EU Parliament slams real estate corruption

EU parliament slams “endemic corruption” in real estate

March 27th
The European Parliament voted overwhelmingly on Thursday to freeze billions of euros in EU funding if the Spanish government does not address “extensive urbanization” practices and “endemic corruption” in the real estate sector. The proposal forms part of a damning report drawn up by Danish Green Party MEP Margrete Auken, who has taken up the case of thousands of mostly foreign residents of coastal regions threatened by legislation allowing developers to acquire private land at below market rates. The so-called “land grab” laws and environmental concerns led to criticism of Spain by the parliament in 2005 and 2007, albeit without the threat of withholding funding. “Spanish regional authorities should suspend and review all new urbanization plans which do not take into consideration the criteria of environmental sustainability and social responsibility and which do not guarantee the respect for the rightful ownership of legitimately acquired property in compliance with the Spanish Constitution,” the Auken report states.

It notes that the European Commission is empowered to interrupt structural funds payments and that Parliament, as the budgetary authority, may decide to freeze funding set aside for cohesion policies if it considers this necessary to persuade a member state to end serious breaches of EU rules.

EU parliament slams “endemic corruption” in real estate

Auken singles out the the "endemic corruption" that the Spanish real estate market suffers from and questions the way in which developers obtain building rights from local councils and regional governments. “Excessive powers [are] often given to town planners and property developers by certain local authorities,” the report states. Under the land grab laws, hundreds of residents of coastal areas of Valencia were threatened with having their homes bulldozed to make way for larger developments and were offered compensation at below market values. Auken found that those home owners seeking redress through the courts faced an “outrageously slow” legal system. “MEPs take the view that persons who ‘in good faith’ have bought property in Spain, which has been declared illegal, should have the right to appropriate compensation through the Spanish courts,” the Parliament said in a statement.

Officials in the Popular Party-governed Valencia region, the source of most of the complaints, accused Auken of producing a “totally intolerable” and “politicized” report that shows “a clear lack of understanding of Spanish law… from property rights recognized in the Constitution to the laws of the autonomous regions.” José Manuel García-Margallo, a PP MEP, blamed the approval of the report on the Socialist Spanish government’s foreign and European policy lapses. “It makes Spain look like a banana republic,” García-Margallo claimed.

El Pais International Edition March 27th 2009

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