VIVA View: Spain’s compensation ruling is a sign of a maturing property market

Spain’s property market is far more mature and transparent these days.

It always felt doubly cruel. Not only were homeowners who had unwittingly purchased illegally built property told that their homes would be demolished, but they also learned that they would, in the process, lose everything.

No compensation. No money. No ‘our hands are tied’ apology. Nothing. Appeals could be lodged, court hearings could be made, but the bottom line remained unwavering: homes built illegally would have to be demolished. No exceptions.

Not only did this scandalous behaviour turn the dreams of thousands into an unending nightmare, but it also served to damage Spain’s property market – and the country’s wider reputation – in the eyes of foreigners…

Around 300,000 properties are estimated to have been built and sold without the proper permits, mostly during the turn of the millennium. The problem was particularly acute in the Almería region, but other Andalusian provinces also have their fair share of homes facing demolition orders.

But the ruling this week announcing that homeowners must be compensated properly before their property is demolished is an encouraging move in the right direction. It is a sign of Spain’s government recognising that the majority of buyers – many of whom are Brits – were simply duped unknowingly by unscrupulous developers and real estate agents looking to get-rich-quick on the back of the country’s scorching-hot property market.

Innocents should not be punished twice. Yes, many may have failed to carry out the due diligence necessary when purchasing a property overseas, but to lose one’s home as well as one’s entire investment was a legal ruling of draconian proportions, and one which, thankfully, has now been partly amended.

Compensation brings relief to those homeowners facing demolition – at least they will no longer be left too out of pocket – but the fact that these homes are still going to be demolished suggests that there is still work to be done to properly rectify this situation.

There are signs, however, that the government may be forced to concede even further on this. The ruling Popular Party has realised the damage to the country’s image that such head-scratching practices were doing, so here’s hoping that the introduction of compensation is just the beginning of a reform in legislation in favour of Spain’s loyal army of property investors who simply want to enjoy everything that this wonderful country has to offer.

That would be the sunshine, the landscape, the cuisine, the culture and the people, and most certainly not the fear of falling foul of bureaucracy that simply refuses to budge. It has budged, finally. Now it has to budge just that little bit further.