The National Commission for Competence (NCC) proposes that all land be for building, except the ones that should be protected for conveniently justified motives of public interest, instead of the current system of classification of land, “a very rigid zoning system, detailed, interventionist and discretionarily modified through agreements” that increases the urbanization costs, promotes inefficient localization decisions and reduces the competence in many economic activities.
In one of the last reports the NCC analyses the impact of the urban intervention, mainly the municipal one, on the land market and concludes that it “configures an offer of land which is relatively more rigid than in other countries, which could have contributed to intensify the great increase in prices registered in Spain in the last decades”.
The main mistakes in the land market are related to the existence of externalities because of uses of the land incompatible between them, disorganized growth processes in cities, loss of open spaces and congestion, among others; an insufficient supply of public properties, such as parks and gardens, the sewage system, or the ground transportation network; asymmetrical information and uncertainty problems and local market power situations.
According to the NCC, there are elements that should be immediately modified in order to favor the competence in the land market and to boost the economic growth and the employment. With the intention of reducing the public intervention it proposes the use of price or urbanization rights mechanisms.
The report recommends the promotion of an urban planning where the different uses established by the qualification are not necessarily detailed, with the intention of increasing the flexibility, to reduce the segmentation and to favor the competence in the assignment of land.
They also stand for including a Competence Report in all urban plans so as to avoid the introduction of unjustified restrictions to the establishment of certain economic activities. Other recommendations of the NCC are the promotion of the elimination of the rights of first refusal and repurchase of the Administration on the land and the assurance that the elaboration and approval of the planning instruments and urban agreements is carried out according to the principles of publicity, transparency, audience and non-discrimination.
Nevertheless, the NCC is not against a certain intervention: “The existence of errors in the market justifies the existence of a public intervention on the land sector. But the intervention can also have negative effects that need to be taken into account when designing it”, it declares.
Julio Gil, managing director of the real estate consulting company Horizone, declares that the report from Competence is “a correct theoretical exercise but its implementation is much more complex, as there are other factors that have an influence on the offer of urban land that are not taken into account, such as the financing.” Gil gives the example of the years of the boom, where there was an excess of building land, but prices continued increasing because the demand was extremely high and there was a great cash flow in the land and housing markets.
This expert declares that “there is an unbalance between the building land and the one enough for a rational development in the Spanish market, as it happened during the boom. However, now the land does not have any value due to a significant change in the buying power of the demand and in the financing of the land.
Gil thinks it is necessary to make the use and density of some homes more flexible and that the deadlines for the transformation of the land should be shortened. (…)