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LRAU – Do YOU Really Own Your Property In Spain? You may be forgiven for thinking you do – but read on McDuff and you will be very surprised to find that in actual fact you could be nothing more than a temporary tenant. What is LRAU? LRAU is a law that was ratified in 1994 to release land for development for the social good. In its initial execution the Law was drafted with good intentions. One of the fundamental powers it bestows that has given rise to the subsequent abuses, is expropriation – compulsory purchase – or not, of the property for the general social good. And this is one area where much of the abuse occurs. Firstly let me state that LRAU ONLY applies when the land is Rustic (Suelo Rustico – agricultural or green belt land). If you live on urbano land then you will not be affected by this law. Development in Valencia and the role LRAU plays. The Valencian economy historically has been built on Agriculture, textiles, ceramics, fishing and shipping. However, recent years have seen a dramatic reliance on tourism and construction. Fuelled primarily by foreign residents seeking a “cheap” place in the Sun, a development boom has taken place to the detriment of these industries. The Textiles industry is facing very stiff competition from cheap Chinese imports – witness recent reports of the EU allowing some €70M worth of textiles into Valencia earlier this year (2005) and in Elche demonstrations were held against the import of cheap Chinese shoes. The Citrus industry more so is under threat from its own government by the introduction of the new Golf Law and has been wholeheartedly welcomed by the Valencian Government – although the very existence of such a law was emphatically denied by Rafael Blasco himself until his own office leaked a report to the press. So what you may well ask? It is the introduction of this law and its close association with LRAU that brings the threat from the costal areas to inland. Why – because there is little land left there to site a golf course by the coasts anymore. So where do the developers look now to get land from. Yep you got it – Inland. The basic premise of the law is that it gives carte blanche permission to build golf courses and the adjoining urbanisations. But the building of these and social housing is likely to be the very core of the next regional election campaign, in order to maintain any sort of economic activity, since all the other factors are in decline, including quality tourism. The proposed golf law makes it possible to use rustic and even protected land, for this "high social purpose", which would in effect be of interest to a very few property owners, let alone the current population. So what again – I hear you say The town halls have already proven themselves largely incompetent of making such decisions. Benissa for example is in debt to the tune of €33M, growing by around €3M annually. The Valencia region is in debt to €10Bn and growing at €500M annually. These figures serve to illustrate a point of fiscal imprudence by those very offices who would be given more powers – perhaps to fill their ever decreasing coffers to landowners detriment. More seriously – town halls have proven to be innately corrupt. For example, in Pego the former mayor has been in prison for such offences. The mayors of Javea and Fleix have been reported for reclassifying land on which they owned a substantial amount. These are some examples and there are many more still. Conflict of interest? You bet there is. Coming soon to a Town Hall near you? Is it not somewhat worrying that the very people who have previously shown such dereliction of duty are now being given even more power to abuse their electorate? Where does LRAU fit in? What is a “poor” town hall to do? Little money from Central Government, rising debts, tourism on the decline and big industries are dying rapidly. The previous solution of devaluing the Peseta is no longer an option – though it appears printing more Euros is, but that’s another story. The quick fix solution lies in re-classifying agricultural land or suelo rustico and making it Urbanisable (Suitable for building). Once town halls apply for reclassification of Land they utilise LRAU to expropriate land from the land owners and thereby ensure the development goes ahead. Inland we’re all right Jack – aren’t we…? Think so do you? Ask yourself this question Where could you place a golf course? Take a look at the orange groves and olive trees around that give so much pleasure. How long before you’ll be looking onto the first tee from your new apartment you swapped involuntarily for your nice house and beautiful orchard? Is it likely to happen? There are plans to build a further 67 further golf courses in the Valencia region alone. Already 30+ are in the offices of the Valencian Government awaiting approval. Where do you think these golf courses are going to go? – can you be sure one of them isn’t at a Town Hall near You? More worryingly, should the construction industry fail – by running out of building land, or people not buying, then the whole of the Valencian Economy will falter. And this will have dire consequences. So the Valencian
government pushed by the promoters and constructors who fund their electoral
ambitions have a vested interest, if not an absolute need, to promote
development and overcome the resistance of property owners who naturally,
if naively believe what they invested their live savings in, is actually
theirs – after all shouldn’t landowners realise it is for the benefit of
the community as a whole and make their "social contribution" to the well
being of the locals, even if these turn out to be developers and cash strapped
town halls
What actually happens? In a majority of cases the above procedure is completely ignored - owners are only told about the plans once they have been approved at which point they have 18 days to respond. Many owners are absent or don’t speak the language, so don’t know anything until it is too late. Town Halls seldom make any attempt to inform the owners because it isn’t in their interests. The environmental impact studies are seldom carried out which leads to problems such as in Javea and Denia where over development has led to water shortages, immense traffic problems and you try parking in Denia or Javea in Summer – its almost impossible. Also what about sewerage and rubbish. Most towns have a problem dealing with the rubbish they currently have let alone added burden of future development. These studies are important not just for the environmentalists but for the rights of current and future residents to basic services which are a standard necessity. Isn’t this what living in a first world European Country grants us? EU contract law is continually flouted. Town Halls DO NOT announce plans where they should – if at all. They award it to one developer who “may be” associated or, have offered some kind of inducement for the project. They never make the project publicly available for competitive tender. Where there is no competition the cost is highly inflated and questionable. All this has an impact on the costs the landowners pay and the land they subsequently lose. And where is the so called social benefit which is the reason for enforcing expropriation of land – oh yes nice green areas and new shiny town hall offices and police stations – to deal with the influx of new residents, who have paid a tidy sum to developers who ultimately profit along with the Town Halls. And the poor landowners. Well why should anyone care about them – after all they were stupid enough to buy a plot of rustic land and who cares if just every law under to protect them has been broken in the process. Well actually we all should because by doing nothing we are helping to promote these abuses. But more later on what You can do about it. Abuses – What Abuses? What exactly has happened that breaches EU law, Spanish Constitution and Human Rights? Well just in case you have missed the past page or two here are the main abuses in detail. 