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Spain instructed to improve land laws

16th December 2005 | back to article listings BACK    print this article PRINT

Following months of speculation, it appears that Spain is finally going to be forced to update its land laws.

Property investors in recent years have often found that the so-called 'land-grab law' has led to a series of abuses by Spanish developers with property owners obliged to pay for local developments.

Members of the European Parliament have now adopted a report on the abuses of the Valencian Land Law known as LRAU, with 550 in favour of reforms and only 45 expressing their opposition to the proposals.

The Times reported this week that a British couple near Alicante have been told to pay £37,000 for 'infrastructure' that is of no use to them and which will result in the loss of one third of their land. Similar stories have emerged intermittently through the years leading to some difficulties for property investors in their attempts to sell property.

The report presented to the European Parliament heavily criticised the current situation and there is now genuine hope that it will be resolved in the near future.

It recommends the inclusion in the new law of a clear definition of public interest which "unambiguously prevents the possibility that the 'public interest' justification for expropriation … could be used for the promotion of private, rather than public, interests".

Another key proposal is that the Spanish government establishes binding criteria in relation to the calculation of compensation in cases of expropriation, which will seemingly prohibit any of the major abuses in the current system in which property investors can lose land with no reimbursement.

Property investors have also been pleased with the suggestion that each property owner affected by plans for urbanisation should be informed "individually, effectively and in good time of any plan … which might affect his or her property and fundamental rights, so as to guarantee an adequate possibility to consider appropriate action".

The EU resolution is non-binding but it is reported by EUbusiness.com that Madrid is now on notice that if it isn't supplied with "a satisfactory response within three weeks" the matter may be referred to the EU court of justice.

Property investors within the EU have also been alerted to the recommendation that the Commission now draws on the experiences of this episode to consider possible safeguards that could be introduced to make property investment a safer and fairer industry. It will consider legislative, non-legislative and advisory measures in view of the increasing number of citizens from within the EU who are now investing in real estate.

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