Construction in urban land

Construction in Urban land – How to build a house in Spain.

If you are projecting to buy your own  land to build a house in Spain,  such as a farmhouse (cortijo), or such a “villa”, it is essential to find out if the land is placed in an area where building is allowed (in this case it is called a “finca urbana”, or “suelo urbano” ) or where it is not allowed (“finca rustica” or “suelo rustico”). This classification will affect the rights of construction on the plot.

Land in Spain is classified in several types:


This is a land in which it is authorized to build with derterminate specificactions contained in the “Development Plans” of the city, or area (Plan General de Ordenación Urbana PGOU), or in specific zones of urbanization called “Partial Plans” (Planes Parciales) etc.

This land uses to have all the facilities and requirements to live there in high density of population, like the proper water and electricity supplies , connection to mains sewage system, parks and green areas, sports, educational, hospitals, etc.

Urban Land or “Suelo Urbano” is the one that we use to find in cities, villages, or urbanizations, and used to have the proper access by roads, with pavement, pedestrian areas, streets, commercial areas, health centres, schools, hospitals, sports, etc.

2. SUELO NO URBANIZABLE (Non-Urbanizable):

“No Urbanizable” is a type of land where it is not possible to develop any industrial, residential or commercial land, because is destinated to determinate protected uses, mainly connected to the forest, agriculture, and others. So, in these type of land, other uses as residential, industrial or commercial are very limited, restristed, and not always allowed.

Inside the “Non Urbanizable” land, we find a classification in sub-types of land, depending on the use allowed, and the level of protection:

  • Protected land (in Spanish “Suelo No Urbanizable Protegido”): This is land where, for determinate reasons (usually connected to nature, forest, etc), constructions, and other type of activities are limited in order to “protect” a determinate value.
  • Non protected land (in Spanish “Suelo No Urbanizable Comun”): This is a land where the main use is agricultural and farming, and where other uses (as residential, commercial, etc. ) might be allowed, respecting determinate conditions.

Rustic land” is the name that usually is adopted to the Suelo No Urbanizable Comun in Spain. In other words: areas where urbanizations cannot be developed, which is being destined to agricultural use, it is allowed other uses as construction of residential properties, or industries, etc, always respecting determinate normative and conditions.  


This is the type of land where, being now considered as “Non Urbanizable”, it can be developed in the future with urbanizations, commercial areas, industrial parks, etc.

Talking now about “urban land”, this is a land where you have plenty possibilities of building, but conditioned with the local normative. 

So, if your intention is to develop a project for building a house in “urban” areas,  you should first check in the legal authority (mainly the Town Hall , Council = “Ayuntamiento”), which are the specifications, requirements, and limitations, that you can have to build there.



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The “Building License”, or “Building Permit”, or “Construction License” (Licencia de Construcción, o Licencia de Edificación, o Licencia de Obra Mayor).

As we pointed before if your intention is develop a project in one of the “URBAN” areas,  you should first check with the legal authority (mainly the Town Hall or Council = “Ayuntamiento”), or, alternatively, consulting and getting the advice of lawyers specialists in construction and urban developments.

So, before to pass to advanced steps of the process, it is essential that you obtain the proper information about the local regulations and limitations of the area, and the possibillities to develop and execute your project. As well as in other countries, the authorization o your project will be formally approved when obtained the  “Building License”, or “Building Permit” from the Town Hall.

So, the First Step is to know if the local normative authorizes the construction of a house on that plot, and which are the specific considerations to respect.


In cities or urbanized areas it is compulsory to install all the necessary infrastructure to convert empty spaces into “cities” or “urbanizations”. So, it passes to make, between others, the following actions:

  • External roads and communication infrastructure: Connections to highway, train, airports, etc.
  • Internal roads and communications: Pavement, streets, pedestrian areas, parks, public gardens, etc.
  • Sewage, water, electric, gas, internet, etc.

Usually, a plot is ready to be build when the above infrastructure is completed. So, purely, it is not possible to build on a plot where there are pending urbanization infrastructure to complete.

