New rules for PUZ approvals: The law’s negative effects

Part 2

(to read part 1, click here)

Last week we had some news that were not really analyzed as much as they should be. Minister Elena Udrea decided to change the status of PUZ approvals in Romania, making it very difficult for a small plot to change its urbanistic parameters. From now on the chief architects will be the ones to decide, using criteria which allow plenty of interpretations. You can read more about this major change here.

Yesterday we saw the positive effects of such a move. But as "every coin has two sides", let us check today the negativeeffects of such a law.

The negative effects

• Land owners without a PUZ approved in hands will see their prices decreased. Part of every land transaction was also "the hope / ability of investor to increase the urbanistic parameters", a situation which will become very difficult now. So prices will fall. (Find out more about this next week).
• Lands with PUZ will have a strong advantage versus the lands without. Even if they are located next to each other, two lands may have completely different price. One with PUZ will be more expensive, while one without it will be cheaper, at least for the following period.
• Lands located at zones without PUG or with very old urbanistic parameters will be blocked. If a city does not have an updated PUG (General Urbanistic Plan) and the land owner can not apply for his PUZ, how can he solve the problem of PUG's no existence? The same applies for properties located in areas with old urbanistic parameters. There are plenty of examples where properties have a Coefficient of 1 (so with 1.000 sq.m. of land, you can build 1.000 sq.m. of building), while close / next to them there are other lands, where a PUZ was approved and the Coefficient rose to 3, even 4 (so with 1.000 sq.m. of land, you can build 3.000 or 4.000 sq.m. of building). These lands appear to be blocked with the new law.
• Not fast enough 1: What happens with the land owners who started collecting the documents in order to apply for PUZ but did not submit it yet? Are they blocked? In order to apply for a new PUZ, you need to collect plenty of documents, plus your architect will need several months in order to prepare his proposal, taking into account many different parameters. This means time and (lots of) money. With the new law, what happens to all these people? Do they lose the money they already invested? Is there any time frame for them?
• Not fast enough 2: What happens to the land owners who applied for a PUZ but it was not approved (or rejected) yet? We all know that once you apply for a PUZ, your application enters in the queue and does not receive an answer before several months to pass. What will happen to the people who applied for a PUZ and still wait for this answer?
• Not fast enough 3: What happens to land owners with PUZ approved, whose PUZ expires soon? There are plenty of land owners who have obtained a PUZ for their lands, but due to the crisis their project was halted. What will happen to them now? Are they going to have the chance to prolong the validity of this PUZ? Or they will lose it, once the time passes?

Proposal: Answering to the logical questions above, I guess that there should be a time frame for this law to be implemented. Or at least that there would be special care for the people who already invested time and money (in crisis periods) to give added value to their property.

"On the authorities' hands"
The main negative effect of this law will be the clear message it sends to all land owners: "Do you want to improve your land's value? You need to convince for this the local authorities". This means that everything will be left "on the authorities' hands". When an authority is ran by people with wisdom, self respect and vision for their city, I am sure that no problem will be created. But we all live in Romania and we know that there are also people who understand their role in different way.

Proposal: I suggest that the criteria should be very clear and structured, in order to eliminate the possibility of problems to happen.

Overall: The new law is good. But there should be additional thought for some important parameters / details of it.

What is your opinion? Send me your emails to info@more-group.eu

On Tuesday, February 15^th:
Why the prices of lands without PUZ will decrease, before rising again

On Tuesday, February 22^nd:
Why this new law may trigger more sustainable development, on the long run