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A boost to the real estate sector in the community of madrid

| News | Real Estate

Antonio Ñudi analyzes Law 1/2020, of October 8, which modifies the Land Law of the Community of Madrid

The political noise that for weeks has captured our attention in relation to the measures adopted to control the pandemic, basically turned into a fight between the Spanish Government and the Community of Madrid, with resolutions of the High Court of Justice involved; the declaration, once again, of the State of Alert; or the exchange of data as if they were blows, has overshadowed some measures that in another scenario would have had more repercussions, above all in the real estate and urban planning fields and, consequently, in the economy of our region itself.

I am referring to Law 1/2020, of 8th October, which modifies the Land Law of the Community of Madrid, for the promotion and reactivation of urban development activity, the text of which has already been published in the Official Bulletin of the Community of Madrid.

The health crisis we are suffering as a result of COVID 19 and the devastating effects it is already having on the economy as a result of the suspension of activity, has led the Government of the Community of Madrid to speed up a process of amending the 2001 Land Law. On this occasion, the main objective is to contribute to economic development and the promotion of employment by facilitating, speeding up or reducing the amount of red tape in administrative procedures, including those relating to town planning licences.

A recent report published by ASPRIMA, in collaboration with Ernst & Young, highlighted the following scandalous figures: the unjustified delay in the granting of new and first occupancy licences costs 12,802 euros per house, which is finally borne by the buyer, and a delay in the payment of taxes such as the Construction, Installations and Works Tax, the Property Tax or the Vehicle Entrance Tax, which affects the municipal coffers.

But it is not only the economic cost that is important, our cumbersome urban legal system causes a real lack of legal security that discourages investment. And this is an even more serious problem than the direct economic loss of the delay.

Although the new legal text incorporates important measures such as the partial license that enables the execution of parts of a work without waiting for the total concession of the same, the star measure in this legislative reform is the Declaration of Responsibility applicable to some actions that until now required a previous urban planning authorization regime, that is, a license. After the reform, the licence will only be required for those acts of construction, building and land use that are reserved by the State Land Law, in which the regional scope cannot be applied, such as, for example, building licences of a greater entity that require a construction project or general intervention actions in protected buildings.

Although it is true that the declaration of responsibility is a figure imposed on us by a European directive (the famous BOLKSTEIN directive), it has always had a lot of critics and since its recent incorporation into our legislation we have associated it with the development of commercial activities and not so much with the building process or the authorisation of residential uses through, for example, the first occupation licence. And perhaps it is in this area, the occupation of buildings, where the measure has the greatest impact, as it is necessary to deed the transfer of the home from the developer to the user, the main legal business of the development activity.

The mistrust of the declaration of responsibility has to do with the lack of confidence in the individual concerned to initiate the action, since it is a document in which the individual states under his own responsibility that the urban development action he intends to carry out complies with the requirements of the urban development and sectorial regulations applicable to the action and with its mere presentation he is legitimised to initiate the action in question. It is true that the administrative control does not disappear, but it is projected a posteriori, unlike in the case of the license that is carried out a priori.

The idea that the legal certainty provided by a licence is not the same as that provided by a responsible declaration is also in the air. In this sense, the role of the Land Registries and their complicity with the new system is fundamental, since we have one of the safest systems in terms of property transactions and the solidity of our registration system has contributed to this.

I believe, however, that the risk is small compared to the great benefit it brings, for several reasons:

- the real estate sector is today, in general, a highly professionalised sector, regulated and subject to internal controls that do not admit actions outside the law. 

- a significant number of agents who do not overlap are already involved in the urban planning process. It is not a bilateral but a multilateral relationship: promoter, designer, builder, project and construction management, Administration, Financial Entity, Valuation Society, consumer or user, Notary, Land Registry and Cadastre.

Each one of them carries out a legality filter that minimizes the risk.

- although the Town Halls have to make an effort to adapt their by-laws to the new regulation, which comes into force 20 days after its publication, in a short time the system will have a regulatory cohesion in which all agents will feel safe. 

- the existence of an a posteriori control by the Administration and the existence of a sanctioning regime, the application of technology at the service of this control and the participation of the License Processing Collaborating Entities in the whole process, will reinforce the security of the system.

Regardless of the fact that another series of actions are necessary and that our Land Law must continue in its process of adaptation to the current social reality, the legislative reform published today encompasses a series of measures which, without a doubt, represent a boost to economic activity and job creation in our region, so necessary in the months ahead, and brings out a true public-private partnership, resulting in compliance with the principle of efficiency which must govern the actions of the administration.

You can see the article at El Independiente

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