But, in some cases, the area has been considered in such a way that, although the majority of the urbanization infrastructure is complete, there are some points not completed, which are left to the moment in which the owner decides to build on it. For example, it is quite common that the owner pays the urbanization costs of the frontal of the plot (the owner has to “give” part of their plots to the public road), or even installing (and paying) the pavement, or others like pedestrian areas, etc.

These type of requirements, when not discovered, may create economical damages to those ones who did not know about when bought these kind of plots for building. So, it is compulsory to account with the services of construction legal specialists to obtain the necessary information about the plot, and to confirm the exact possibilities and conditions of construction on it.


It is quite common to find empty plots in new developed areas, where the urbanization and the are is not completed yet. It makes difficult to know how will be the area when completed, and which kind of properties, constructions and installations will be executed in the area.

So, it is also essential to account with a construction specialist lawyer to obtain detailed information about the future developments to execute in the area, in order to avoid undesirable surprises in the future.

So, We advice that before BUYING  the plot, or to make any decision over the transaction, bear in mind to have a PRELIMINAR STUDY OF THE PROJECT consulting with local lawyers, architects, builders, or the construction technical staff from the Building Department of the Town Hall (Departamento o Concejalía de Urbanismo).  This will make more secure the investment because,   after all,   you will have a concrete idea and acknowledge about the conditions and limitations to build in that plot, before to proceed to buy the land. It is more than recommendable that to make a study by a Solicitor expert in construction and,  if possible, consulting the architect who will develop the project and the construction.

Also, in that premilinar study ask your lawyer to confirm not only the specific building rights on the plot, but also to discover what other developments are planned on that area, for example new roads, highways, train line,  industrial parks, commercial areas, or even an urbanization.

This information can be obtained from your lawyer with meetings at the Town Hall, studying of the local normative, and also obtained from the Town Hall with a document named “CÉDULA URBANÍSTICA”.

Once you know exactly the type of building authorized to be built in that land,  then you must contract the services of an architect to develop the PROJECT OF CONSTRUCTION, or BUILDING PROJECT.

In the building project, your  architect must adapt your ideas and preferences to the specific regulations from the Town Hall in that area. So, your architect will guide you throughout this process, informing you about the different possibilities to transform your “ideal house” in a construction fulfilling the regulations of the area.

The most important thing is to have every detail specified by your architect. Have your architect go through the plans in as much detail as you can stand. Try to visualize what the views from different windows will be, and what size beds the guestrooms can handle etc.

In simple words: Try to obtain from your archtiect as much as information about how the final house will be. Try to furnish and live in the house while it’s still on paper. You may not be on-site to catch things that could annoy you for years to come, like a window that’s off centre in a bedroom, or skylights that aren’t exactly above where the bathroom sinks will be.

Once the project is complete, then your Architect must be present to the Building project to the local Town Hall at the Building Department (“Departamento de Urbanismo” or “Concejalía de Urbanismo”). With the application of the Building License, you have to pay a municipal tax, Impuesto sobre Construcciones, Instalaciones y Obras, which is applicable to all developments which need a building license (whether one is applied for / granted or not). This tax can vary from 2% to 4% of the cost of the construction, depending on the Town Hall of your area.

Then, they will study how suitable is your project to the specific conditions or limitations in the area.

If your project fulfills normative, and fulfills with the regulations and requirements to build on in that area, then they will authorize you to build there with the proper “Building License” or “Building Permit”, so you will be entitled to build there exactly the same property as presented to the Town Hall with the project.

So, if you find a plot in one of these areas, and you have the aim to build there a determinate construction or project, you should first check in the legal authority (mainly the Town Hall , Council = “Ayuntamiento”), which are the specifications, requirements, and limitations, that you can have to build there.



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Once you have the building permit, you must contract the services of a builder or constructor, to execute the project, and to build the house.

This builder must follow the instructions from the architect in order to execute the construction as strictly projected.


At this point, is very important to pay attention to the work of the architect. When the services of a Spanish architect are contracted to make the project of construction, he will complete his work once the project is obtained. But, you can also contract his services to “control” the works made by the builder, and to guarantee that all the steps of the construction are done as the project specifies. In Spanish, this is “Control de Obra”, or “Supervisión Técnica de la Obra”. Of course, the fees from the architect will be higher if the architect assumes this work, but the guaranties of the construction will be higher, because the works of the builder will be periodically inspected by the architect.

