Admit it: the current urban model is obsolete

Miguel Hernández. Director. Advanced Programme in Real Estate Business Management. IE Business School

4 May 2007

Despite efforts to reform it, the first Spanish Land Act of 1956 has grown obsolete. Now Spain’s political parties should agree on new legislation that addresses the problems of today’s real estate market.

The first Land Act of 1956 laid down a model that essentially is still in use today. This pre-constitutional Act has been patched up several times, with changes ranging from heavily regulation of land use to total market freedom, depending on whether the government was in the hands of the Socialist Party or the centre-right Popular Party. Even the Constitutional Court has had a hand in shaping Spain’s land-use model with its ruling that the regional governments, and not the central administration, are largely responsible for territorial planning.

The premises on which the 1956 Act was based have little to do with today’s reality: society, technology and the economy have all evolved dramatically over the last 50 years. Although the aim of successive legislation was to provide legal support to the original model, the principles underpinning this model grew obsolete, rendering it incapable of solving today´s problems. This failure is evidenced, on the one hand, by the lack of criteria behind recent urban development projects and, on the other, by the explosion of corruption scandals in the real estate market. Furthermore, the model has done nothing in recent years to mitigate skyrocketing housing prices. And, of course, land-use policy continues to provide a key source of financing for local authorities.

A closer look shows just how difficult and complex the situation is. Each municipal district draws up its own urban plan based on its own criteria, without taking into account neighbouring districts. Each one commissions an endless array of sector reports on roads, the environment, historical and artistic heritage, hydrographical conditions, aerial or maritime issues, etc. Then, each city or town hall seeks to obtain information about the service networks from the utility companies in charge of electricity, water and telephone. This procedure has no common rules and tends to be very bureaucratic, making it all the more laborious to complete. Without a clear-cut set of rules to follow, municipal officials often make discretionary decisions, with all the problems that this can entail.

In addition to the municipal districts, each with its own urban planning policy, there are 17 autonomous regions, each with its own land law. The question is, despite all of these different policies, are there any standout examples that could serve as a model? Can we really understand what happens with the different legislative initiatives when there are so many participants involved in each one?

The land problem needs to be viewed from two standpoints:
On the one hand, land is a question of geography-- the medium in which human activity takes place and which directly affects the countryside, the environment, society and the economy. The land in question must be organised and it must have infrastructure. On the other hand, land is the raw material for the Spanish property sector, which is of vital importance to the Spanish economy.

From my point of view, the new Land Act currently under debate in Parliament simply seeks to patch up the same old model. It outlines plans for state housing projects, proposes measures for increasing transparency in an effort to limit corruption and details procedures for compulsory purchase orders, etc. But, once again, it fails to address the heart of the problem.

As the first step towards resolving the land problem in Spain, all the political parties must agree to design a new model for the 21st century. Next, a comparative study of the models used in other developed countries should be carried out with a view to analysing their pros and cons.

In addition, the autonomous regions should assume the central role in this new model, as recommended by the Constitutional Court in the current land act. The regional autonomies have a clear vision of local interests and are well placed to process and coordinate the sector reports issued by the utility companies. Municipal plans should make way for broader regional plans. Because these regional blueprints are likely to be loosely drawn up, local authorities, in conjunction with teams of technical experts and other social organisations, would have plenty of room to finalise details. The regions would then be responsible for approving these plans, which would outline the infrastructure needed, protect natural environmental spaces and establish gross construction indices. Under the new model, private initiative would play a role in the planning process.

The government should approve a “procedural manual” similar to those used in the Technical Building Code. This would help standardise procedures, ensure sustainability, limit discretionary decision making and simplify the urbanisation process.

Once again, we have missed an opportunity to modernise land management procedures and introduce new technological tools for planning and analysing the property market. As citizens, we must make do with what we have. But the question is, why?

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