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Update Regularization of illegal Properties

This article looks at the latest update relating to the regularization of illegal properties in Andalucía

The real estate boom together with increasing price of property in the years prior to the recession in coastal areas in Andalucía, gave rise to a high demand of properties in the countryside.

A lot of them were built illegally and prices were considerably lower than on the Coast.

There are various reasons why so many properties were built illegally, the main one being the restrictive rules to build on rural land.

This in turn created a black market where all kind of tricks, including corruption happened in order build the illegal properties.

The Law on Land Use in Andalucía (LOUA) demands to build a property in the countryside; the owner has to justify the need of the property for agricultural, forestry or livestock production purposes.

This is impossible to prove for a standard property built on a small country plot, as you would need a lot of land to prove it was for agriculture use.

Hence, the large growth of illegal properties, if you want to know more about the reasons for this you can read our article Illegal Constructions in the Andalusian Countryside  

The different changes in the LOUA have proved useless over time as there has been so far very little willingness from the former Andalusian government to tackle the situation.

There are approximately 300.000 illegal properties out of the 500.000 properties in the Andalusian countryside. Of which only 26% have been granted the AFO or Assimilated to Out of Order planning status.

Please read our article What is an AFO and why do you need one if you want to know more about this.

Basically although the AFO does not legalise the property, it gives the recognition that the property meets the necessary health and safety conditions to serve as a dwelling.

This allows the owner to legally contract to the services and supplies (water and electric).

It also allows the owner to carry out basic maintenance works on the property.

Which properties can be granted an AFO?

The aim of the new law is to try and regulate the status of illegal properties built in either the countryside or in the town when the statute of limitation for the authorities to protect or restore the planning order has elapsed, i.e. six years since finalization of the construction.

Any of these properties fall within the category of AFO properties. However a resolution from the Local Council needs to be obtained granting the AFO status to access the services and supplies.

If the property is not granted the AFO the property cannot contract the services and supplies to the property, nor can conservation works be carried out on the property.

Which properties cannot be granted the AFO?

Illegal properties built when the six year statute of limitation has not elapsed since completion of the construction.

Those properties built in protected rustic area, green areas, land which is zoned as public area.

Construction works in protected areas.

illegal properties Andalucia

Who can apply for an AFO?

Either the owner of the property or the Local Council by statute.

What needs to be proved to obtain the AFO?

Identification of the property with registration particulars, rates reference, plan of location, date of finalisation of the construction which can be proved by any valid means.

Also verification that the property meets with the necessary health and safety conditions to serve as a dwelling duly certified by a competent Technician.

Upon review of the documentation lodged and the reports from the relevant bodies of the Administration which it affects, the Local Council will make a decision.

The reports can include whether the property has been subject to proceedings aimed to protect or restore the planning order.

Can the Local Council demand certain works prior to granting the AFO?

Yes, these could be required to guarantee the minimum health and safety condition for the property to be used as a dwelling or those works to minimize the visual impact within the landscape.

These works will have to be carried out under the supervision of a competent technician, such as an architect or engineer.

These people must issue a certificate confirming the completion of the required works and these must be approved by the Local Council technicians.

What is the content of the AFO resolution?

The AFO will declare that in respect of the illegal property, the statute of limitation to protect or restore the planning order is over.

This means that neither protection or restoration proceedings, such as the demolition of the property, nor fine proceedings can be addressed against the property.

The recognition that the property counts with the necessary health and safety conditions to serve as a dwelling.

That the property can now contract to the services and supplies (water and electric).

Also there will be reference to the possible criminal proceedings which may affect the property.

What are the consequences of the AFO being denied?

The property can neither contract to the services and supplies, or any construction work be carried out on the property.

What is the time for the Local Council to resolve the application?

Six months – If there has been no express resolution within such time scale, the application has to be considered rejected and therefore the same can be applied to the subject of appeal by the owner.

Are there new fines foreseen in the law?

The law foresees fines for any property subject to illegal division of land if advertised in the internet. The construction of electricity and water connections without authorization or the issue of Certificate stating how old a building is with false information issued by a Technician.

