Originally published by and reproduced here with the kind permission of

Typically Spanish www.typicallyspanish.com

How to stop real-estate speculation?

By h.b. Mon, 17 Jul 2006, 15:32

EDITORIAL COMMENT - For some time the Spanish Government has been talking about stopping real estate speculation and trying to ensure that first time buyers can get onto the ever more expensive housing ladder in Spain. It’s a tall order when it’s the market, fuelled in many areas by a high tourist demand for second homes, which has pushed the prices higher. Recent corruption cases in Marbella and elsewhere have highlighted how local corporations have been tempted to allow the developments, and the speculation, in return for the greater income for their personal or municipal coffers. Quite obviously something had to be done.

Last Friday the Cabinet meeting approved the draft for a new ‘Ley de Suelo’ designed to control the market. Real Estate promoters have already described the document as ‘interventionalist’, while the Partido Popular have surprised few by announcing their rejection of the draft and an appeal to the Constitutional Court. Some of the regional governments are reported to be unhappy too, fearing that the legislation implies a loss of control for them.

Consumers organisations have generally welcomed the ideas – the CECU have said that they support the project as it tries to stop the speculative movements in the real estate market.

So what are the proposals?

1. 25% of all new homes must be for protected public housing, often known as council housing in northern Europe. This measure will not apply in municipalities of less than 10,000 people.
2. The developers must allow between 5% and 15% of the land for public facilities.
3. Any changes to original plans have to be put on public display for at least 20 days.
4. Building land will be prohibited in rural areas.
5. All urban plans will be subjected to an environmental impact report.
6. Plans must now include details and maps of local water sources and must include a report from the local water board on the availability and supply of water.
7. The promoter must also be responsible for the connection of the water and waste services.
8. Notaries will confirm that the finished project matches the technical requirements in the plans.
9. Land affected by forest fire cannot be built upon for at least 30 years.

Trying to control the demands of the marketplace is a dangerous and difficult exercise, and only time will tell whether the above ideas become an effective method.

Restricting development in certain areas is bound to have the undesired effect of increasing the price of housing even further. But it is clear that something needs to be done and any fresh ideas on how to do are sure to be welcomed. The PP previously allowed building without restriction, except in already protected areas.

Over the past decade prices of building land have increased in some areas by as much as 500% and 800,000 new homes are built every year – many of them destroying Spain’s coastline, according to a recent Greenpeace report.

© typicallyspanish.com