1 Procedures of preservation target purpose of agricultural land in case their alienation Latvian experience Workshop on land market in the context of ensuring free movement of capital INT MARKT The State Committee of Ukraine for Land Resources Kyiv, March 17th, 2011 European Commission, TAIEX

General Information - Latvia Government: Parliamentary Republic Latvia’s Parliament – Saeima (100 deputies), elected for a four years time period in free, democratic elections. Independent: 1991 EU: 2004 Capital: Riga (0,8 mio population) Official language: Latvian Population: 2.22 million Location: Eastern Europe, bordering the Baltic Sea, between Estonia and Lithuania Area: sq. km. ( sq. mi.) Currency: LVL (1.00 LVL = 0, EURO) GDP (per capita) - 10,630 USD Religion: Christianity (Roman Catholics, Lutherans, Latvian Orthodox) Administrative structure: 5 Planning regions 9 cities (regional centers) Local governments – 118 Parishes European Commission, TAIEX

3 Protection of Ownership Rights THE CONSTITUTION OF THE REPUBLIC OF LATVIA Clouse 105*: Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law. Expropriation of property for public purposes shall be allowed only in exceptional cases on the basis of a specific law and in return for fair compensation. * Clouse under Chapter VIII, Fundamental Human Rights (into force from ) European Commission, TAIEX

4 Restoration of Property Rights  Restoration of ownership of land in rural areas Law On Land Reform in the Rural Areas of the Republic of Latvia, Law On Land Privatization in Rural Areas (1992) Law on Completion of Land Reform in Rural Areas (1997)  Repossession of house and grounds Law on House and Grounds Denationalization in the Republic of Latvia Act, Act on Repossession of House and Grounds by Legal Owners (1991)  Denationalization of enterprises Law on Restoration of Ownership of Enterprises and Other Realties  Restoration of ownership of religious organizations Law on Repossession of Religious Organizations’ Property Act;  Privatization of national and municipal property European Commission, TAIEX

5 Types of Conveyance Pursuant to the Civil Law: by a transfer, which is based on a presumably legal deal by succession by restoring one’s ownership of expropriated and nationalized property European Commission, TAIEX

6 Dead of Sale As provided for the Civil Law:  Essentially deal is concluded between two parties, which are demonstrative of the type of a deal and the typical basic terms and conditions, which conform to the notion. A deal must be sufficiently clear and concrete to enable its implementation by legal means and arbitration  The essential components of a Purchase Contract (Deed of Sale) must be the subject of purchase/sale and the purchase Price  The Purchase Price must be in terms of money.  Conclusion of a Purchase Contract (Deed of Sale) does not cause any right of ownership, just a right of claim  The property owner is the one, who is registered as such in the Land Register Stamp Duty Payment (for Purchase Contracts – 2% of the real property value, but not more than LVL 30000) European Commission, TAIEX

7 Transitional Measures (I) In accordance of Law On Land Privatization in Rural Areas (1992) since 1 st, May, 2003 in Latvia has a number of restrictions for citizens of European Union member states and legal entities of those member states, in which such cannot acquire: Land in the area of state borderland; Land of nature preserve areas and in the territories of other nature parks; Land of Baltic Sea and Riga’s bay beach dune’s protective zone; Land of public waters protective zones, excluding territories for the purpose of construction according territorial plans of municipalities; Agricultural and forest land, if such land uses have been determined by territorial plans of the specific municipality; Land of public (federal) mineral mines. European Commission, TAIEX

8 Transitional Measures (II) Conditions of Law:  restrictions related mentioned in the Law persons concerning obtaining agricultural and forest imposed during the seven-year transition period (until year 2012)  the term of transition period is possible to postpone to a later time, but no longer than three years  Those restrictions did not come into force only for those citizens of European Union member states, which chose farming as an economic activity and had continuously, lived in Latvia during a three-year period, and have been involved with agricultural production for three years However, legal entities of European Union member states will not obtain agricultural and forest land during the transition period (seven years). The citizens and legal entities of European Union member states will be able to obtain other land (for example land for construction purpose and land for maintenance of buildings) during the transition period, as well as agricultural and forest land after the seven-year long transition period in the same order (according Latvia’s laws) as Latvia’s citizens European Commission, TAIEX