Will a property with an AFO be considered as illegal forever?

The properties with AFO may be incorporated as legal properties in the future Town plans providing this considers that they are compatible with the principles and definitions of the new town plan and the corresponding planning charges and obligations have been satisfied.

What happens with properties with an order from the authorities to restore the planning order which is impossible to be carried out? 

Those properties will also be considered for an AFO providing the corresponding economical compensation has been paid to the Local Council.

What happens with properties illegally built where building licenses have been declared null and void?

These properties can also be considered for an AFO providing six years have elapsed since the completion of the construction.

However, these will be subject to the decisions of the Court when executing the corresponding judgment.

This means if the Court upholds the demolition of the property, this will be carried out.

In summary, the new legislation recognises the AFO status to any illegally built property on which the statute of limitation for the authorities to protect or restore the planning order has elapsed, i.e. six years since completion.

Even for those properties where the building consent has been declared null and void.

However to be able to contract the services and supplies to the property and to carry out maintenance works on the property an application has to be lodged to the Local Council and has to have an AFO approved and issued.

Rafael Berdaguer Barbadillo

Abogado

rberdaguer@berdaguerabogados.com

www.berdaguerabogados.com

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution.

 

Copyright © 2019 Rafael Berdaguer Barbadillo. All rights reserved

 

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NEW MORTGAGE ACT IN SPAIN

On Monday 17th June 2019, a new Mortgage Act (Law 5/2019 of 15th of March) came into force in Spain

With the introduction of the new mortgage act, it has raised a few questions, this article aims to address most questions people may have in relation to the change.

1) To which mortgage loans is the law applicable?

To any mortgage loan granted after 16th of June 2019 applied for by a physical person for the purchase of a residential property. It also can be applicable to Deeds signed after the said date that modify the terms of a former Deed of Mortgage.

 

2) Who is finally paying the costs related to the mortgage?

The bank has to pay the Stamp Duty (since 10.11.2018) and now also Notary’s fees, Land Registry fees and Law Agent fees known as “gestoria”.

The purchaser / borrower has to pay the fees for the valuation of the property and the copies of the Notarial Deed of Mortgage.

 

3) What happens with the floor clause?

The new legislation strictly prohibits the insertion in the Deed of Mortgage of a clause with a minimum interest rate thus the floor clause has been banned.

 

4) Are there any changes on the commissions for repayment before maturity?

Yes, these have been reduced.

For mortgages at a variable interest rate  the banks can charge a 0,15% commission on the amount to be repaid during the  first five years of the loan and 0,25% on the amount repaid in the first three years of the loan. After that term no commission can be charged.

For mortgages at a fixed rated  the banks can charge 2% on the amount  to be repaid during the first 10 years and 1,5% on the amount to repaid during  the  rest of the terms .

 

5) What happens if I cannot pay the mortgage loan?

You will have a longer term to avoid the repossession of the property by the bank.

The procedures to repossess a property can only be initiated   by the bank in the following cases:

  1. During the first half of the loan if the borrower has not paid 12 monthly installments or owes more than 3% of the capital of the loan.
  2. During the first half of the loan if the borrower has not paid 15 monthly installments or owes more than 7% of the capital of the loan.

 

6) How much interest would I have to pay if payment of the installments is not made on the due dates?

The new legislation’s limits the rate of interest for delay in payment to a maximum of 3 points above the normal interest rate applied to the mortgage.

 

7)  Can I change my mortgage loan from a variable rate to a fixed one?

Yes, the new law legislation will make it cheaper to convert a variable rate mortgage into a fixed rate the maximum charge in this case will be 0.15% and will only be applicable if the change happens within the first three years of the term of the mortgage

 

8) Do I have to subscribe insurance policies and other products with the bank that is granting the mortgage?

No, in principle the banks cannot longer force the client to contract other products to obtain the mortgage (home insurance, life covers, credit cards etc.)  However they are allowed to offer a lower interest rate in return for clients contracting various services of the bank. They can request insurance policies but the borrower can subscribe with any company.

 

9) Will I have more information about the mortgage loan and possible abusive mortgage clauses?

