Valencian Region
Land Law, October 2007
The Urban Development Legislation (Ley Reguladora de Actividad Urbanística/LRAU), introduced in 1994, in the region of Valencia is currently the centre of a highly-publicised dispute between developers and hundreds of property owners, who are being forced to pay huge sums of money for infrastructure development or for the repurchase of their own land. If the owners don’t (or cannot) pay, developers can legally seize the land and pay owners compensation at a fraction of the market price.
When it was introduced in 1994, the LRAU’s objective was to promote urban development in the region where town planning faced continual obstacles mainly from landowners who refused to participate in development projects. As a result, towns and cities could not expand or build low-cost housing or essential public services. Under the LRAU, landowners must participate in development projects backed by town councils by paying for contributions towards infrastructure such as roads, mains supplies and street lighting. In the city of Valencia, the LRAU has worked well and the city and suburbs have benefited hugely from new development for housing (relieving the chronic shortage), green areas and public services such as hospitals and schools. Control in and around the city has been strict and development highly regulated. However, in other parts of the region, particularly the Costa Blanca, the LRAU has been systematically abused by corrupt local authorities and developers who stand to make huge profits by developing rural land for villas. Most of the development plans in this area carried out under the auspices of the LRAU provide little or no public benefit.
Many owners, Spanish and foreign, of semi-rural or rural properties in the area are affected by the LRAU, particularly as developers now move further inland away from the coast where there’s a shortage of building land. As a result, many owners are facing large bills (up to €75,000) or are being forced to sell their property. The LRAU has been challenged before the Spanish Constitutional Court as a breach of essential property rights, although a decision by the court isn’t expected in the near future. The matter has been taken up with the European Court of Justice and the EU has opened an infringement procedure against the Spanish government, but an end to the LRAU and compensation for victims has still yet to arrive. Meanwhile and until there’s a court ruling against the LRAU, you’re advised not to buy rural or semi-rural land in the region of Valencia without taking comprehensive professional advice, preferably from a lawyer who can thoroughly explain all the implications of such a purchase
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