Friday, 18 December 2009

THE SPANISH PROPERTY SCANDAL

THE SPANISH PROPERTY SCANDAL

How it all began
Unlike the UK, where the mayor is merely a figurehead, in Spanish towns the Mayor is a very powerful person within his town or village. The mayor and his town council have traditionally been responsible for almost all major decisions. The issue of building licences being of paramount importance to this report. Building licences cannot be issued on non-urbanizable land.
The price differential between urban land (which can be built on) and rustic land (which cannot be built on) is in the region of 100 euros per square metre. So it can be seen that there are huge profits to be made from building on rustic land. Therein lies the start of the problem.
With so much profit to be made, the temptation for illegal building and corruption became too great. The builders, with a nod and a wink, and the passing over of many brown envelopes stuffed with euros, were encouraged to build on rustic land. They were then able to sell at urban prices, with some of the larger builders/developers making hundreds of millions of euros profit.
Complicit in this were the mayors, town councils, police (responsible for upholding planning law), lawyers (especially lawyers), agents, notaries, and even the Junta (the regional government). All insisted that the correct paperwork was in place when assisting ex-pats to purchase property in Spain.
Spain rode high on the construction boom, all the while aware that the majority of the building work was unlicensed, and illegal. The authorities were more than happy to take taxes from the building work, and to turn a blind eye. How far up the governmental chain does the corruption go?
More demolitions are happening almost daily.

So what happened?
During the past four years it has become clear that many thousands of people had fallen victim to the building scandal. They were unable to obtain the correct paperwork for their property, without which they could not obtain mains electricity and water.
The Spanish environmentalists began to look more closely at what was happening, and started to initiate proceedings against some of those responsible for the illegal building. The rate of growth within the construction industry was unsustainable, with services struggling to cope.
The Junta stepped in and stopped all building. Shutting the stable door some time after the horse had already bolted. Many people had their building licences revoked, as they had been issued illegally, many just did not have building licences. The Priors home in Vera was very publicly demolished, even though they had the correct paperwork.

Personal experience
This was part of a submission to the Auken Report, but which could effectively apply to tens of thousands more people caught up in the property scandal:

I belong to a group of mainly British third age people who bought houses in El Fas, Cantoria, in the Province of Andalucia, who are from all walks of life, most of us were very careful when we made the big decision to embrace the Spanish way of life and purchased our houses. Checks were made on agents, Spanish solicitors were employed, notaries processed the escrituras, and we were constantly assured that all was in order and that our houses in Spain were completely legal according to Spanish law.
You would find it hard to imagine the horror, stress and strain of discovering that your house, into which you have put your life savings was to become subject to demolition because it was illegal.
The first any of us knew about this was when we discovered that the builders were being prosecuted and that the public prosecutor of Huercal Overa wanted to demolish 19 houses on El Fas where we live. Oblivious to the fact that we were all victims of fraud, and making us double victims by threatening our houses.
We fully understand that the laws of Spain have to be upheld, but where was the law when we were cheated and lied to? Where was the “Law” when our house where being constructed?, the authorities did not control the situation, the “Town Hall officials”, “Mayors” and “Councilmen” Police, Guardia Civil ALL turned a blind eye. WHY? We are now told that no building licences have been issued by Cantoria for 25 years. Why are we being punished when we had done all we could to ensure that we complied with the law and bought in good faith.
It is inconceivable that the Spanish authorities were unaware of the situation regarding the illegal building, and thereby condoned it. Where did they think the extra revenues were coming from? Why has Spain been booming in recent years? Where did all the businesses that profited from the mainly British investments think that the money came from? It really is shameful that they should suggest that we should pay more. What about sharing some of the profits that have made out of us. Profits which the government has shared with the taxes which have been paid.
Our Dutch builders have received around 4 million euros from us just on our small estate. We now find that we have no electricity except from a very expensive to run generator (generously provided by the Mayor of Cantoria), and water from who knows where ( NOT drinking water ). All because we have been misled, lied and cheated to by Agents, Developers, Solicitors, and above all by the Administers of the Laws of Spain, the Town Halls, Andalucian Parliament, Andalucian Junta. We cannot now get the correct paperwork for our houses.
Tens of thousands of people now find themselves in the same situation.
Why was this allowed to happen?
This is the shame of Spain!
The realisation that so many houses are now classed as illegal was the main cause of the property slump in Spain, long before the current worldwide economic problems.
All we want is to live out our lives in peace, and enjoy this wonderful country, among the good Spanish people. Surely this is our fundamental basic human right.
We think the Spanish government should consider the following:
1. Take away the threat of demolition.
2. Allow us to gain mains electricity and water. We can then contribute to the local councils and pay our bills correctly as we would all wish to do.
3. Sequester the assets of the builders and developers who have acted illegally, and use this to carry out any further work to enable developments such as ours to become fully legal.
4. Further punish those responsible, by applying the criminal laws of Spain.
5. Use any money remaining to compensate the victims (legal expenses, etc.). Those of us who are taking legal action are doing so at our own expense, against these builders/developers who are criminals, and we are having to pay huge amounts of euros to bring them to justice.
6. Make the Spanish Authorities, ADMIT that they have been complicit and instrumental in the making of this situation, as highlighted by Michael cashman, MEP; Margaret Auken MEP and recently by Willie Meyers MEP.
These actions would bring much needed revenue into the towns and the service industries, and would cost very little. We estimate that the population of our few houses in El Fas spend in the region of 4000 euros per week in the locality. Multiply this by the many thousands more properties and you can see that this is a massive amount of money being put into the Spanish economy. Most of us are registered on the padron, and have our residencia.

