Buyers beware of ‘land grab’ law threat

SPANISH holiday home buyers are being warned about a draconian ‘land grab’ law that allows property to be seized for development.

The quirky property development law applies to land in the popular Valencia region in the east of Spain, and the Department of Foreign Affairs is raising its legality with the Spanish Government.

The legislation allows property developers, who own over 50% of land in a given area, to oblige homeowners to sell them the actual land around their apartments or houses. The developer can then also force those home owners to pay the costs of the infrastructural development.

Given the boom in foreign holiday home purchases by Irish people, particularly in Spain, Fine Gael foreign affairs spokesman Bernard Allen said yesterday that prospective buyers needed to be aware of this type of local law and use reputable estate agents and legal advisers.

“Mainly my intention is to raise awareness that if people are buying, that they are aware of this minefield and they are protected legally from a law that could ruin them financially and destroy their dream of a holiday home,” he said.

Responding to a parliamentary question from Deputy Allen, Minister for Foreign Affairs Dermot Ahern said his department was well aware of the problem and the Irish Embassy in Madrid was approached by a number of Irish citizens raising concerns about the impact of the law.

“Together with our EU partners, we are examining how the concerns in this matter could best be further pursued with the Spanish national and regional authorities,” the minister said.

The law, known as the LRAU, Ley Reguladora de la Actividada Urbanistica, or Law Regulating Urban Activity, affects both Spanish and foreign nationals. The European Parliament has also been strongly critical of the effect of the law.

The Spanish Government said it had no control over the law as it came under the jurisdiction of the regional Government in Valencia, an area that encompassed the bulk of the Mediterranean east coast, including popular resorts in Alicante and the Costa Blanca.

While there are no hard figures available on overseas holiday homes owned by Irish people, the number of trips abroad by people with their own holiday home has more than trebled in the last four years. Central Statistics Office figures show that in 2000 there were 29,000 international trips by people heading to their own holiday home and that this had grown to 99,000 trips by 2003.

The growth in the foreign holiday home market has led Revenue Commissioners to monitor sales as they suspect that undeclared income is being used in some of the purchases.