Over the last few years the term ‘Land Grab’ has undoubtedly become linked with the Spanish Property market. British newspapers and television programs featuring distraught ex-pats who have had their Spanish homes demolished or been forced to pay extortionate sums has instilled fear in Britons wanting to buy property in Spain.
But what exactly is the so-called Land Grab and does it still pose a risk to Britons wishing to purchase property in Spain?
The Ley Reguladora de la Actividad Urbanistica’ (LRAU) become tagged as the ‘Land Grab law’ and was passed by the regional government of Valencia in 1994.
The purpose of the law was to prevent landowners in the Valencia region from obstructing urban development that the local authority considered to be beneficial to the local community, for example providing additional housing, services and facilities.
Each Spanish region implemented their own version of the law however the version implemented by the regional government of Valencia was badly drafted and allowed unscrupulous developers and corrupt officials to abuse the laws against the interests of property owners.
In order to understand the land grab risks it is important to appreciate that land in Spain (in general) falls into one of three categories.
1. Urban –in an area which has already been developed;
2. Rural –in an area which has not been developed; or
3. Suitable for urbanisation –in an area previously classified as Rural but is to become developed.
The LRAU allowed Rural land to be reclassified as suitable for urbanisation without the landowner’s consent. Where a property is part of an area classified as suitable for urbanisation, the law required the owners of such property to contribute to the new infrastructure by way of cash and/or by surrendering part of their land. These may be in order to widen roads, connect mains water, sewage, electricity and landline telephones etc.
Undoubtedly, there were inexcusable abuses of this law within Spain, where rural land has been ‘grabbed’ from owners with little compensation so that it could be developed for huge profit. Meanwhile, the existing owners of properties had to contribute massive sums towards costs of infrastructure that they do not want whilst often losing a large percentage of their own land.
Whilst the Land Grab Law understandably attracted a lot of bad press the actual number of times that it has occurred is relatively small. What is clear however is that many of those affected have purchased Rural land without obtaining advice from a competent independent lawyer as to the potential risks and liabilities.
Is there still a risk?
The laws drafted in 1994 have since been replaced however it is argued that this does not prevent the possibility of a land grab style situation arising in the future.
This is not the only law to deprive Brits of their Spanish property investments however and Valencia is not the only region affected. There are reported to be thousands of homes in Spain illegally built on rural land and many British owned properties in Andalusia for example are currently subject to demolition as a result.
The bad press surrounding the old Land Grabs laws and the current issues in Andalusia will understandably cause those looking to buy in Spain some concern however it is important to remember that thousands of Brits buy property in Spain each year without any problems at all and that those who have been affected represent a tiny proportion of cases.
The best course of action to protect your position is to instruct a reliable independent Spanish lawyer who will be able to find out the classification of the land, speak to the Town Hall about any proposed planning in your area and advice you as to the potential risks, if any, of the land or property you intend to purchase.
Rather watch and learn? See our You Tube video on Land Grabs in Spain