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Procedures of preservation target purpose of agricultural land in case their alienation Latvian experience 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 43658 The State Committee of Ukraine for Land Resources Kyiv, March 17 th, 2011 European Commission, TAIEX 1

General Information - Latvia Administrative structure: 5 Planning regions 9 cities (regional centers) Local General Information - Latvia Administrative structure: 5 Planning regions 9 cities (regional centers) Local governments – 118 Parishes - 582 European Commission, TAIEX 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: 64 100 sq. km. (25 640 sq. mi. ) Currency: LVL (1. 00 LVL = 0, 702804 EURO) GDP (per capita) - 10, 630 USD Religion: Christianity (Roman Catholics, Lutherans, Latvian Orthodox) 2

Protection of Ownership Rights THE CONSTITUTION OF THE REPUBLIC OF LATVIA Clouse 105*: Everyone 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 06. 11. 1998. ) European Commission, TAIEX 3

Restoration of Property Rights § Restoration of ownership of land in rural areas Law 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 4

Types of Conveyance Pursuant to the Civil Law: • by a transfer, which is 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 5

Dead of Sale As provided for the Civil Law: § Essentially deal is concluded 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 6

Transitional Measures (I) In accordance of Law On Land Privatization in Rural Areas (1992) 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 7

Transitional Measures (II) Conditions of Law: § restrictions related mentioned in the Law persons 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 8

Protection of Agricultural Land Use § Sustainable land policy and legislation § Transparent land 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 9

Land Policy (I) § § § National Development Plan (2007) Land Policy Guidelines (2008) 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 10

Land Policy (II) Regulations On National Importance Territories of Agricultural Land (2010) states: § 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 11

Transparency of Procedures Relating Land Development Main principles: § Creation of investment attractive environment 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 12

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

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

Physical Objects registered in Cadastre (1995 – February, 2011) Physical objects Land parcels (units) Physical Objects registered in Cadastre (1995 – February, 2011) Physical objects Land parcels (units) Textual part of cadastre Graphical part of Cadastre 990 195 990 053 100% Buildings 1 392 777 1 372 234 98, 5% Groups of premises 1 848 087 European Commission, TAIEX 15

Statistics of Registered Objects in Cadastre (01. 03. 2011) Real properties, land uses Cadastral Statistics of Registered Objects in Cadastre (01. 03. 2011) Real properties, land uses Cadastral objects Land units and legal provisions restituted property rights Number Area, in hectares 585006 4812824 88581 1279561 privatization 159334 953424 deals 292266 1849693 44825 730146 169296 2295095 land uses 151008 2229010 free sate and municipal land 3308 4810 state land 1759 8118 municipal land 6139 10948 15103 53034 state and municipal properties Land uses, free state holds, state and municipal land Leases (land) European Commission, TAIEX 16

Fiscal Policy (I) Involved parties: § Ministry of Finance (taxation policy) § Local Governments 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 17

Fiscal Policy (II) Law On Real Estate Property Tax (taxation issues) Taxation rate for 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 18

Land market (I) European Commission, TAIEX 19 Land market (I) European Commission, TAIEX 19

Land Market (II) European Commission, TAIEX 20 Land Market (II) European Commission, TAIEX 20

Average Prices of Agricultural Land (2000 -2010) Properties with area no less than 3 Average Prices of Agricultural Land (2000 -2010) Properties with area no less than 3 hectare Only purchases with allowed future agricultural use of land European Commission, TAIEX 21

Number of Land Sales with Agricultural Land Use (2000 -2010) European Commission, TAIEX 22 Number of Land Sales with Agricultural Land Use (2000 -2010) European Commission, TAIEX 22

Land Owned by Foreigners Registered in Cadastre (2009) Agricultural Forest in total Forests in Land Owned by Foreigners Registered in Cadastre (2009) Agricultural Forest in total Forests in land in total land in (in hectares) foreign (hectares) foreign ownership (hectares) (%) 2428020 14203 0. 585 European Commission, TAIEX 2954635 8388 Forests in foreign owners hip (%) Land under waters in total (hectares) Land under waters in foreign ownership (%) 0. 28 240231 667 0. 28 23

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

Conclusions The portion of sales where foreigners are involved in real estate transactions are 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 25

Thank you for attention! Questions please! Sarmite Barvika Project manager The State Land Service Thank you for attention! Questions please! Sarmite Barvika Project manager The State Land Service of Latvia sarmite. [email protected] gov. lv www. kadastrs. lv European Commision, TAIEX 26