17.08.2018 Real estate law

Drastic decrease in transactions on the agricultural real estate market

On 20 July 2018 the Central Statistical Office published data concerning real estate transactions for 2017. The presented records show that in 2017 the number of agricultural real estate purchase contracts decreased by 17.6 % as compared to 2016. In absolute numbers the statistics show that with 69,771 purchase contracts concluded in 2016 in respect of agricultural land, there were only 57,492 such contracts in 2017.

The agricultural real estate market slump is the more visible, if you compare the number of transactions in 2015, which was approximately 116,400 contracts. Thus, in 2017 the number of concluded purchase contracts fell by ca. 50% as compared to 2015 (data from the study of the Central Statistical Office Real estate transactions in 2015).

The above data confirms anxiety regarding the negative influence of the amendment to the Act of 11 April 2003 on the Shaping of the Agricultural System made with the Act of 14 April 2016 on Suspending the Sale of Real Estate of the Agricultural Estate Stock of the State Treasury and on Amendments to Certain Other Acts, which came into effect on 30 April 2016.

Let us remind that on the grounds of the amended regulations, generally, agricultural real estate may be purchased by an individual farmer only, while purchase of agricultural land by other entities requires obtaining a permit from the General Manager of the Polish National Support Centre for Agriculture, and the purchaser of agricultural real estate is obliged to run a farm for 10 years and during that period they have no right to sell the purchased real estate or transfer its possession.

Moreover, the Polish National Support Centre for Agriculture has the right of first refusal concerning the shares of the joint-stock company which is the owner of perpetual usufructuary of agricultural real estate (except for situations specified by law, e.g. transactions concerning shares admitted to trading on the regulated market), as well as the right to purchase such real estate owned by a partnership joined by a new partner.

All of the above restrictions in respect of unconstrained agricultural real estate transactions resulted in a drastic decrease in the number of executed transactions as compared to 2015, namely the last year before the amended legal regulations came into effect, by 50%. Such a significant decline is a sign of not so much ordinary deterioration of the conditions on the market of agricultural real estate transactions, but its absolute slump.

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