It is very important that the architect must be registered in the Official College of Architects of the Region.

Then you need to appoint an architect, and to agree a contract with him that specifies exactly what he is responsible for, timescales, and costs of the buildings. The architect’s fee includes the preparation of the “memoria de calidades” (Quality specification list of materials). It has to be in detailed, including for example the formula for the concrete, the type of materials, and the size of pipes, plans, etc.

The architect will instruct an aparejador, a qualified architectural engineer, who will supervise the building, carrying out on site inspections, and ensure the building is built following the required standards. He will issue the architect’s certificates which are necessary to obtain the Spanish Certificado de Fin de Obra (Completion Certificate – or Final Works License), and the Licencia de Primera Ocupación (called the First Occupation License or Certificate of Habitation).

You will need to prepare an exact specification for the building, and then find a reliable builder. Your architect may accept responsibility for this, and for supervision. You need to agree a completion date, with a penalty clause in your favour  for late completion. This needs to be incorporated into a legally binding contract to be signed with the builder.


Also, in this point is very important for you to consider what is called SEGURO DECENAL or TEN YEARS INSURANCE.

When you buy off-plan from a Spanish builder or developer, or you build a new property (which this is the case now ), the builder or developer, together with the architect, must guarantee you that the essential and most important parts of the construction will be secure at least for ten years.

In order to confirm this responsibility, the Spanish regulations forces to developers of new buildings to insurance the most important parts of the construction, as the foundations, internal structure, bines, etc. Other defects affecting the habitability of the property are covered for 3 years. Other minor defects are covered for 1 year. In the last two cases insurance cover is not required, but obviously if a builder can offer this as an additional guarantee, it will be better.

Also, it is an additional guarantee for the construction, because the same insurance company will force the builder to pass determinate quality inspections, to check the quality of the materials and the works made in the property, in order to give the proper policy.

 Spanish Ten Years Insurance (or “Seguro Decenal”) is obligatory and compulsory when the promoter is a company with the activity to build houses for sale.

But, it is voluntary when the developer is a particular, usually the owner of the plot. This is called in Spain “Autopromotor”, translated as “Self-Promoter”, or “Self-Developer”. This is the case in which a particular buys a land in Spain with the intention to build a house for him, but he has not the activity of buying for sale. In these cases,  Spanish laws gives the option to these particulars  not to apply for this insurance, because the Spanish Government understand that, if a particular is building something to live inside, he will take the necessary care to build in a safe and secure way. So, the particular can choose whether to save costs avoiding to pay this insurance; or in instance, to contract this insurance to have a better protection against  construction problems and defects.

But, if you,  as self-promoter decide not to apply for this insurance, in the future, if you decided to sell the house to other buyers, Spanish Laws force you to inform the eventual buyers that the construction is not covered with this guaranty, and they must expressly accept this as an essential condition from the sale. From the point of view of an eventual buyer, it will be always a better option to buy a property with this insurance. So, they must be duly informed, and they must confirm, that the property is not with any insurance in this way.


As promoter of the construction, you must contract the services of a builder to execute the construction as per project and following the instructions made by the architect. One of the most important elements of constructing a property is the building contract with the builder. The builder will always try to protect his interests,  and if you are not experienced with these type of contracts your property can end up being of a fare less quality than expected, or take twice as long as promised or even worse.

To protect yourself always make sure that your Solicitor draws up the contract or dicrectly negotiates the contract proposed by the builder.

The most important elements of the contract are to make sure that the contract considers:

  • The full name and CIF number (Tax number of the company) of the constructing company,  and the owner are included.
  • That the construction is made with as much as detail as possible following plans and building description provided by the architect, and also including a detailed list of materials and qualities  (“memoria de calidades“).
  • That extras (such as garage or pool, etc) are included the price
  • That a start and termination date is included in the contract, considering also penalties for late completion.
  • Payment terms (new properties pay more than 20-30% before the starting date of the construction and fix all the rest of the payments to different stages of the construction. It can also be recommended to retain 5-10% of the price to repair any defects after the building is finished).
  • That certificates from the architect, electricians and the town hall have to be given on the last payment.
  • Taxes involved in the transaction, explaining and detailing how much is for IVA (VAT), and Stamp Duty (“Actos Jurídicos Documentados“), Notary, Land Registry fees, etc.

