The new Land Law through which Madrid seeks to lay the foundations for a decade of demographic and economic growth
On 6 April, the public consultation period for the Draft Law on the Promotion and Balanced Development of the Region — known as the LIDER Law — came to an end. This step marks further progress towards the approval of what may become Madrid’s new Land Law. The future legislation will replace the current Law 9/2001 and Law 9/1995, bringing territorial planning and urban development together into a single text, with the aim of adapting the regulatory framework to the new economic, social and demographic dynamics of the Community of Madrid.
Current context and diagnosis
The Community of Madrid, and in particular the conurbation formed by the city of Madrid and its neighbouring municipalities, has become one of the main centres of economic activity and investment attraction in southern Europe. By 2039, its population is expected to exceed 8 million people, following growth which, in 2024 alone, already reached 140,000 new inhabitants in a single year.
The growth and economic dynamism of the Community stand in contrast to legislation that is now more than twenty-five years old and which still follows the model inherited from the 1956 State urban planning system: all-encompassing, slow, rigid and poorly suited to the changing needs of society.
A clear illustration of this is that, despite having been in force for more than 24 years, only 21 of the 179 municipalities in the Community of Madrid currently have a general plan adapted to the existing Law 9/2001 on Land of the Community of Madrid. The remainder operate under older planning instruments, in many cases because revising a general plan can take between 8 and 12 years and requires such extensive technical resources and political commitment that few local authorities are willing to undertake the process.
The diagnosis of urban planning in the Community of Madrid reveals a model that is unable to adapt with sufficient speed and flexibility to the social changes affecting the city.
The LIDER Law is therefore born with a clear purpose: to modernise, simplify, enhance legal certainty and accelerate urban planning in Madrid.
The draft bill proposes a structural reform of Madrid’s urban planning system, among which the following new features are particularly noteworthy:
1. New land classification regime
The LIDER draft bill abandons the traditional tripartite classification of land — urban land, land suitable for development and non-developable land, each with its various categories — which has been carried over since the Consolidated Text of the 1976 Land Law. It introduces three land classes: urban land, protected rural land and non-protected rural land.
In doing so, the LIDER Law aligns urban planning classification — a matter falling within regional competence — with the basic land situations established under State legislation, namely the 2015 Consolidated Text of the Land and Urban Rehabilitation Law. Accordingly, owners’ rights will depend on the actual physical situation of the land, rather than on the planning designation assigned to it.
This new regime is complemented by a new typology of urban planning actions: urban transformation actions, building actions and actions affecting the urban environment, each linked to a specific class of land. Thus, rural land allocated by planning for urban growth will retain its classification as rural land until all the obligations inherent to the relevant transformation action have been fulfilled. Only then will it be classified as urban land.
2. Commitment to strategic territorial planning
Law 9/1995 has been in force for more than thirty years without the Community of Madrid having approved a single territorial planning instrument. While other autonomous communities, such as Andalusia, have long since developed supra-municipal instruments, Madrid has lacked any tool capable of coherently structuring territorial areas beyond the municipal level.
The LIDER Law addresses this gap through two instruments: the Territorial Strategy of the Community of Madrid and Territorial Plans of subregional or sectoral scope. In this way, the Community of Madrid seeks to provide itself with a common framework of reference capable of coordinating residential development, economic activity, environmental protection and major infrastructure at a scale that no municipality can encompass on its own.
The logic is bottom-up: municipalities contribute, through their strategic plans, to the common territorial diagnosis, while the Community establishes the frameworks without imposing them. The model is deliberately more flexible than that of the failed Regional Territorial Strategy Plan of the 1990s, which was never approved precisely because of its rigidity.
3. Simplification of urban planning instruments
One of the stated purposes of the draft bill is to simplify the system of urban planning instruments. The current Madrid Land Law 9/2001 provides for up to four types of hierarchically ordered urban planning instruments: the General Plan, the Sectorisation Plan, the Partial Plan and the Special Plan.
The LIDER draft bill reduces them to just two:
The Municipal Strategic Plan (Plan Estratégico Municipal or PEM), which defines the municipality’s overall model and strategic guidelines, including diagnosis, objectives and indicators. Unlike the General Urban Development Plan, the PEM does not contain exhaustive land-use regulation, but only general guidelines.
The Executive Plan, which is the sole operational instrument. Through this instrument, any amendment to the current urban planning framework may be carried out, and transformation actions may be delimited in any class of land. The Executive Plan may incorporate, within the same procedure, both land management instruments and physical implementation instruments, namely the Reparcelling Project and the Urbanisation Project.
Furthermore, where the Executive Plan includes the urbanisation project, the strategic environmental assessment of the plan and the environmental impact assessment of the urbanisation project will also be processed jointly and in a coordinated manner, eliminating the dual sequence of reports that has burdened current procedures.
These instruments are supplemented by the traditional complementary instruments that will be maintained under the LIDER Law: Detailed Studies, the Catalogue of Protected Assets and Areas, and Municipal Urban Planning Ordinances.
In addition, the principle of hierarchy — whereby the annulment of one instrument could trigger the cascading annulment of all lower-ranking instruments — is abandoned and replaced by the principle of competence. Each instrument will have a clearly defined scope and an independent legal existence. The aim is to prevent the annulment of a general planning instrument from automatically dragging down all other plans approved in implementation of it.
4. Commitment to the regeneration of the existing city
The LIDER draft bill makes a firm commitment to the existing city, as opposed to the expansion of new land.
