Agricultural real estate market freed for developers

The Act on the Shaping of the Agricultural System in the wording effective from 30 April 2016 generally did not include any mechanisms which would enable one to evade or mitigate restrictive limitations in respect of agricultural real estate transactions.

Basically, the only possibility of purchase of agricultural real estate by a person who is not an individual farmer, without the requirement of obtaining a permit from the General Manager of the of the Polish National Support Centre for Agriculture and the need to run a farm for 10 years, was to conduct a complicated, expensive and in many places discretionary administrative procedure of exclusion of agricultural land from agricultural production under the provisions of the Act of 3 February 1995 on the Protection of Agricultural and Forest Land.

On the other hand, purchase of agricultural real estate will be significantly facilitated by the Act of 5 July 2018 on Facilitating Preparation and Implementation of Housing and Accompanying Investment Projects (the so-called special housing act), signed by the President on 1 August 2018. This is because the act amends the Act on the Shaping of the Agricultural System by introducing a possibility of unconstrained purchase of agricultural real estate located within administrative borders of cities to be used for purposes of implementation of housing or accompanying investment projects based on the provisions of the special housing act, i.e. on the basis of a resolution on specification of the location of the housing or accompanying investment project, and if the investor does not meet the conditions set out in the act, the Polish National Support Centre for Agriculture will be able to take over the real estate ownership title pursuant to its unilateral statement. This will be possible, if the investor:

• fails to obtain the building permit within 2 years following conclusion of the contract transferring the real estate ownership title (in the case where the resolution on specification of the location of the housing or accompanying investment project has been previously obtained) or following the passing of the resolution on specification of the location of the housing or accompanying investment project (in the case where such a resolution has not yet been passed at the time of real estate purchase);
• fails to execute – within 5 years following obtaining the final decision on building permit – at least 50 % of the residential building constituting the housing investment project or the whole accompanying infrastructure.

If the above conditions are not met, the Polish National Support Centre for Agriculture will have the right to take over such real estate in exchange for payment of a price corresponding to its market value specified with the use of the methods of establishment of real estate value provided in the provisions on real estate management.

However, in the face of substantial costs of obtaining such real estate by the National Centre (resulting, e.g. from an increase in the real estate value as a result of implementation – at least partially – of a housing or an accompanying investment project) it does not seem that the right of purchase under consideration will be frequently exercised. Thus, the special housing act appears to really exclude, or at least significantly limit, application of restrictions in agricultural real estate disposal towards developers executing housing investment projects and accompanying investment projects associated with them.

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