Other aspect we recommend to agree with the builder:

  • To ensure that the builder will organize the final steps of the process regarding documentation. It means that the builder itself will obtain the Certificate of Final Works  (Certificado Final de Obras), or the Declaration of New Building, or Horizontal Division (Declaración de Obra Nueva o de División Horizontal), and, the most important, the License of OccupationCertificate of Habitation (Cédula de Habitabilidad). These items are extremely important in rustic land, in which is not common to find enough electric or water points of connection mains supply.
  • To guarantee that, once you have paid the final payment for the price of the construction you will have the water and the electric meter connected, and with the contracts signed on your private names.

Why ask these things to the builder?

Because it is very common that the builder leaves the case once he has completed the construction, or once he obtains the Final Works License – CFO (Certificado Final de Obra), and the New Building Declaration-DON (Declaración de Obra Nueva).

With these certifications, the builder declares that the new building is finished (with the CFO), and that the construction is complete and already declared in the land registry the (DON).

But, at this stage, the final administrative declaration of the building is not complete. It rests to obtain the Certificate of Habitation – CH (Cédula de Habitabilidad o Licencia de Primera Ocupación). This document is very important because, you need it to pass the supply of the water and the electric contracts from “Works” supply to “Home” use.

We are going to explain  this concept in a better way :

With a strict interpretation of the Contract with the builder, he finishes his service in the moment in which the property is physically finished, and appears as a “house” in the land registry (Registro de la Propiedad). This is obtained with the two documents named above:

  • Final Works License (Certificado Final de Obra), which is a document in which the architect who projected the construction certifies that the building is already finished, with the compliance of both, project and Building License;
  • New Building Declaration-DON (Declaración de Obra Nueva), which is the process of inscription of the new building in the land registry (Registro de la Propiedad) over the existing plot.

In this moment, you,  as promoter, have the house complete, and duly inscribed in the land registry. Also, in the property, there is electricity and water. So, you can think that the property is ready to live inside….. BUT… NOT. For your information, the property is not ready yet ,  for you to live there, the property is not a “house” yet, it is a “construction” because, to be a “house” you need the following items:

  • CERTIFICATE OF HABITATION /OCCUPATION LICENSE (“CÉDULA DE HABITABILIDAD or LICENCIA DE OCUPACIÓN:  This is the confirmation from the Town Hall that the property is ready for habitation, and it is applied once the property is finished with the Final Works License (Certificado Final de Obra), and inscribed in the land registry with the New Building Declaration-DON (Declaración de Obra Nueva).You need this document to obtain the permission of the Town Hall to live live in the house. Before you get it, what you have a is a construction, but not a “house”.This document will be necessary to obtain the individual supply of the main utilities on your name, and with the consumption use for a “house” .
  • CERTIFICATE OF ELECTRIC CONNECTION (Boletín de Electricidad) : Before the builder obtains the certificate of habitation, there could be water and electricity supply in the construction, because, it is normal that the builder obtains this supply to make the works of the house (for the tolls, machinery, etc.). But the supply obtained from the builder is a supply for “works”, but not for “house” use consumption. Sometimes, buyers or promoters are left in their properties with electricity and water “supply for works use” for many years, because the builder did not obtained the proper CH (Certificate of Habitation). They have water and electricity, but in a very poor conditions, and expensiver than the normal supply for a house. So, in order to ensure that you, as buyer or promoter, will obtain the proper CH from the part of te builder, it will be recommendable to leave a part of the payment of the price agreed with the buidler to be paid when the CH is obtained. In this way, this will force the builder to work right and to do his best to get this document asap.

So, as explained above, we highly recommend you, as promoter or buyer, to be obtain guaranties that the builder will hand over the property to you being habitable with the CH, with the proper water and electric supply (as a “house”), and with the security that you will not have any problems in the future with this.

The builder knows the area, he knows the architect, also the Town Hall, and he will obtain these documents three times faster and cheaper than you. And, if he wants to be contracted by you, he must just obtain these items. If he refuses to do it, it will be a reasonable argument to look to another.


It is very common that you, as promoter, need to apply for a mortgage to pay the construction of the property. In this case, there is a specific mortgage which is offered by the bank to obtain enough financial to build the property. This is called: Promoter Mortgage, or Self-Promoter Mortage (Préstamo o Hipoteca Promotor o Auto-Promotor). The situation is the following: You have the plot, and an initial idea about the house projected with the architect, and you have now found the builder to make construction. But you need money, and you need to ask for a loan to build the house. Then you go to your bank and ask for possibilities of financial. After studying your personal and economic situation to confirm that you will be a good client to pay back  the mortgage payments, then If the bank accepts and offer you to lend you the money for the project. But, the bank will not give you the full amount of the construction expenses at the beginning, they will be giving you the funds by steps. Which steps?, the ones derived from the same evolution of the construction.

 For example: Imaging that you need € 100.000  to complete the works. The bank will give you 20 % to buy the land, and to make the foundations, 20 % when the structure is finished; 30 % when the roof is complete, etc., and the rest when the architect makes the “certification of final works license” or Licencia de Final de Obra. Your bank will request from your architect, an update of the buildings ,to issue a certification confirming that the works are satisfactory complete. Then  you will bring that certification to the bank, and they will lend you the corresponding percentage for that step in relation with the global. Your bank might ask you to have the plot on your name before to give you the approval of the mortgage, and to declare the house “on construction” in the land registry. This is because, sometimes, the builder offers you one of the plots which are on his name to you to build there, and the plot keeps in the builder’s name till completion. So, in order that you give a better guarantee to the bank, they may request to change the land into your name, and to inform the land registry that a house is being built in that land. If this is the case, then you have to go to the notary, and get the deeds of the land into your name. With the deeds of the land in your name, you have to go to the land registry together with the Building Project, and the Building License. In this way, the land registry will have the house “in construction” over that land.



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Final Works License – Licencia o Certificado Final de Obra

As explained before, once works are finished, then it is necessary that somebody confirms that the job is complete. This is the work of the architect. He has the obligation to go to the building and to inspect that  works are completely finished and following the instructions and specifications made in both, his project, and the building license obtained. This is done through the Certificado Final de Obra.

But, meanwhile, the construction is not declared in the land registry. So, there is a process to register the construction in the land registry, which is called: Declaración de Obra Nueva. This process will get the construction declared in the land registry.

New Works Declaration – Declaración de Obra Nueva (DON)

This is a process done in front of a Spanish Notary, who will prepare the deeds of the house over the pre-existing land or plot.

In order to prepare the DON for new houses, it will be necessary to obtain the Certificate of Habitation (CH) from the Spanish Regulations approved on 2007 (Ley del Suelo de 2007) Land Law. Before 2007, new houses could be inscribed in the land registry without the CH.

As result of the DON the notary produces the deeds from the house, and they are duly registered at the land registry office.

So, in order to complete the registration of a property, the following documents are needed:

  • The Building Project from your architect.
  • The Building License
  • Final Works License – (CFO) Licencia o Certificado Final de Obra
  • New Building Declaration-DON (Declaración de Obra Nueva).
  • Ten Years Insurance (Seguro Decenal) – This is voluntary

Expenses and taxes

At this point, is very important to differentiate two concepts which are the most widely used in the market when somebody is buying an individual plot for building:

1.- To buy from a promoter or a developer the final building.  Then, acquiring the position of a normal “buyer” off plan. It means that the builder assumes the position of the the promoter, and he offers the property to you once works are complete.

In that way, you pay to the builder the price by stages as long as the working process advances. And you obtain the possession of the building once works are finished.

Following this concept:

  • The builder is the “Promoter”: It means that the building license is on “his”name, and not on “yours”.
  • You do not have the ownership of the plot. It keeps in the hands of the builder till the end of the building process.
  • In case the building fails, you cannot recover the amounts paid on the process getting the plot or the existing constructions currently built. What you have is a “debt” against the builder.
  • The builder is forced to contract a “Building guaranty” to ensure that the amounts paid on account of the price are secured in a guaranteed bank acount. So, in case the project fails you can easily recover them directly from the bank.
  • The builder is forced to contract the “Ten Years Insurance” to cover the structural defects from the building during 10 years.