Latest developments
The authorities have instigated inspections to ascertain just how many illegal houses there are. This has resulted in a figure of 11,000 for the Valle de Almanzora. And across the whole of Spain the figure is likely to be around 250,000 properties.
These inspections allow each town to produce a new PGOU (Plan General de Urbana - a town plan) which can incorporate many of the illegal houses. However, the rules which need to be applied to new plans are strict, and all illegal houses will not be included.
The time scale for these plans to be approved can be up five years. The majority of UK ex-pats are in their twilight years.
There are other systems which are being put into place, but the majority of these will involve many thousands of euros having to be paid by home owners to legalise their property, if it can be legalised at all. Euros that many simply do not have. It was said that the British were “like sheep waiting to be fleeced”, that would appear to still be applicable.

European Union - What are they doing?
Despite the fact that the EU is involved in every single aspect of life in the UK, they continually tell us that they cannot interfere in the internal affairs of a member state.
Margrete Auken has produced a report adopted by the EU (available at http://www.aulan.es/Auken_Report.pdf) highlighting the problems faced by the victims in the property scandal in Spain. The Green parties are backing this report and are helping to fight for justice for the many thousands of people affected.
The report is highly critical of Spain, and suggests withholding a sum of money from Spain’s EU grants (billions of euros), until such time as the problems are solved. A vote for this action was due to be held in the EU Parliament on 26th October, however the amendment was never voted on due to some obscure technicality which only applies to budget-votes. The technicality is that you cannot have a vote where you increase the budget line. This amendment did not increase the budget, it only stated that the money for that part of Spain should be frozen as agreed by Parliament in the Auken-report, so it would seem that the decision to disallow a vote may have been politically motivated. The Green MEP Margrete Auken has apparently submitted a complaint, but unfortunately the vote is now closed and the chances of retabling the amendment in December to the vote on the actual budget are slim. However, it may be that this issue can be re-opened as part of the budget discussions required by the Lisbon Treaty.

UK - are they interested?
It would appear to many that those UK citizens who have chosen to live in another European country have become persona non-gratis as far as the UK government is concerned. Despite much lobbying within the UK, it has so far failed to produce any worthwhile results.
For the many thousands of UK victims, the support from the UK Government has been non-existent. There has been some rhetoric from the British Consulate in Madrid, but they are words with no action.
Many of the political parties in the UK voice their support for the victims in Spain, but only the UKIP has so far publicly voiced their support with the following press release:

Pursuing Justice For British Home-Owners In Spain
In recent years, Spanish provincial governance has employed a number of instruments for depriving tens of thousands of home-owners, in new developments, either of their properties, in their entirety, or of the amenities, such as access-roads and water- and electricity-supplies, to which they were legally entitled.
One such instrument was a requirement for "retrospective planning-permission", whereby planning-permissions, which had already been granted, and on the basis of which properties had been built, could be, and frequently were, retrospectively withdrawn.
Legal challenges to such instruments characteristically foundered in a welter of official obstruction, which it would not be extravagant to call corrupt; and an outcry consequently arose, from Spain, which eventually reached the Petitions-Committee of the European Union's consultative assembly, in Brussels, and gave rise there to a report, by Margrete Auken (2008/2248(INI)) condemning the actions of the Spanish authorities and calling for the budget of the European Union to be suspended, until suitable redress was made.
Many thousands of those dispossessed or disadvantaged in this way were Britons, who were tempted to invest, and live, in Spanish properties, on the understanding that to do so would be safe enough, because Spain was a "member-state" of the European Union.
Accordingly, the UK Independence Party supported the adoption of the "Auken Report" and deplores the assembly's inaction - with regard to bringing pressure to bear on Spain by suspending the European Union's budget - which has nevertheless followed.
Moreover, since the British Government, as an EU-member government, seems to be unwilling to intervene, or to be incapable of intervening, to protect its nationals abroad, despite its assurances that they would be as secure in another "member-state" of the EU, as in their own; and in view of the erroneous nature of the assumption that diplomatic relations, between the EU's "member-states", would be more, and not less, effective, than diplomatic relations generally, for providing the necessary safeguards, the UK Independence Party is determined to press the members of the EU's consultative assembly to use what power they have, in the way they promised to use it, when they adopted the "Auken Report".


