Spanish property

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Andalucians have always had a healthy disregard for the finer points of property law. Spanish law was somehow peripheral to the everyday concerns of getting things built in the South – the Costa del Sol is an unfortunate testament to that. Epitomised by the corrupt modus operandi of the notorious Jesus Gil, the late Mayor of Marbella, the boundaries between builder and regulator were conveniently blurred. In an area where armed banditry existed well into the twentieth century Spanish law didn’t seem to apply to Los Andaluces.

Consequently, the history of property development on the Costa del Sol is a well documented horror story – the legacy of which is an unsightly concrete scar running along the coast of southern Spain from Malaga to Estepona. Then came January 2003 and a stringent new land law introduced by the Socialist regional government of Andalucia, the Junta, was designed to drag the town halls and builders of southern Spain away from their Wild West ethos and more in line with Europe.

It was a bold and audacious attempt to control one of the property world’s least regulated areas. Building in the countryside ground to a spectacular halt. Huge tracts of expensive land were rendered worthless as they no longer qualified for building purposes and most shocking of all – large scale property developers were forced to build affordable, lost cost housing – as the pay-off price for developing that million Euro, frontline beach project in Marbella.

‘The new law of Jan 2003 changed, in one seismic shift, the planning and building world on the Costa del Sol. The days of Jesus Gil are over. The boom of the last six years has come to an end. Many of the larger estate agents have found themselves with a problem.’ JP Weise, the Director of Valuations for one of the largest agents on the coast, Viva Estates, shakes his head ruefully, as he recounts the effects of the law amongst the property community.

‘Agents like Ocean and Interealty, who depended on the investor market, have hit real problems. And then when the UK market slowed….’ he emits a low whistle ’..offices were closed. And we even had unpaid Interealty staff putting a banner across one of the coast road bridges saying ’Interealty – Ladrones’’ (Interealty – Thieves).

But it would be wrong to assume development has stopped – far from it. The cranes along the Costa del Sol are still there. It’s just now they are legally there. As JP affirms ‘Now, on the coast, as one of the largest agents, we ask a lot more questions of developers than we used to. In the old days we’d sell off plan apartments without the developer having a building license – now we won’t do it. In the past a building license was easy to get – now you can’t just build anywhere you like.’

Miguel Manzanares, a well known Puerto Banus property lawyer, has experienced it at first hand. ’Like many people, I too own a piece of land I bought prior to the implementation of the law that I can no longer build on.’ Although, funnily enough when he said this, he didn’t seem overly dismayed at his predicament. But we’ll come to that later….

‘The Junta is looking to keep control of the countryside. Some town halls were respectful of the land and others were not…The Junta now wants to guarantee that Andalucia is protected. But it was a big shock for everyone – lawyers, property developers and estate agents. In the countryside building is no longer permitted. None at all.’

As someone who’s worked for a time in southern Spanish country property, the notion of no building going on at all seems inconceivable. So I dig a little deeper…enquiring of Miguel ’so how come prices of land haven’t dropped?’ And a little chink of familiar daylight starts to emerge….

‘Well, there’s a continuing scepticism in Spain …Andalucians know laws are not always sacrosanct.…traditionally, laws have always been flexible. So at the moment no one who bought land before Jan 2003 is panicking. ’ Oh, really? I nod encouragingly, as Miguel reveals how one might ’handle’ ones country planning problem.

It seems that in many areas local town halls can still permit the building of ‘almacenes’ or warehouses and, once built, are turning a blind eye to the actual use the building is put to. This is in fact one of the old tricks but now it seems to have come to the fore as the main way to build your luxury villa. Although, Miguel of course advises against doing it (being a good lawyer, talking into a tape recorder) – I get the distinct impression he’s not a stranger to the four bedroom warehouse with adjoining swimming pool and barbeque…

This hunch is confirmed by the countryside area manager of one of the major agents – who, interestingly, wished to remain anonymous. ’After the advent of the new law – it was all doom and gloom and all building came to a halt. However, two years on…people are becoming more confident in…erm… interpreting the law….’

Without knowing I’d seen him that morning, he cites Miguel Manzanares as the perfect lawyer to use when requiring a touch of ‘creative planning’. ’We work closely with Miguel. He’s a huge comfort to many of our clients wishing to build a house on rustic land.’ I could now see why Miguel wasn’t too perturbed about his expensive piece of land remaining an olive grove.

So the old spirit of the South lives on – but it‘s not confined to Andalucia. The nature of Spains’ economy, in the modern age, is something of an embarrassment to it’s government with 20% of it still existing as a black economy. While working as an agent in southern Spain I once sold a house for €324,000 …half of which was paid in cash, with the nervous buyer turning up at the notary with a very large suitcase. I can tell you it takes about half an hour to count €162,000 in used notes….

Ignatio Infante, the head of investment property development for Lexland, a firm of Marbella lawyers, consequently broadly supports the new law as he sees it dragging Spain into the twenty first century. ’Spain would be in the G7 group of countries if our black economy was at normal western European levels of around 5%. Our Socialist government are moving in the right direction – but you can‘t change a culture over night.’

Dealing primarily in urbanisation projects costing in excess of 25m Euros, Infante has to appear whiter than whiter. He welcomes the new constraints placed on the big developers – as he appreciates unplanned tourist based communities will lead to concrete wastelands.

’If you build at a density of more than 15 homes per hectare in Andalucia, now, a developer has to build a corresponding development – within the same town hall area – of low cost housing. It must be equivalent in size to 30% of the main development. I think this is a good law. We have a problem on the Costa del Sol with lack of access to affordable living. These properties have to be sold at a fixed low price. It’s a huge opportunity for our young families.’

Like many Andalucians Infante is keen for southern Spain to become Europe’s California, so he welcomes the Junta finally trying to control planning. ’I think the Junta de Andalucia is doing a good job. The regulations will ultimately work. At the moment we still have something like gold fever on the Costa del Sol…a little like the 60’s, when Benidorm’s high rises shot up. Really we need more centres of community life on this coast. We need pedestrian traffic – not more cars. I hope we don’t ruin Andalucia.’