1. Consultation – or lack of it In any civilised country and, I am sure we all believe Spain is, before any kind of development can take place the land owners have to be consulted. This is a basic right is it not? However it is a basic right that is seriously overlooked and completely ignored in Valencia. 2. Feasibility and environmental impact study - or lack of it The Generalitat should order a feasibility study and environmental impact study to be conducted by the town halls. These are important because they identify problems such as water shortages (very poignant given the drought this year - 2005) where waste will be disposed, electricity supply (Iberdrola are refusing to grant new licences in some areas because they don’t have the capacity to cope with current demand). There are very few projects that have such a study and where such studies are carried out it is questionable whether they are indeed factual. For example the salt flats 'Las Salinas' at Calpe had such a study made of the area. In fact a petition was raised against this very urbanisation because of the environmental impact. However the Spanish Authorities responded that according to there study there was no impact to consider and therefore the EU washed its hands of it. However this turned out to be extremely misleading as the re-parcellation project turned out to be a major urbanisation project which will destroy hundreds of species of wild birds, not to mention many species of flora and Fauna and water shortages – which already present a large and growing problem in the area were conveniently overlooked. No consideration was given to anything except the benefits to the property developers and the local town halls to the detriment of the environment and the property owners. (as an update to this the land has now been reclassified as protected so cannot be built upon) 3. Notification of owners – or the complete lack of Once the town hall have the basic outline permission and identified an area the owners should be notified – in nearly every case they are NOT! These owners are typically (but not exclusively) foreigners who are not permanent residents and no attempt is made to contact them – why because if they mounted a legal challenge it would hold up the project. Where such an attempt is made, the contact details are typically way out of date – and it really isn’t in the best interests of the Town Halls to identify the current owners. So they don’t bother. 4. Invitation to tenders. The town halls are required to announce the urbanisation in the local, regional, national and European press (the European Journal is a legal requirement) for any major contracts (over €5.3M which is pretty much any urbanisation in recent history) – this is basic European Contract Law and applies to all member states and all town halls irrespective of nationality. They are required to do this to give all constructors the opportunity to bid for the project – thus ensuring impartiality and the best price/value. Very seldom is this done – if ever. Typically it is a developer who initiates the process and applies pressure on the town halls in terms of lobbying, social benefits (green areas public buildings etc) and inducements – read bribes – allegedly. There are a number of cases that have sprung to light in the past 2 years where the mayors have been put behind bars for taking inducements from developers in the form of money or expropriated land – it matters not it is the same – fraud by any other name. They then push through the development plans and only when it is approved do they announce these plans – giving the property owners no time to react. 5. Expropriation of land. The town halls have the right under LRAU to steal – and lets not mince our words, this is theft – the land from the owners. They can take up to 70% of the land. Now let’s play devils advocate here and say that we agree that urban development is a good thing and we don’t mind losing a bit of land – we don’t even mind paying a bit for the urbanisation. But 70% of your land to go to building roads and infrastructure – come on! That’s a lot of roads! Where does this land really go? I was given some facts about an urbanisation locally – I won’t name it because the person does not wish to be identified. However I was told that 10% of the land was for roads, 10% for green areas, 10% for public use. I am no mathematician but I calculate that to be 30%. These figures aren’t exact but not far off. He also told me that the landowners lost around 40% in total. So where did the other 10% go to? If this is a typical urbanisation (it is about 330,000M2 so could be classed as typical in size and distribution) then if 40% is enough for this urbanisation, why, then, do others feel the need for an additional 30% on top. Where does this land go to? Have a think about that for a moment. Now think about this? Many town hall mayors and certainly the promoters, become VERY rich after an urbanisation. How did they become lucky enough to find so much land in an area that was being urbanised. I sure wish I had their foresight. 6. Payment of urbanisation fees. To add insult to injury the landowners who have lost 70% of their land are now presented with a bill for the urbanisation. At the AUN meeting on Sept 20th in Benissa, I met a Lady who prefers not to be named (she has been named on many previous occasions and she is a little fed up with the press in general) who told me her story. She had 1000M of land with a house on it. The developers took 700M of it away leaving her with 300M. Not enough to have a house on they say – she needs 800M at least. So in order to keep her house she must buy back another 500M of her OWN land at the new urbanised value – which by the way she cannot afford to do. Not only this but, she is presented with a bill for an urbanisation she neither wants nor benefits from – an amount totalling €200,000. Mere pocket change really isn’t it? But she has land left she can sell I hear you say. The land she has left is worth about €225,000. So she now is in a situation whereby she has no home, little land and no money. She may be lucky and come out of it with a second hand caravan – so why is she complaining eh? She still has somewhere to live hasn’t she? And what did she do wrong? She bought a plot of rustic land. CRIME of the Century! If it is then how many others, I wonder, have committed the same crime? Hold on a moment, surely this counters the argument put forward as a benefit to the owners that their land is worth substantially more after the urbanisation plans and that the owners will benefit from this price increase. In which case, in what way have our lady and her neighbours benefited. If she is lucky she will be left with a little bit of money from the sale of her land – but who will buy it. Oh yes the developers will – but at a knock down price because its no good to anyone else. The land she has left will be needed to pay the urbanisation fees. Where is her benefit here? Who is really
benefiting from this?
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