For several years now, Poland has been facing a shortage of land for residential development, which is one of the main reasons for rising housing prices. This is why there are regular calls for greater access to agricultural land, particularly in cities and their outskirts. In today's article, we will present the most important recent changes, particularly those affecting the sale of agricultural land by non-farmers. We will also highlight regulations that significantly hinder the entire process of acquiring such land by non-farmers.
On 5 October 2023, an amendment to the Act on the Development of the Agricultural System (" UKUR "), the Act on the Management of Agricultural Real Estate of the State Treasury and the Civil Code entered into force.
First, we note a significant change regarding the institution of adverse possession . According to recent amendments, not only individual farmers will be able to acquire agricultural land by adverse possession. Due to the repeal of Article 173 § 3 of the Civil Code, the requirement to acquire agricultural property by adverse possession will no longer be individual farmer status . It is worth noting that after the 2016 amendment, adverse possession of agricultural property by a non-farmer was essentially impossible. Based on these changes, the requirement to operate a farm for five years after adverse possession has also been eliminated . In our opinion, the removal of § 3 from Article 173 of the Civil Code is a very beneficial solution, as the previous provision was unclear and hindered the sale of small agricultural plots. Furthermore, in the case of adverse possession, the National Support Center for Agriculture will no longer be able to exercise its so-called right of acquisition.
The amendment also changed the strict regulation that already applied to agricultural properties with an area of less than 0.3 hectares (UKUR). Before October 5, 2023, land with an area of 0.3 hectares or more, where only a small portion was agricultural land, was classified in its entirety as an agricultural plot. Therefore, all restrictions under the UKUR applied to such properties. However, under the new regulations, the agricultural land will have to be at least 0.3 hectares (0.3 ha) for the entire property to be marked in the land register with the symbol "R" – meaning agricultural land . This will make it easier for non-farmers to acquire such land. For example, if the entire property has an area of 1 hectares (1 ha) and only 0.29 hectares (0.29 ha) is classified as agricultural land, the property will no longer be considered agricultural land under the UKUR. We believe this change will undoubtedly streamline real estate transactions involving a small percentage of agricultural land and those not used for agricultural purposes. There is no doubt that this is a positive change for the housing industry.
It is also worth noting the current wording of the difficult-to-interpret Article 2, Section 3, Item 11 of the UKUR, which raised many doubts regarding the acquisition of agricultural land by non-farmers as a result of, among other things, transformations. Generally, only an entity with the status of an individual farmer can purchase agricultural land. However, the UKUR introduces numerous exceptions to the above rule, thanks to which non-farmers can also acquire agricultural property. The amendment removed this uncertainty, as a result of which it is now undoubtedly possible to acquire agricultural land in the event of the transformation of any entrepreneur or civil partnership into a commercial company . However, it should be remembered that in such a situation, the National Support Centre for Agriculture will be authorized to submit a declaration of acquisition of the agricultural land.
Referring to commercial law, it is worth adding that Article 3a of the UKUR has been amended . Unfortunately, this change will prolong and complicate share sale transactions . The amended provision grants the National Support Centre for Agriculture the right of pre-emption for shares in parent companies that hold shares in companies that are owners/perpetual usufructuaries of agricultural land with a minimum area of 5 hectares, or agricultural land with a total area of at least 5 hectares. The National Support Centre for Agriculture will have up to two months to exercise its right, which will directly translate into a longer transaction.
The changes also apply to the prices of agricultural plots, as the UKUR amendment expanded, among other things, the catalog of consents for the acquisition of agricultural real estate issued by the Director General of the National Support Centre for Agriculture . The previous conditions: (i) the seller demonstrating that it was not possible to sell the agricultural real estate to an individual farmer, (ii) the buyer's commitment to conduct agricultural activities on the purchased agricultural real estate, and (iii) the acquisition not resulting in excessive concentration of agricultural land, have been expanded to include demonstrating another (fourth) condition , which concerns ensuring that the sales price of the agricultural real estate will not be lower than 95% of the price included in the announcement of the agricultural real estate .
Another significant change introduced by the amendment is the elimination of the right of family foundations to acquire agricultural plots of 1 hectare or more under the same conditions as entities with individual farmer status . Under the amendments, they will first have to obtain individual farmer status.
In summary, agricultural land transactions have been facilitated only slightly, and therefore, most plots will still be subject to significant restrictions resulting from the authorization granted to the National Support Center for Agriculture. It should be emphasized that the implemented changes, particularly those concerning adverse possession and the expansion of agricultural land, are positive, but certainly insufficient. While we certainly agree that restrictions should apply to valuable lands that are crucial to agricultural production, it is difficult to justify the restrictions imposed on urban and suburban land, which could solve the problem of a shortage of development plots and accelerate urban development.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of October 24, 2023
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