In recent years, buying property in Spain has earned a negative reputation. The term “land grab” has entered common parlance, with potential buyers (and some current Spanish property owners) running for cover. It’s been the focus of investigative newspaper columns and TV shows on both sides of the Atlantic.
‘Land Grab’ has been a massive public relations disaster for Spain. Still, the Spanish government rarely provides a convincing rebuttal, and most written accounts fall short of the mark.
Without question, there have been horrendous abuses within Spain, with land being ‘grabbed’ by Spanish property owners to be developed, usually at a tremendous profit. This has happened in several highly desirable coastal locales where ‘developers’ have purchased farmland for pennies on the dollar. The ‘grabbed’ land is subsequently re-designated as building land and is used to construct housing estates or golf courses with the help of self-interested and unscrupulous local officials. Existing property owners on the ‘grabbed’ land have had to pay astronomical sums toward infrastructure costs (roads, mains water, electricity, etc.) while frequently losing a sizeable portion of their own land.
This is unsettling news for anyone considering purchasing real estate in Spain. It calls into question the fundamental idea of purchasing rural real estate securely.
However, whenever the term “Land Grab” has been in the news, it has become abundantly clear that many of the Spanish property owners who were impacted had purchased on Rustico land without realizing it and, astonishingly often, without seeking the counsel of a qualified, independent lawyer. They have, in part, brought their plight upon themselves.
Several forms of Spanish real estate are safe to invest in. Therein lies the ‘rub.’
Unlike a similar situation in the UK, existing property in Spain varies from entirely legal and safe to lawful but is vulnerable to potential liabilities and downright illegal. When a building is proven illegal in the United Kingdom, it is immediately dismantled. There is no wiggle room. If you’re looking to buy a home in Spain, you’ll want to make sure it complies with all applicable laws and regulations, or at least be aware of the risks involved in purchasing a home in Spain that doesn’t.
To simplify a complex topic, remember that you should always know the full scope of your purchase before committing. Foreigners often purchase real estate in Spain without first familiarizing themselves with the fundamentals of Spanish land law. They are, therefore, frequently let down by greedy and corrupt professionals who engage in a conspiracy of silence or are, at best, “economical with the truth,” which is a term that describes both extremes. There are three primary land classifications that, in general, govern a property’s legality and any potential obligations, and each is crucially important to know as a potential buyer of Spanish property:
Zoned for urban development. This is explicitly labeled as such and typically (but not always) comprises smaller communities and larger estates with villas, pools, etc. Completely urbanized areas within this category are immune to ‘land grab’ claims.
Putrid Country. All the territory not already mentioned before. The overwhelming bulk of Spain’s territory is undeveloped countryside. However, a different portion of it could be declared as Urbanisable (explained further below). This is especially the case in regions with lots of room for growth, such as those that are close to the water or to a bustling little town. The risk of ‘Land Grab’ and the other problems that come with helping to build infrastructure for the developed world increases if the name is changed.
Urbanisable. The previous designation of this site, “Rustico,” has been modified. This is the era when the land is changing from Rustico to Urbano. Anyone looking to purchase or own property in Spain should exercise extreme caution due to the substantial liability he will incur as a property owner in contributing to new infrastructure improvements. Road widening, connecting to municipal water and sewage systems, installing overhead power lines, and installing landlines are all examples. We will also be putting in new sidewalks and lighting for the streets. If it becomes essential (for example, to enlarge a road), land may be “grabbed.” A hefty sum may be required. The cost to urbanize a neighborhood close to the author was 38 Euros per square meter 2008. This means that a landowner with a 1,000 square meter plot would spend 38,000 Euros, a landowner with a 2,000 square meter plot would pay 76,000 Euros, and so on.
Real estate in Spain is most secure in areas fully urbanized and given the Urbano designation. Even though two seemingly identical Spanish homes in different regions (the Urbano and the Rustico) may have duplicate square footage and design, the Urbano home will always command a significantly higher price. The value of real estate in Spain is increased considerably by the presence of modern infrastructure (enough roads, lights, internet, landline telephone, mains water, electricity, etc., etc.) in an Urbano and fully urbanized area. Urbano land classification is unambiguous, open, and objective and may be proved without any room for question. The local town hall will supply you or your lawyer with a clearly defined plan of the Urbano area as confirmation that the site is Urbano. You might feel most secure purchasing Spanish real estate in an Urbano neighborhood that has been fully urbanized.
The land in question is designated as Rustico territory. However, it is not always clear if or when a specific property plot in Rustico will be reclassified. There is peril right here. Even if you purchase land in Rustico without knowing its current categorization, that doesn’t imply it won’t change in the future.
The transition from Rustico to Urbanisable status often brings positive changes. Although you will have to contribute to the infrastructure expenditures, you may find that the change in classification is desirable and quite profitable indeed (the extent to which your property’s worth increases depends on several factors, including the quantity of land you own). However, if the urbanization project is poorly managed or corrupt, the re-designation could be devastating, ruin your property, and cost you a fortune.
The vast majority of Spain is, by definition, a Rustico landscape. Given the country’s sheer size, it’s impossible to see even a tiny piece of it being developed or repurposed as urban or residential. Before purchasing real estate in Spain on Rustico soil, it is prudent to carefully consider the possibility of ‘urbanization’ while exercising a healthy dose of prudence.
ADVICE
First, always verify the legal standing of any land you’re considering purchasing. The examination is impartial. A Spanish home is either located in an urbanized area (Urbano), or it is not. Make sure your attorney provides written confirmation of this. Your prospective Spanish property will be safe from a ‘Land Grab’ if you purchase it.
If you want to invest in Rustico land, you should have your lawyer do a thorough search to ensure there are no pending or planned projects that could change the land’s categorization.
Third, when shopping in Rustico, use your common sense. In practice, however, this rarely occurs. There are, however, some places where progress is likely to be made shortly. These are typically found in rapidly growing cities and affluent seaside communities, though this is not always true.
Investing in most Rustico properties is safe because they will never be reclassified. Therefore, they should not be automatically disregarded. They’re often a sound financial commitment and offer outstanding value.
5. However, it is essential always to avoid caution when purchasing real estate in Spain and to have your conveyancing performed by an independent, English-speaking, experienced Spanish conveyancing lawyer. And have your lawyer write his or her recommendation, as this will serve as a “wake-up call” to even the most inept or corrupt practitioner!
Compromise on your ideals as much as possible and invest in a fully-urbanized Urbano property instead.
Author of three books about Spain, including “How to Move Safely to Spain” [http://www.movetospain-safely.com], Nick Snelling is well-known in the field. In addition, he pens an informative Blog about relocating to Spain and daily living there:
Read also: https://journalall.com/category/real-estate/