Conclusion
The Spanish economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fuelled domestic demand and a property boom boosted by easy access to loans that has collapsed, leaving around one million new homes unsold, and hundreds of thousands more houses unsaleable.
Spain got around 20 per cent of its output from the property and construction sectors in 2007 before the housing bubble ended, according to government data.
Meanwhile the laws of supply and demand will mean that Spanish property values will remain low and without any significant growth for a long time. This is desperate news if you are a seller of property in Spain - particularly if you bought at the height of the boom. Indeed, the only possible consolation for UK sellers is the strength of the Euro over Sterling, thus allowing sellers of Spanish property to reduce their prices on the basis that their Euros can be beneficially converted into Sterling. However the strength of the Euro is a double edged sword and has meant that Britons have seen the purchasing power of their UK incomes fall dramatically - sometimes meaning that they have been forced, unwillingly, to sell their Spanish properties. They have found themselves simply unable to afford to live in Spain on their reduced incomes.

As you can see, the Spanish authorities have little or no regard for the victims of their property scandal. Which they themselves have caused.
Some members of our group are facing severe harassment including death threats, both physically and by e-mail, a live shotgun cartridge placed on a front doorstep, and abusive and malicious e-mail and press campaigns.
There has been some movement towards regularising most of the illegal properties (Certificate of Ordenanza), but that has proved to be unworkable, and will merely result in extracting more money from the victims. There are then all of the other irregularities, ie, the land not being properly segregated, problems over who actually has title to the land, the payment of urban prices for rustic land, etc.
In the case of the 19 houses at El Fas, some of us have grouped together and employed a solicitor who is properly versed in Spanish law, and a barrister from Madrid. Their estimate of the costs to sort out the illegal mess is 50,000 – 60,000 euros. Yes, that is 50 to 60 thousand euros. Where is that money supposed to come from. Why should the victims bear the costs of bringing the criminals to justice?
As I have already stated, the authorities were complicit in this scandal. They have received taxes from the developers (where the developers have bothered to declare), and taxes from the profits made by the many businesses who themselves have profited from the illegal building. All those people who have profited should now be paying for the problems to be sorted out.
The scale of the fraud is immense, not only are there rogue builders and developers, there are rogue property agents, solicitors, notaries, town councils and especially some Mayors. All have played their part in this shameful scandal.
The authorities would appear to be trying to pretend that they knew nothing, and that they have no say in the judicial process. What rubbish! They could allow the majority of properties to be connected to the mains services tomorrow, if they so wished. At least that would go some way to helping the victims, many of whom are having to pay for very expensive to run generators for their electricity. Some can now only afford to run their generator for five hours per day.
Apart from the horrendous legal costs, we are now threatened with the costs of infrastructure, which again can run into many thousands of euros. Where will the money come from? The victims should not need to pay even one cent more.
Most of the victims of this scandal are pensioners living on a set income, much reduced as the euro gets stronger. Many have had to return to the UK to beg for help from friends and family. Their properties in Spain are virtually worthless in the current economic climate. Many are trapped in Spain, existing as best they can.
There is a belief that the houses were purchased very cheaply because they were built on rustic land. Whilst that may be true in a few isolated cases, we certainly did not pay rustic prices. We have paid urban prices for rustic land, and the developers have made massive profits. Possibly more than 4 million euros from our 19 houses alone. Many of these developers are now pleading poverty, but we are assured that much of the money has been salted away. Even if the properties were legal and had correct paperwork, where is the market for selling?
Many of these victims need help, help towards the costs and stress of living as victims of this massive fraud.
The Spanish authorities have no regard whatsoever for the victims of their housing policies, and have been quite happy to turn a blind eye as long as the economy was booming on the back of this scandal.
Unless action is swift, these problems are going to rumble on for years, many of the victims are in their twilight years, they do not have years to wait for their life to begin again. Four ex-pat males have died in El Fas in the last eighteen months.

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