The revolution in the land trading, black clouds over the warehouse market

Big changes in the land trade are coming next year. Since January the law on shaping the agricultural system enters into force, which may turn out to be a disaster for the industrial and warehouse market. The new rules can block the ability to purchase multiple plots, which until now have been used for the construction of industrial facilities – experts convince.

The act on shaping the agricultural system contains legal records which in practice may prevent the purchase of land for industrial or warehouse investments. Free sale or purchase will apply only to plots covered by the development plan, which refers to relatively low number of plots in the market. Plots that do not have a development plan will be subject to the new law.

- The legal records of the act mean that almost every other plot must be treated by a notary as agricultural property within the meaning of the new law. Even one that has issued zoning. - says Tomasz Olszewski, Head Industrial Department in Central and Eastern Europe, JLL.

The zoning

The zoning is an auxiliary instrument, which is used as an exception in areas where there is no master plan. - This solution meant that land which was formally agricultural land, and fulfilled the conditions for obtaining zoning, was used by developers to build warehouses. A significant part of the warehouse parks that exist today, are based on a zoning - says Tomasz Olszewski, JLL. The main advantage of this solution is the duration of the procedure.

How JLL experts explain, the adoption of the development plan lasts from one to several years, while zoning can be achieved in about half a year. - The fact that now these plots will be subject to the law terms of the act on shaping the agricultural system makes it virtually impossible to use this shorter way to prepare the ground for the construction - says Tomasz Olszewski.

The new rules were intended by the authors of the project to protect Polish farmers against massive buyout of agricultural land and, consequently, a drastic increase in its prices. As expert adds, changes in the law have a direct impact on developers building warehouse and industrial premises. - In practice, the new law cuts the developers from the half of the land resources, which until now were accessible - says Olszewski. - Transactions, if possible, will become an ordeal, and neither party will have certainty as to the final - summarizes the expert from JLL.

The new law will therefore make a lot of restrictions on the marketing of agricultural property. One of the main restrictions would ban the division of farms, where the transferred land are earmarked for non-agricultural purposes.

A smaller number of people entitled to buy land

- After entering the law into force virtually impossible will be dividing the farms if the buyer is not another farmer - says Tomasz Olszewski. In practice this will mean that the farmer who holds a farm of 40 hectares, could sell the entire land to anyone, but if he wants to divide his land, ie: to a 10 ha plot, he can only sell it to another farmer. In addition, Olszewski says, the new law stipulates that in case of sale of land, resulting in the division of the farm, you will need the consent of the Agricultural Property Agency.

The larger number of buyers entitled to pre-emption

The act on shaping the agricultural system expands the number of players who will have the right of pre-emption. The new rules assume that if agricultural property is to be sold, it’s tenant has the priority to buy it. If it does not apply, then priority will be given to a neighbor - the individual farmer, the owner of an agricultural property bordering the sold land.

- The new rules definitely complicate the sale of land, as it notary will be entitled to ascertain to pre-emption. But this is not so simple and obvious as neighbor-farmer also must comply with the conditions - says Tomasz Olszewski with JLL. Farmers entitled to pre-emption is a person having agricultural qualifications and holding a farm for at least 5 years in the same municipality. In the case of land trading, considering the plots above 1 ha with such a right will be entitled the Agricultural Property Agency. Only if neither party exercises its right of pre-emption, then the land will be able to be bought by a buyer selected by the seller. However, there are further conditions.

Lower prices for land

According to regulations, if the price of real estate will - in the opinion of wanting to take advantage of pre-emption rights - differ from its market value, he will be able, within 14 days of notice of exercise of the right of pre-emption, ask the court to determine the lower price. This may block the sale of the property for many months.

JLL experts predict that the effect of the entry into force of the above act will be an increase in demand (and hence the price) parcels with existing zoning plans. But for owners of agricultural land - even the best-located - the prospects are not the best. Or they will procedure with the municipality to enact zoning plan, or their chances on the sale of land at a reasonable price will drop to almost zero.

Tomasz Olszewski

Memorandum scope

- Encyclopedia of knowledge of the plot to be sold .

  1. 01.

    Extracts and maps from the land register

  2. 02.

    Land and mortgage register

  3. 03.

    Technical infrastructure

  4. 04.

    Location and access to road networks

  5. 05.

    Environmental conditions

  6. 06.

    Geotechnical surveys

  7. 07.

    Analysis of planning documents

  8. 08.

    Decision on land development


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