Protecting Land and Rural Life: Everything You Need to Know About the New Parcel Law

In response to the uncontrolled growth of rural plots of land in Chile, the government introduced a bill for the Protection of Territory and Rural Life in the Chamber of Deputies. This proposal seeks to address the agricultural, environmental, land planning and regulatory problems arising from the use of housing in rural areas that were originally intended for agricultural, livestock or forestry purposes. Below, we explore the details of this initiative.

Why is this Law Necessary?

The exponential increase in the number of rural plots destined for housing uses has affected extensive areas of rural land. Current plots are estimated to cover between 175,000 and 300,000 hectares, a figure comparable to the 208,688 urban hectares existing in Chile as a whole. This phenomenon has developed without adequate planning, with limited control and minimal legal requirements, generating several problems:

• Loss of highly productive agricultural soils.
• Unmitigated negative externalities.
• Environmental and social conflicts due to lack of regulation.

Additionally, this type of land development can enable capture of land value gains by real estate developers, undermining equitable and sustainable territorial development.

Current Legal Framework

In Chile, rural regulations allow the subdivision of land into minimum lots of 0.5 hectares under Decree Law No. 3,516, intended exclusively for agricultural, livestock or forestry activities. Exceptional housing for owners, agricultural workers or social housing is also authorized. However, some developers have used legal loopholes to promote residential subdivisions, which the Comptroller General of the Republic has qualified as fraud against the law.

What does the Bill propose?

The initiative seeks to distinguish subdivisions intended for forestry and livestock from those intended for housing uses, and to apply different treatments according to their nature. Among the main measures are the following:

1. Strengthening of auditing

Restrictions for silvicultural land subdivisions are reinforced, maintaining the minimum area of 0.5 hectares and prohibiting their residential use.

2. Creation of Rural Residential Complexes

A new mechanism is established for housing subdivisions with clear requirements to ensure safe and ordered development, such as:

• Formal water, sewage, electricity and waste collection systems.
• Access to public roads.
• Fire prevention measures and coexistence rules.
• Partial use of the area for forestry and livestock or environmental conservation activities.

3. Warranties for buyers

Purchasing promoters must sign contracts secured by insurance policies or bank guarantees, providing protections that enhance transaction security for buyers.

4. Transition for current owners

Owners who acquired plots before the new law will have three years to apply for authorization to build a single-family home, provided they comply with the new standards.

Impacts of Inorganic Growth

The unregulated growth of rural plots has consequences across several areas:

Agriculture

• Reduction of highly productive agricultural soils.
• Conflicts between residential settlements and agricultural activities (for example, domestic animals affecting livestock).

Environment

• Loss of biodiversity and key ecosystems.
• Urbanization in sensitive areas amid a climate crisis.

Territorial Management

• Increased costs for municipalities and public services.
• Extension of urbanization without adequate infrastructure, complicating waste collection, transportation and basic services.

4. Urban Planning

• Territorial fragmentation that fosters socio-spatial segregation.
• Housing developments aimed mainly at high-income sectors or low-quality informal housing.

Legislative Stage and Regulatory Modifications

The bill was formally introduced on July 30, 2024 and is currently in the first constitutional procedure in the Committee on Agriculture, Forestry and Rural Development. Among the regulations it proposes to modify are:

• General Law of Urbanism and Construction: to create and regulate rural housing developments.
• Decree Law No. 3.516: reinforcement of restrictions for agricultural subdivisions.
• Law No. 18.755: adjustments in the role of the Agriculture and Livestock Service (SAG) to supervise subdivisions.

Towards a Sustainable Development of Rural Territory

The Land and Rural Life Protection Bill seeks to curb the lack of control in rural subdivisions and to promote a planned, sustainable use of rural land. By differentiating clearly between housing and forestry purposes and establishing standards for each type of subdivision, it aims to protect agricultural land, reduce negative externalities and improve quality of life in rural areas.

The bill's success will depend on the consensus achieved during the legislative debate and on effective implementation of the proposed measures. It represents an important step to address the challenges posed by the rapid growth of rural land parcels in Chile.

When to expect the Promulgation of the New Law of Parcels in Chile?

There is no definite date for enactment, as the legislative process depends on factors such as the complexity of the law, political agreements and Congress's legislative priorities. The bill is under discussion in the Agriculture Committee of the Chamber of Deputies, and its progress will depend on parliamentary consensus.

It is recommended to follow official updates to track the bill's progress and any eventual entry into force of the new legislation.

At Produncan Lands we support sustainable projects.

At Produncan Lands, we believe the future of real estate and territorial development must be sustainable, responsible and in harmony with the environment. Our commitment focuses on partnering with those who seek to transform spaces while respecting ecosystems and supporting local communities.

We aim to be a reliable partner for initiatives that pursue sustainable and conscious territorial development—whether creating rural communities, developing real estate projects or promoting environmental conservation.

If you have an idea or project and are looking to give it a sustainable approach, let's talk! At Produncan Lands we are ready to help you make it a reality. Contact us here: https://produncan.cl/en/contact/