In Spain, all land is categorised. For example, a piece of land could be classified as urban land ( “urbano”) or rural land ( “rustico”) - more accurately, for planning purposes, known as suelo no urbanizable. There are several other classifications that need not detain us here.

When buying property that is rural land or in a rural area there are always certain risks. Some occur in any country, others are specific to Spain. Keep a sense of proportion. Remember that tens of thousands of foreigners have bought land in rural Spain with no problems at all. A few dozen or hundred have been adversely affected by this law.

The first risk is that the land around you will, at some stage, be reclassified as building land. Your beautiful open views will then become views over dozens of houses.This is not what you wanted. As in Britain, there is little you can do to guard against this risk. It is worse if you are near the edge of the present developed area or if your area has good communications and good views or other natural features that make it particularly attractive for development. I always tell clients buying land that the only truly safe assumption is that any land that is not presently built on will, at some stage, be built upon - whatever anyone promises! If you are worried about future development plans we can make enquiries to establish what development projects are currently scheduled but we cannot guarantee that a plan will not be lodged the very next day that will affect your home. The enquiries made will not even guarantee that there are no current plans to the extent that you could take action against the planning authority if something was not reported to us. Nonetheless, if the continuing rural nature of the locality is important to you it is probably worth asking us to make these enquiries as the cost is generally modest.

The second problem is that rural properties have often been around for a long time. This means that there has been plenty of opportunity for rights and obligations to build up in relation to the properties. Not all of these are obvious. Not all of them are recorded at the land registry.You should, therefore, keep an eye out for “suspicious” signs such as conspicuous pathways running across your land, lots of spent cartridges or other evidence of hunting on the property, signs of people extracting water from your stream etc. If you see anything of concern, draw it to your lawyers’ attention. They will then discuss what action, if any, can be taken to clarify the situation.

The third - and most serious problem - is where your property itself becomes involved in the process of development.

In Spain when plots of land belonging to several people are re-zoned for development the local authority can deal with the situation in a number of ways. Often they set up a “junta de compensacion”.This is a committee of all of the owners of the land concerned. It has the right to make key decisions as to the redevelopment, such as who will do the work, how it will be funded etc. As a member you may vote, but if your fellow owners outvote you then you are bound by their decisions.

Normally, infrastructure works such as the construction of roads, electricity substations and so on will have to be undertaken. It would be grossly unfair if all of these were constructed on your plot leaving you with nothing and your neighbours to reap the benefit of the much higher value of their land as building plots. The junta will, in various ways, therefore re-allocate the land left over after the infrastructure works to make sure everyone has a fair share of the building land.

The owner of land forming part of a development plan has various obligations;

• To bear his share of the cost of any necessary works
• Use his land in a way compatible with the prescribed permitted use
• Give the relevant authority, free of charge, any areas that will be used for access ways, open spaces or for other public purposes
• Build within the design limits established by the plan and within the period stipulated in the plan

In return the owner will be entitled to benefit from the construction process in proportion to the other owners. There are several ways of achieving this. One is that the land ownership is simple redefined. If you had 10 per cent of the original plot, before roads, schools, electricity substations etc. were separated from it, your boundaries would be modifies so as to allocate you 10 per cent of the available building land after all of the “dead” land has been accounted for.

If you do not want to take part in the redevelopment project your choices are really limited to:

1. campaigning against the plan before it is passed
2. selling up at once - either to your neighbours or a third party - and using the money to buy somewhere more remote
3. going through with the redevelopment and then selling your building plots. This will usually be for much more than you could get for the undeveloped land.

Any property that was on the site before the plan was passed can remain there, unless it is needed for roads etc or the public good - in which case it can be compulsorily purchased. Even if you can keep your house, however, you will not be allowed to extend or improve it. In practice it is seldom possible for you to remain in your house on your plot and permit the building work to go on all around you.

This system is very different from the British way of developing land but it generally works reasonably well.

