What is the Licence of First Occupancy and how do you get it?

One of the most essential documents for moving into and using a property is the so-called "licence of first occupancy". The competent administration grants this document, certifying that the property complies with all the legal requirements from an urban planning point of view.

In this article, we will tell you all the details about the licence of first occupation: what it is, how to get it and the consequences of not having it, and whether you can rent, sell or buy a property without a licence of first occupation.

What is the licence of first occupation?

The licence of first occupation is a permit processed by the council where the property is located. It certifies that the construction or refurbishment complies with all the technical and legal requirements of national, regional and local urban planning regulations.

If a project that received a positive licence requires modifications; they can be legalised through the completion certificate itself, a prior document that must include any remodelling or modification necessary during the execution of the work.

Requirements to apply for a licence for first use

The construction or renovation company or private owner must apply for the licence of first occupancy. Normally, the architect and quantity surveyor include this procedure in their fees, which is the final step of handing over the building for the client's use.

The local council will approve the requirements for the application for a licence of first occupancy using a municipal ordinance. These are some of the documents you will have to provide:

• Application form
• Completion certificate
• Construction book
• Proof of payment for the fee associated with this procedure

In general, the local council will review the documentation provided and check that all the legal requirements for the property are indeed met so that it can be lived in, so a visit from a technical inspector will probably be necessary.

The result will be a favourable or unfavourable report. If the report is unfavourable, the existing deficiencies will have to be rectified and the application will have to be processed again.

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Why is the licence of first occupancy important?

A licence of first occupation is essential whenever building work is carried out that requires a positive licence from the local council. This is the case when building a new home or building or undergoing major renovation works that requires reporting to the local council to effectively control urban planning legality. 

Therefore, we are faced with a protocol that will lead us to obtain, in this order, the following documents:

• Firstly, the building permit allows us to work on the property or build it, and ensures that the project complies with urban planning legislation.
• Once the work has been completed, we will need a completion certificate, which will also serve to validate any changes to the initial project, as long as they are legal.
• We will then be able to apply for the licence of first occupancy and, where applicable, the occupancy certificate.

The most frequent cases are licences of first occupancy for old renovated houses and licences of first occupancy for new builds.

Licence of first occupancy price

The licence of first occupancy cost is normally included in the architect's and quantity surveyor's fees when carrying out a building project.

The exact price will depend on many factors, such as the complexity of the work or the administrative procedures associated with it: reforming an emblematic building is not the same as carrying out a small renovation on a recently built flat.

As a guideline, remember that project management (which includes the final bureaucratic procedures, and obtaining certificates and licences) usually accounts for around 30% of any project budget. This includes obtaining the completion certificate, as well as the licence of first occupancy and the occupancy certificate.

What happens if there is no licence for first occupancy?

It is not advisable to live in a property that does not have a licence of first occupancy and, consequently, an occupancy certificate. This can lead to significant fines and penalties, taking into account the risk to the health of the person living there.

If the property does not meet the required conditions of occupancy, there is a legal obligation to terminate the rental contract, and no monthly payments shall be made as long as the property is not habitable.

Each autonomous region and town's regulations can give you some clues as to the penalties applicable. Also, the main consequence of not contracting a licence of first occupancy is that it will be difficult for you to use your property: it will be considered uninhabitable for all practical purposes and you will not be able to contract any supplies, rent it out or sell it as a living space.

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What happens if I buy a property without a licence of first occupancy?

Normally, the licence of first occupancy is one of the documents required by the notary to formalise the purchase, although this is only required in some autonomous communities. The missing licence may be grounds for annulling a purchase contract.

In addition, it is common for banks to require this document to mortgage the property, together with the occupancy certificate, which will serve as backing for the mortgage guarantee.

However, properties can be sold without a licence of first occupancy and an occupancy certificate, provided that both parties are aware of this and that the buyer agrees to carry out the necessary renovations to ensure that the property is habitable.

In these cases, the contract of sale must state the property's current condition.

Licence of first occupancy and occupancy certificate 

These two documents can be confused because they are both related to being able to live in the property. They are also requested at the same time during the construction project. However, they have different purposes, although they are complementary and, to a certain extent, overlap:

• The licence of first occupancy certifies that the work has been carried out by the project and that it complies with the corresponding urban planning regulations.
• The occupancy certificate focuses on analysing whether the property is habitable and suitable for use as a residence.

Any construction project must comply with the habitability regulations, and therefore, throughout the construction process (including obtaining licences), compliance with these requirements will be ensured.