 In principle the reason for the new legislation is to increase the protection of the consumer by providing a greater level of information of the loan.

The bank has to provide the future client with the form called FEIN (Ficha Europea de Informacion Normalizada, or European Standardized Information Sheet).

This standardized document is designed to give the borrower an overview of the terms and conditions of the mortgage loan. Also the bank has to provide the client with the FAE (Ficha de Advertencias Estandarizadas), where the most relevant clauses and elements will be generically explained, and also with a copy of the loan contract.

If the mortgage is at a variable rate, the client will also receive a separate document outlining the effect on installments in various scenarios.

The bank has to remit these documents to the Notary’s office at least 10 days before the date of the signing of the Deed of Mortgage and the borrower will have to visit the Notary who will give free advice   on the clauses and mortgage terms.

The borrower will have to pass a test to confirm to have understood the terms and Notary will have to   prepare a Deed confirming that the documents have been received and understood by the borrower. Only after this on a second visit the Deed of Mortgage can be signed by the client.

 

RBA Rafael

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.

www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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BREXIT in case of NO DEAL

Contingency Regulations in Spain for BREXIT in case of No Deal

The withdrawal process of the United Kingdom (BREXIT) commenced following the referendum held on 23rd June 2016 and the subsequent notification to the European Council on 29 March 2017. Which means they should leave the UE on 29th of March 2019.

At present there is no withdrawal agreement which should establish the conditions for the withdrawal of the United Kingdom from the European Union and from the European Atomic Energy Community (EURATOM).

In the proposed agreement which has not been signed and ratified by the UK a transition period is provided up to 31st of December 2020 as to facilitate the withdrawal and sufficient time to negotiate and conclude the agreement that will govern any future relations between the two parties.

If the agreement is not ratified, the United Kingdom will have the same status as a 3rd world country in Spain.

Therefore the Government of Spain has adopted certain measures approved by royal decree 5/2018 of the 1st of March to guarantee certain rights to Expats in case the UK leaves the  EU without a deal.

This will come into force when the withdrawal has taken place i.e. in principle on the 30th of March 2019 and only if there has been no withdrawal agreement signed.

The measures taken and are subject to the condition that the UK grants the same rights to Spaniards living in the UK.

Residency

If the UK leaves the EU without a deal,  UK nationals  and their family who already residing in Spain  will have up to the end of 2020 to apply for a  new  foreigner identity card as third world country nationals  to secure the right to remain from 2021 on wards.

During the grace period the existing registration certificate will continue to be valid.

For those who have already permanent residency this will be an easy process.

However this means that future applications for residency from UK nationals not registered in Spain or who cannot prove to have been residing in Spain before Brexit, or arriving here after 29th of March will be processed in the same way as those of other third world country nationals, with the corresponding requirements more demanding than those for EU citizens.

Working in Spain

If a UK national is working as employed or self-employed in Spain they will be able to continue working as normal.

Social Security and Pension

British citizens who are legally resident and working in Spain subject to Spanish social security shall have the same rights and obligations under the social security system as Spanish nationals.

Provision is also made for the continued receipt of certain social security and pension benefits subject to limitations.

The Spanish government will take into account periods of work in the UK before 29th March 2019 when calculating your Spanish pension.

The above is applicable for a period of 21 months from the withdrawal date, i.e. up to 31st of December 2020

Healthcare provision

If a UK national is currently registered for healthcare in Spain as a resident, they will be able to continue to access healthcare until at least the end of 2020.

Spain will continue reimbursing healthcare costs for eligible UK nationals settled in Spain and Gibraltar before BREXIT up to at least 2020

University Admissions

Students coming from educational systems in the UK will continue to enjoy the admissions procedures to Spanish Universities applicable at the date of withdrawal for the academic years 2019/2020 and 2020/2021.

Driving after EU Exit

Britons have 9 months from the 29 March 2019 to exchange their UK license for a Spanish one, in the meantime the UK license is accepted.

 


 

 

We hope this information has been useful and if you have any questions please do not hesitate to contact us. As new information is published we will continue to update you.

Written by Rafael Berdaguer Barbadillo – Senior Partner