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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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Holiday home rental in Andalucia

Holiday home rental in Andalucia

From 11th of May 2016 a new regulation came into force in Andalucía in connection with holidays rentals.

The law was approved on the 22nd of February 2016 and regulates the rental of Properties to tourists.

The objective is to put a stop to people trying to get away with undeclared rentals and thus avoid unfair competition with hotels and other tourist resorts that declare their income.

It will also ensure that there is a  minimum standard of quality and complies with health and safety regulations.

For owners who wish to rent their property (holiday rentals) they must register them at the Tourism Registry of Andalucía before letting them out.

Although if refurbishing works are required in order to comply, these can be completed in the term of 1 year.

PERSONS AFFECTED BY THIS LAW

Property owners who offer a tourist service and advertise their property by internet or other marketing systems such as travel agencies or real estate agents etc.

WHO WILL NOT HAVE TO COMPLY WITH THIS REGULATION

The Owners of the following properties will not have to comply with this law as they are subject to a different legislation.

  1. Properties that are occupied during the holidays without payment of any rent.
  2. Properties rented for more than 2 months to the same tenant.
  3. Properties located in rural areas.
  4. Properties in the same block (3 or more) owned by the same person.

TYPE OF RENTAL

  1. Rental of the whole Property – The property is fully rented out and it cannot have more than 15 occupants.
  2. Rental of part of the property (B&B) – This is applicable when the owners live in the property and rent it partially. In this case there should not be more than 6 occupants.

Requirements to be met for renting out your property for holiday rentals in Andalucia

  1. Registration of occupants by the owner.
  2. The property must have first occupation license.
  3. It must meet technical requirements regarding ventilation, air conditioning, furniture, etc.
  4. A first aid kit, brochures, instruction booklets, etc will have to be made available to the occupiers.
  5. There is an obligation to provide tourist information of the area, have a complaints book, and telephone contact for incidents.
  6. Specific reservation and cancellation terms are applicable to the holiday rental.

REGISTRATION AT THE TOURISM REGISTRY OF ANDALUSIA

Before renting your property out as a holiday home in Andalucia you have to first register your property at the Tourism Registry of Andalusia.

You need to sign a document with the particulars of the property and the owner and confirm that it meets the requirements set out in the law.

The property will be assigned a registration code which must appear in all the publicity that is made of the property.

FINES

If you rent your property as a holiday rental and it is not registered at the Tourism Registry or does not comply with all the requirements set out in the law, you as the owner can face fines which could go up to 150.000 Euros.

 

AGREEMENTS OF THE COMMUNITY OF OWNER THAT AFFECTS THE HOLIDAY RENTAL

Also since March 2019 the community of owners can adopt agreements by majority of 3/5 of the owners, to limit or condition the exercise of the tourism rental housing activity. Also with this majority the community of owners can resolve to increase the community fees of these apartments up to 20 % of the existing fees. 

 

DATE WHEN REGULATIONS FOR HOLIDAY RENTALS  CAME INTO FORCE

The regulation came into force on the 11th of May, 2016. From then  on all properties that are going to be used as holiday rentals in the province of Andalucia must comply with these regulations.

If you intend to rent your property as a holiday rental, our office can assist you in the compliance required.

We will assess your property and inform you of all requirements that need to be met by the legislation, documentation needed and arrange for registration at the Tourism Registry.

 

Rafael Berdaguer
Lawyer within the firm
Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved