Investment approach
Permit Delay Risk: How to Build the Timeline into a Project
A licence delay is a chain of stops: pauses for requests and reports, suspension of licences when a plan changes, the licence's own validity period. The rules and a worked calculation.
A licence delay is allowed for as a chain of stops, not as a single figure: the regulatory deadline, pauses for requests and reports, suspension of licensing when a plan changes. Every month of owning a property costs money, so the timeline is written as a range and tied to the contract. The Ajuntament's statutory deadlines are covered in the article on project timelines; here the subject is what can shift those deadlines.
What stops the clock and how long it can last
In Catalonia a licence is issued under the Ley de urbanismo (Decret legislatiu 1/2010, TRLUC), while the deadlines and pauses of the procedure are set by Ley 39/2015. Four sources of delay follow from them.
| Source | What the rule says | Maximum | Cost at 4,533 € a month |
|---|---|---|---|
| Request for documents | Art. 68 Ley 39/2015: 10 days to correct the application, and the review period is suspended for that time (art. 22.1.a) | 10 days, plus up to 5 on request | about 1,500 € for ten days |
| A mandatory report from another body | Art. 22.1.d: the period is suspended until the report arrives | No more than 3 months | 13,600 € |
| Suspension of licences when a plan changes | Art. 73–74 TRLUC: the Ajuntament may suspend the issue of licences in the territory to which the change applies | 1 year, and 2 years where grounds accumulate | 54,400 € or 108,800 € |
| Expiry of the licence itself | Art. 189 TRLUC: if the licence sets no deadlines, works must start within a year and finish within three | After that a new licence under the current plan is needed | Depends on the plan |
An extension of the start or completion period by half of the period is given by law if requested before it expires, and an extended licence is not hit by a suspension under art. 73 (art. 189.4). The request must be filed in time.
Separately, on the authority's silence. For new buildings with a technical project, art. 188.2 TRLUC does not allow a licence to be treated as obtained by silence, that is, a pause without an answer means no licence. For minor works the procedure is different, and it is described in the article on llicència and comunicat.
How to price the timeline
A worked example, not a forecast. A property for 1 M€, capital valued at 4% a year (an assumption), holding costs 1,200 € a month (an assumption). A month of waiting costs 3,333 + 1,200 = 4,533 €. Three months of pause for a report cost 13,600 €, a year of licence suspension 54,400 €. For a project with a net result in the tens of thousands of euros, the last line matters more than any saving on the budget.
A good approach: name a base timeline (by the regulation), a reasonable-worsening timeline (plus a request for documents and a report) and a stress timeline (suspension). The project should withstand the second option without revising the sale price and should not collapse in the third.
How to fix the timeline in the contract
- For buying a property whose price depends on a licence: a condition in the contract (condición suspensiva, a suspensive condition) or an option instead of immediate payment. The variants are covered in the article on a plot with conditional payment.
- A latest date for filing the application and a latest date for obtaining the licence, after which you have the right to exit or revise the price.
- A split of costs: who pays for holding the property during a suspension or a request for documents.
- Starting works only after the licence. Works without one turn a delay into a fine and a dispute, and an abogado (lawyer) assesses the consequences.
- Checking whether the plot lies in an area where the plan is changing. For this, look at publications on licence suspensions and at the progress of the plan, as in the article on planning-change risk.
How a delay affects the investor and DNPI's fee
DNPI's fee is 50% of the project's profit. The contractual 10% relates to the whole project, not to a year, so a delay does not change the threshold but dilutes the annual return. Ten percent per project equals about 4.9% a year over two years, 3.2% a year over three and 2.4% over four (compound interest). DNPI's contractual compensation is paid out of its fee within the limits of the contract and is not a guarantee of capital. At Sitges, permits and licences cost 20,000 € and the project took two years; how much of that time went on approval is not stated in the published project figures. These are the figures of one completed project, before taxes, financing and other costs, and past results do not guarantee future ones. The project itself is described on the Sitges page.
Who it does not suit: projects with a hard date for returning capital. If you need to exit in exactly two years, a licence with a possible one-year suspension does not fit. You can put your own timeline into the investor calculator.
Questions and answers
How long does a suspension of licences last in Catalonia when a plan changes?
Under art. 74 TRLUC, up to one year, and up to two years where two grounds accumulate. Licences can be suspended again for the same territory and the same purpose only three years after the first suspension ends.
Is a licence considered granted if the Ajuntament did not reply?
For many acts yes, under art. 188.2 TRLUC. The exceptions are new buildings with a technical project and a number of other cases: there silence means no licence. The regime for your property is determined by an abogado.
What if the licence is about to expire and the works are not finished?
File a request for an extension before the term ends. Under art. 189.4 TRLUC, an extension by half of the period is given by law on a reasoned request filed in time.
Can I know in advance whether licences will be suspended?
Only in part: the decision to suspend is published in the official bulletin, and it can be searched for before buying. Neither the seller nor the Ajuntament knows it in advance.
