Process of building a property in Spain: Rustic land (Suelo Rustico)
If you are buying land or a property in the country, such as a farmhouse (cortijo), it is essential to find out if it is placed in an area where building is allowed (in this case it is called a “finca urbana”, or “suelo urbano” ) or where it is not allowed (“finca rustica” or “suelo rustico”). This classification will affect the value of the property, and it will also affect the amount of mortgage that you can obtain.
icon-arrow-down Land in Spain is classified in several types : We are going to give you more details of them:
A) Suelo Urbano (Urban land):
This is a land in which it is authorized to build with derterminate specificactions contained in the “Development Plans” of the city, or area (Plan General de Ordenación Urbana PGOU), or in specific zones of urbanization called “Partial Plans” (Planes Parciales)..etc.
This land uses to have all the facilities and requirements to live there in high density of population, like the proper water and electricity supplies for the properties and constructions, and public electric and water. And other supplies connections, like sewage, gas, telecommunications, etc.
Urban Land or “Suelo Urbano” is the common land in cities, villages, or urbanizations, and used to have the proper access by roads, with pavement, streets, commercial areas, health centres, schools, colleges, sports, etc.
B) Non-Urbanizable Land (Suelo no urbanizable):
Rustic land is a land considered non-urbanized. It means that the land classified in this way cannot be urbanized. So then no urbanizations, or cities, or plans can be developed in that area.
There are several types of land included in this classification, like green areas, protected areas, mountains, lakes, public areas, etc.
Inside this classifications there is the “rustic land”. This is a land which must be used to grow for farmers. So, the only use allowed in this land is to “grow”, or to be used by farmers to develop an agricultural activity.
But, in this land, it is authorized to build new constructions, eventually. These constructions must be in a very low density of construction. So, is very common to find that only when the land has a minimum size (5.000 m2 in Murcia, passing to the 10.000 m2 in the Spanish Land Law (Ley del Suelo), or 20.000 m2 in over protected areas), you are authorized to build there a construction, also called “cortijo”, “villa”, “masía”, chalé”, “chalet”, “hacienda”, etc.
Of course, there can be houses in rustic over plots smaller than the minimums required in the different areas. This is because these buildings were built before the new regulations entered in to force, or, simply, that they were built “illegal”. In these cases, these houses are respected by the public institutions (even it they were built illegal and the file of the infraction has not been expired), and can be reformed, but not extended.
C) Suelo Urbanizable:
This is a land in which, although nowadays is not “urbano”,the Town Hall can change the classification to “urbano” at any moment.
So, if you find a plot in one of these areas, and you have the aim to build there a determinate construction or project, you should first check in the legal authority (mainly the Town Hall , Council = “Ayuntamiento”), which are the specifications, requirements, and limitations, that you can have to build there.
icon-money WHEN YOU NEED TO FINANCE YOUR CONSTRUCTION – SITUATION FOR MORTGAGE PURPOSES- SELF PROMOTER MORTGAGE (Hipoteca Promotor o Auto-Promotor)
It is very common that you, as promoter, need to apply for a mortgage to pay the construction of the property. In this case, there is a specific mortgage which is offered by the bank to obtain enough financial to build the property.
This is called: Promoter Mortgage, or Self-Promoter Mortage (Préstamo o Hipoteca Promotor o Auto-Promotor).
The situation is the following: You have the plot, and an initial idea about the house projected with the architect, and you have now found the builder to make construction. But you need money, and you need to ask for a loan to build the house.
Then you go to your bank and ask for possibilities of financial. After studying your personal and economic situation to confirm that you will be a good client to pay back the mortgage payments, then If the bank accepts and offer you to lend you the money for the project. But, the bank will not give you the full amount of the construction expenses at the beginning, they will be giving you the funds by steps. Which steps?, the ones derived from the same evolution of the construction.
icon-chevron-right For example: Imaging that you need € 100.000 to complete the works. The bank will give you 20 % to buy the land, and to make the foundations, 20 % when the structure is finished; 30 % when the roof is complete, etc., and the rest when the architect makes the “certification of final works license” or Licencia de Final de Obra.
Your bank will request from your architect, an update of the buildings ,to issue a certification confirming that the works are satisfactory complete. Then you will bring that certification to the bank, and they will lend you the corresponding percentage for that step in relation with the global.
Your bank might ask you to have the plot on your name before to give you the approval of the mortgage, and to declare the house “on construction” in the land registry. This is because, sometimes, the builder offers you one of the plots which are on his name to you to build there, and the plot keeps in the builder’s name till completion.
So, in order that you give a better guarantee to the bank, they may request to change the land into your name, and to inform the land registry that a house is being built in that land. If this is the case, then you have to go to the notary, and get the deeds of the land into your name.
With the deeds of the land in your name, you have to go to the land registry together with the Building Project, and the Building License. In this way, the land registry will have the house “in construction” over that land.
icon-arrow-circle-o-right CATASTRO (In English “Cadastre”) OR COUNCIL TAX.
In the position of the self-promoter, the Catastro over the land is called “rustic”. In other words, the land is paying the Council Tax as “land”.
The “Catastro” is the institution which consider the properties for maps, drawings, plans, and for Council Tax purposes.
Whilst the Registro de la Propiedad and the escritura may well confirm the ownership of a property, and the conditions of this ownership, like who owns the property, in which percentage, if is there limitations or charges (like mortgage, public auctions, Tri¡bunal disputes,e tc), the Catastro details will give you a better understanding of the boundaries of the property (usually in a visual form) and, size and description of the property.
But, when you complete the building of a house over that land, then you must inform the Catastro (Council Tax authority), that over that land now there is a “house”, with determinate specifications. If you do not do it, you can have future problems.
There are areas in Spain (like Andalucía and Murcia) in which the notary, when declare a new house over a pre-existing land, they send the deeds to the Catastro to inform about the modification. So, once you have the deeds of the DON in the land registry, the job is finished in this way. But, in other areas, like Valencia region, once you present the deeds of the property with the DON to the land registry, you must bring a copy of the CFO, and the Building license to the Catastro, in order to inform them that, over the land, there is now a house. If you do not do it, they will contact you in the near future to provide them with these documents.
Once the construction is duly inscribed in the Catastro, the job is finished, and soon (it takes sometimes around 1 or 2 years), you will start to receiving the bills from the Council Tax- SUMA BILLS.
icon-arrow-circle-o-right ELECTRIC AND WATER CONNECTIONS:
Once you have the construction properly declared in the deeds with the process of Declaración de Obra Nueva, and you have the Certificate of Habitation (“Licencia de Primera Ocupación”, or “Cédula de Habitabilidad”), then you must apply for the contracts of supply for the ¡water and electric companies. For this, you must present the following documents to the csupplying companies:
A) Electricity: Certification obtained from the authorized electrician who made the installation or “Boletín de Instalación Eléctrica” + Certificate of Habitation.
B) Water: Certification obtained from the plumber who made the installation or “Boletín de Instalación de Agua” + Certificate of Habitation.
Then, the electricity and the water company will install the individual meters into your property, and will issue the contracts for individual supply. Only in that moment, the supply turns from “building supply” to “individual supply”.