The most notable development in this area is the creation of a new type of urban planning action: urban regeneration actions. These actions are intended to address existing urban areas that have become obsolete — whether due to energy inefficiency, poor accessibility or insufficient public facilities — but that do not fit neatly within the existing categories of redevelopment actions or actions for the provision of public facilities.
The LIDER Law reduces the urban planning burdens associated with urban regeneration actions in order to facilitate their viability. The mandatory transfer of land is limited to 5 square metres for every 100 square metres built, to be allocated to open spaces and public facilities, and may be replaced by financial compensation where it cannot be physically provided. Nor will there be any public participation in capital gains where the area has been declared degraded in the PEM or where the owners’ development rights barely vary. Only where buildability increases by more than 5% may additional transfers or a reserve of protected housing be required.
In addition, the draft bill introduces the figure of the regeneration agent, who may carry out these actions where the owners fail to do so within the prescribed period. This role may be assumed by a homeowners’ association, a cooperative, a company or an administrative association. The aim is to attract private financing to the regeneration of neighbourhoods and existing urban fabrics, which have traditionally been less competitive than the development of new land.
5. Administrative streamlining: shorter deadlines, positive silence and simultaneous processing
The delay between the start of the processing of an urban planning instrument and the obtaining of a building permit is a key factor in the profitability of projects.
The model inherited from the 1956 Land Law requires applicants to go through a chain of successive procedures: first the plan, then the urbanisation project, then the reparcelling project and finally the building permit. This has become even more complex with the addition of parallel environmental prevention instruments, such as strategic environmental assessment. The result has been an uncertain timeframe, subject to all kinds of contingencies.
The acceleration of procedures is the most cross-cutting objective of the draft bill. The mechanisms are several: the joint processing of the Executive Plan together with the land management instruments, the urbanisation project and the environmental assessment in a single coordinated file; the standardisation of regional sectoral reports within a uniform three-month period, subject to positive silence, as opposed to the current fragmented system in which each sectoral law sets its own deadline and determines the effect of silence; and the establishment of a maximum period of three months to decide on building permit applications.
In relation to permits, the responsible declaration is consolidated as the general enabling title for most actions. The draft bill also introduces the essential permit — allowing works to begin before the full permit is obtained — and the permit for autonomous phases. In addition, the requirement for dual authorisation on non-developable land is removed: urban planning qualification disappears, and all reports required for action on protected rural land are requested within the procedure for the permit itself.
Challenges and outstanding issues
The draft bill arrives with considerable reformist ambition. However, the success of its implementation will depend to a large extent on factors that the law cannot resolve by itself.
The first is the actual capacity of local authorities. Delays in the granting of permits — with documented cases of waiting periods exceeding two years and backlogs of 2,000 pending files in a single municipality — will not be solved merely by a more agile law. Sufficient technical staff, digital resources and an administrative culture oriented towards service are required. However well drafted a law may be, it cannot deliver results without the means and the will to make them possible.
The second concerns State sectoral reports. The draft bill standardises sectoral reports falling within regional competence. However, reports issued by State bodies — river basin authorities, air navigation authorities, coastal authorities and heritage bodies — remain outside its scope. These are precisely the reports that, in many cases, generate the greatest delays, sometimes lasting for years and even frustrating urban developments that had successfully completed all regional procedures. This is a structural limitation that the draft bill acknowledges but cannot resolve.
Finally, reference must be made to urban planning litigation. The public action provided for under State land legislation allows any citizen to challenge urban planning actions without having to prove a direct interest. Likewise, the indirect challenge of planning instruments allows a plan that has already been approved — and whose direct appeal period has expired — to be attacked through a subsequent permit. The result is that plans remain exposed to legal challenges for years, creating an underlying legal uncertainty that no procedural reform can eliminate unless State basic legislation is amended.
The principle of competence replacing the principle of hierarchy will, in principle, limit the effect of cascading annulments, but it does not remove the risk that Executive Plans may be individually challenged, with consequences for the permits granted on the basis of them.
Next procedural steps, estimated approval date and entry into force
Following the conclusion of the consultation period in April, the legislation is now at the analysis stage. The next step will be the preparation of the final text of the bill, which must be submitted to the Committee of Deputy Regional Ministers and Technical General Secretaries and subsequently approved by the Governing Council before being referred to the Madrid Assembly for parliamentary processing.
The Director General for Urban Planning of the Community of Madrid has expressed her intention for the law to be approved before the end of 2026. If approved, the draft bill provides that the Law will enter into force one month after its publication in the Official Gazette of the Community of Madrid.
Conclusion: A window of opportunity to watch closely
Subject to all the reservations set out above, the LIDER Law represents a significant reformist commitment to urban planning and territorial planning in Madrid. If approved in terms close to its current wording, greater legal certainty for developers may be expected, together with more predictable processing times — although not necessarily as short as those promised by the legislation — and a more favorable framework for urban planning actions, particularly on urban land.
The reduction of risk that would result from greater certainty regarding timeframes could facilitate the attraction of financing for projects that currently struggle to secure backing. Madrid’s urban planning system is facing a genuine window of opportunity. Whether it can be realised to its full potential will depend not only on the quality of the legal text, but also on the capacity and willingness of all stakeholders involved in its implementation.
At KINSHIP, we are closely monitoring the legislative process and its potential impact on real estate projects in Madrid. We are ready to help developers, investors and landowners assess the opportunities and risks arising from the proposed reform, and to anticipate its implications for planning strategy, permitting timelines and project execution.
By Adrián Robles, senior Associate; and Pedro Fernández, co-founder and Managing Partner of KINSHIP