So, when the property is finished, you pay the final price of the property, as well as if you were buying a property off-plan with the following expenses:

  • 10% VAT over the total price of the sale.
  • Notary and land registry fees for the sale.
  • 1-2 % Stamp Duty over the price of the sale.

2.- To adopt the position of Self-Promoter: In this case is YOU,  and not the builder, who adopts the position of the Promoter of the building project.

Following this concept:

  • YOU are the “Promoter”: It means that the building license is on “your”name.
  • You have the ownership of the plot. It keeps in your hands till you decide to sell it.
  • In case the building fails, or you have a legal dispute with the builder, you will always keep the plot and the existing constructions currently built.
  • The builder is NOT  forced to contract a “Building guaranty” to ensure that the amounts paid on account of the price are secured in a guaranteed bank acount.
  • The builder is NOT forced to contract the “Ten Years Insurance” to cover the structural defects from the building during 10 years. It can be contracted voluntary in case you wished to.

It means, that you assume the position of the Promoter, so, you have to pay the following expenses:

  • The price of the plot (Remember that you have to buy the plot first)
  • The fees for the project of the architect
  • The fees for the final works license of the architect
  • The builder fees and materials
  • The notary fees for the acquisition of the land
  • The notary fees for the Declaración de Obra Nueva- DON
  • The land registry fees for the Declaration of the building “in construction”
  • The land registry fees for the inscription of the DON

Taxes for:

  • Building License: 3-5 % over the budget of construction. This budget is fixed in the same project made by your architect
  • Certificate of Habitation: around € 200-1.000 (depending on the area).
  • Taxes on the land:
    • If the land belongs to a particular, and not to a company, then, 6-10 % Transfer Tax, over the price of the land. This is to be paid when the deeds of the land are passed into your name.
    • If the land belongs to a company, then, 21 % VAT.
  • 1-2% Stamp duty, over the total price of the construction. This is the budget of the house when declared for DON. And it is required when you bring the deeds of the DON to the land registry to inscribe the house over the land.
  • VAT (IVA)  for  fees for  the builder,  the architect and for materials.
    • Architect: 21 % VAT
    • Builder: 10 % VAT
    • Materials:
      • If you bought materials directly by yourself: 21 % VAT.
      • If the builder supplies materials: 10 % VAT

As you may note, differences between the “buyer off-plan”, and the “self-promoter” are very high, so, the decision to adopt one or the other requires of detailed study to consider directly with your legal advisor.


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CATASTRO (In English “Cadastre”) OR COUNCIL TAX.

In the position of the self-promoter, the Catastro over the land is called “rustic”. In other words, the land is paying the Council Tax as “land”.

The “Catastro” is the institution which consider the properties for maps, drawings, plans, and for Council Tax purposes.

Whilst the Registro de la Propiedad and the escritura may well confirm the ownership of a property, and the conditions of this ownership, like who owns the property, in which percentage, if is there limitations or charges (like mortgage, public auctions, Tribunal disputes,etc), the Catastro details will give you a better understanding of the boundaries of the property (usually in a visual form) and, size and description of the property.

But, when you complete the building of a house over that land, then you must inform the Catastro (Council Tax authority), that over that land now there is a “house”, with determinate specifications. If you do not do it, you can have future problems.

There are areas in Spain (like Andalucía and Murcia) in which the notary, when declare a new house over a pre-existing land, they send the deeds to the Catastro to inform about the modification. So, once you have the deeds of the DON in the land registry, the job is finished in this way. But, in other areas, like Valencia region, once you present the deeds of the property with the DON to the land registry, you must bring a copy of the CFO, and the Building license to the Catastro, in order to inform them that, over the land, there is now a house. If you do not do it, they will contact you in the near future to provide them with these documents.

Once the construction is duly inscribed in the Catastro, the job is finished, and soon (it takes sometimes around  1 or 2 years), you will start to receiving the bills from the Council Tax- SUMA BILLS.



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