9 Protection of Agricultural Land Use  Sustainable land policy and legislation  Transparent land convenience and building permission obtaining procedures  Convenient and non-bureaucratic land registration procedures  Fiscal policy (land taxation)  Support available for farmers (European Union subsidies, mortgage guarantees, insurances) European Commission, TAIEX

10 Land Policy (I)  National Development Plan (2007)  Land Policy Guidelines (2008)  Building Act (1995)  Spatial Planning Law (2002)  Regulations On National Importance Territories of Agricultural Land (2010)  Law On Geospatial Information (2009) European Commission, TAIEX

11 Land Policy (II) Regulations On National Importance Territories of Agricultural Land (2010) states:  Principles of determination of status of national meaning agricultural land (with fertility no less than 50 quality points, common area – no less than 50 hectares)  List of territories with high fertility (agricultural land) There are obligation to register those territories in the Cadastre, as well as include this information in territorial plans for future avoiding use this territories for construction purpose European Commission, TAIEX

12 Transparency of Procedures Relating Land Development Main principles:  Creation of investment attractive environment (avoiding unnecessary bureaucracy in land registration and building permission obtaining procedures)  Finalization of land reform (turning to free real property market conditions)  Spatial planning issues (coverage of territorial plans for all municipalities) – information on territorial plans includes  GIS information accessibility (INSPIRE demands) European Commission, TAIEX

13 Land Registration System (I) Legislation:  Land Register Act (securing property rights) - Land Register ( )  Law on Real Estate Cadastre (registration of physical data of the property) – The State Land Service of Latvia ( ) European Commission, TAIEX

14 Ministry of Justice Real Estate Registration System (II) State Land Service National Real Estate Cadastre IS Fiscal function State Unified Computerized Land Register Legal function European Commission, TAIEX

15 Physical objectsTextual part of cadastre Graphical part of Cadastre Land parcels (units) % Buildings ,5% Groups of premises Physical Objects registered in Cadastre (1995 – February, 2011) European Commission, TAIEX

16 Statistics of Registered Objects in Cadastre ( ) European Commission, TAIEX Real properties, land uses Cadastral objectsNumberArea, in hectares Land units and legal provisions restituted property rights privatization deals state and municipal properties Land uses, free state holds, state and municipal land land uses free sate and municipal land state land municipal land Leases (land)

17 Fiscal Policy (I) Involved parties:  Ministry of Finance (taxation policy)  Local Governments (tax administration and collection)  Ministry of Justice (The State Land Service) – real estate mass valuation European Commission, TAIEX

18 Fiscal Policy (II) Law On Real Estate Property Tax (taxation issues) Taxation rate for agricultural land:  1,5% from mass (cadastral value) for cultivated land (1997)  3% from mass (cadastral value) for unmaintained agricultural land (2010) – possesses on 15% of all agricultural land properties in accordance of information of Rural Support Service Law On Real Estate Cadastre (property registration and valuation issues) European Commission, TAIEX

Land market (I) European Commission, TAIEX 19

European Commission, TAIEX 20 Land Market (II)

21 Average Prices of Agricultural Land ( ) Properties with area no less than 3 hectare Only purchases with allowed future agricultural use of land European Commission, TAIEX

22 Number of Land Sales with Agricultural Land Use ( ) European Commission, TAIEX

23 Land Owned by Foreigners Registered in Cadastre (2009) European Commission, TAIEX Agricultural land in total (hectares) Agricultural land in foreign ownership (hectares) Agricultural land in foreign ownership (%) Forest in total (in hectares) Forests in foreign ownership (hectares) Forests in foreign owners hip (%) Land under waters in total (hectares) Land under waters in foreign ownership (hectares) Land under waters in foreign ownership (%)

Monitoring Procedures European Commission, TAIEX 24 Agricultural land ortho-photo (1995) Agricultural land ortho- photo (2005)

25 Conclusions The portion of sales where foreigners are involved in real estate transactions are still very low Main risks of degradation of agricultural land are local development issues:  Migration of population from rural areas to towns  Emigration  Demographic issues  Unemployment and differences in development between regions  Ineffective land cultivation areas (land reform legacy) - average size of arable farm land is about 7,7 hectares European Commission, TAIEX

Thank you for attention! Questions please! Sarmite Barvika Project manager The State Land Service of Latvia European Commision, TAIEX26