infrastructure works. These may be the widening of roads, the connecting of mains water, sewage, electricity and landline telephones. Pavements and street lighting will also be installed. Land may be ’grabbed’, should it be necessary (i.e. to widen a road). The cost can be considerable. An area close to the writer was recently (2008) urbanised at a cost of 38 Euros per m2 of land owned by each property (in this case, as an owner, if you have a 1,000m2 plot you will pay 38,000 E, for a 2,000m2 plot 76,000 E etc. etc. – towards the urbanisation costs.).
Clearly, the safest purchase that you can make is within land that is designated Urbano and that has been fully urbanised. However, property that is Urbano and that has been fully urbanised is always very much more expensive than that found within Rustico land - notwithstanding that given properties may be absolutely identical in appearance and size. Property within an Urbano and fully urbanised area has a much higher value because of its inherent safety and the modern infrastructure that will already exist (decent roads, lighting, internet, landline telephone, mains water, electricty etc. etc.).
The designation of Urbano land is absolutely clear, completely transparent, totally objective and can be established without doubt. The proof that an area is Urbano will be provided by the local town hall, who will produce for you, or your lawyer, a clearly marked plan of the Urbano area. If your property is within an Urbano area and has been fully urbanised then it will be the safest property that you can buy in Spain.
The designation of Rustico land is equally clear. However, it is not at all always apparent when, or if, a given piece of Rustico land will have its designation changed. This is the danger area. There may be no indication of a planned change to the designation of an area of Rustico land when you buy it - but this does not mean it may not happen in the future!
The change in designation from Rustico to Urbanisable can be very advantageous. The value of your property can rise enormously (depending upon various factors and the amount of land that you own) and, whilst you will have to pay towards the infrastructure costs, you may find that the change in designation is desirable and very profitable indeed. On the other hand, if the urbanisation project is administered poorly, or perhaps corruptly, then you may find that the re-designation is disastrous, blights your property and is very, very costly.
Clearly, most of the land in Spain, by definition, is Rustico. In such an enormous country it is therefore inconceivable that any but a tiny proportion of the land will ever be ‘urbanised’ or re-designated. The likelihood of ‘urbanisation’ must therefore be looked at with some degree of commonsense (combined with a good deal of caution) prior to buying a property in Spainon Rustico land.
ADVICE
1. Always establish the exact status of land upon which you are thinking of buying. The test is objective. Either a property is Urbano and fully urbanised - or not. Make sure that your lawyer confirms this fact and does so in writing. If you buy, then your property cannot be subject to ‘Land Grab’.
2. If you choose to buy in Rustico land, ensure that your lawyer comprehensively checks that there are no plans for re-designation or projects in place that may initiate a re-designation of the land – unless you are seeking to buy as a risk investment.
3. Use your commonsense when buying in Rustico land. In reality, very few areas are re-designated. However, there are areas where clearly development is likely to occur over the coming years. These are often, but not always, in high value coastal areas and close to towns and villages that are expanding.
Copyright Nick Snelling (www.nicholassnelling.com) author of three books on Spain including ‘How to Move Safely to Spain’ (www.movesafelytospain.com)
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