The rules as to the development of land are one of the areas which, under the Spanish constitution, are delegated to its autonomous regions. In the region of Valencia special rules were passed in 1994.This is the (now) infamous LRAU (Ley de Regulación de la Actividad Urbanística). This law was intended to encourage the development of what was then a backwards area where little development was taking place. In that it was very successful.

Unfortunately, recently - in the last two or three years - greedy and unscrupulous developers have found a way of abusing the position. Equally unfortunately, the region of Andalucia (which covers the whole of the Costa del Sol) has decided to introduce similar changes.

Under this law the town hall has the right to permit a developer - who may have nothing to do with the site - to put forward or “facilitate” a development plan and appoint him or her to coordinate and promote the development. Although, in theory, the local residents are protected in various ways this can lead to abuse. The developer can acquire relatively small holdings in the area in question and can often dominate the process, twisting the decisions made to his advantage. For example, if the junta votes to fund the development itself rather than to seek bank finance, then anyone who cannot pay his or her share may find their land being compulsorily purchased for its basic value as rural land - much less than it will be worth once the works have been undertaken.The expenses of the infrastructure can be inflated. The developer’s friends can be awarded key contracts.

Many successful and fair developments have been carried out under this law but there is no doubt that it is open to abuse. This is recognised by the Valencian government, whose public works committee is proposing significant improvements in the law. The British ambassador to Spain and the local British consul have expressed their concern.The law, as it stands, has been challenged as unconstitutional and this case will eventually be heard before Spain ‘s Supreme Court and, probably, the European courts. There is case law to suggest that the challenge will be successful. More extensive proposals for reform are also being made. This is all likely to take several years. In the meantime, what should you do?

• Buy a home that is already classified as urban ( urbano ). This problem only affects land currently classified as rustico (rural) - or (possibly) adjacent to rural land. Quite a lot of property in rural areas is in fact urban land. Some land in areas you think of as urban might still, technically, be rustico . Get your lawyer - to check the position.
• If you are buying a home in a rural area always check to see what plans already exist. Your lawyer will be able to do this for you.The extra cost will be worth it. As already mentioned, this does protect not you completely as a plan could be submitted the next day. Again, as already mentioned, the risk is worse if you are near the edge of the present developed area or if your area has good communications and good views or other natural features that make it particularly attractive for development.

If you already own a home that is threatened by this problem the most important advice is to act quickly and not to stick your head in the sand. Swift action can protect your position. Delay can be fatal. See your lawyer at once.

Buying into a development where major improvements to streets, lighting etc. are required

If you buy into a development which, over the years, has fallen below current minimum standards. For example, the roads may be less than the minimum permitted width or they may have no street lighting or they may not be surfaced. In this case the municipality may insist on matters being brought up to scratch. You might not want, for example, street lights, but if the town hall says you are going to get them then get them you will. If the law requires street lights they will have no choice but to put them in. If the street lights are not strictly obligatory then lobbying by the residents can affect the decision. If they do have to be installed the way of dealing with it is different from the system in England . Here, generally speaking, where such improvements are needed they would be undertaken by the local authority and thus fall to be paid for by all of the council tax payers in the area. In Spain they will be paid for by the owners of the properties affected.This means that most years your council tax bills are very low - you are not paying for improvements to other people’s property - but sometimes you may have to pay out quite a large amount.The payments for works of this kind tend to be quite large but not huge (say £5,000 to £10,000 per property for a large project). The municipality can also compulsorily purchase such parts of your land as may be necessary to implement the improvements - for example, taking a metre off your garden to permit a road to be widened.The silver lining in this cloud is that, once the work has been done, the value of your property usually increases.

Biography

John Howell is senior partner at John Howell & Co, English Solicitors and International Lawyers - a highly specialist law firm which deals only with work involving continental Europe & Dubai (www.europelaw.com). Mr Howell is the author of the Sunday Times guides to buying a property in France, Spain Portugal, Italy & the USA. He is a regular speaker at seminars throughout the UK, in continental Europe and in the United States. He is also a regular contributor to television and radio.You can contact him on +44 20 7420 0400 or info@europelaw.com.