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Findings of Romania case study

Findings of Romania case study. Review of transitional restrictions maintained by Romania with regard to the acquisition of agricultural real estate Lucian Luca and Cecilia Alexandri Institute of Agricultural Economics, Bucharest. Structure of the presentation.

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Findings of Romania case study

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  1. Findings of Romania case study Review of transitional restrictions maintained by Romania with regard to the acquisition of agricultural real estate Lucian Luca and Cecilia Alexandri Institute of Agricultural Economics, Bucharest

  2. Structure of the presentation • Legal framework regarding the restriction • Evolution of the land market • Role of foreigners in the land market

  3. Law on the land resourcesNo. 18/ February 1991 • Restitution of land to former owners or to their heirs • Chapter II Establishment of private property right on land • Chapter IV Legal circulation of the land • Art. 45 – Private land, regardless of its titular, is and shall remain in the civil circuit. It may be acquired and alienated in any of the ways established by the civil legislation, by observing the provision under the present law. • …the acquirer's property shall not exceed 100 ha of agricultural land, in arable equivalent , per family… (Art. 46) • Art. 47 – Natural persons who are not Romanian citizens and do not have their domicile in Romania as well as juristic persons not having Romanian nationality and their headquarters in Romania shall not acquire land of any kind in property by inter vivos deeds. • Art. 48 – Alienation by sale of agricultural land from the outside of the buildable area may be made by exercising the preemption right. • …exercised through the Agency for Rural Development and Planning…

  4. Law on legal circulation of the landNo. 54/ March 1998 • Art. 1- Land areas into private ownership, regardless of their titular, are and will remain into the civil circuit. • …the acquirer's property shall not exceed 200 ha of agricultural land, in arable equivalent , per family… (Art.2) • Art. 3 – • (1) Foreign citizens cannot acquire property right on land • (2) Romanian citizens with the domicile abroad can acquire land • (3) Foreign legal persons cannot acquire land in Romania • (4) the provisions of the legislation on foreign investments were applied • … any investor “can acquire any real rights on the movable and immovable goods” (GEO 92/ 1997)…

  5. Law on the reform in ownership and justice, No. 247/ July 2005 • TITLE X - Legal circulation of land • Art. 3. - The foreign citizens and the stateless persons, as well as the foreign legal entities can acquire the ownership right on land areas in Romania under the conditions stipulated by the special law. • the pre-emption right was completely eliminated • the upper limit of property (200 ha) per family was abolished • TREATY…CONCERNING THE ACCESSION OF THE REPUBLIC OF BULGARIA AND ROMANIA TO THE EUROPEAN UNION (June 2005) • ANNEX VII, List referred to in Article 20 of the Protocol: transitional measures, Romania (FREE MOVEMENT OF CAPITAL) • …Romania may maintain in force for seven years from the date of accession the restrictions laid down in its legislation, existing at the time of signature of the Treaty of Accession, on the acquisition of agricultural land, forests and forestry land by nationals of the Member States… • Self-employed farmers who are nationals of another Member State and who wish to establish themselves and reside in Romania, shall not be subject to the provisions of the preceding subparagraph or to any procedures other than those to which nationals of Romania are subject.

  6. Law on acquiring the private land ownership right by the foreign citizens and stateless persons, as well as by the foreign legal entities, No. 312/ November 2005 • Art. 5 • (1)The citizen of a Member State, the stateless person with domicile in a Member State or in Romania, as well as the legal entity established in conformity with the legislation of a Member State can acquire the ownership right on the agricultural land, forests and forestland after 7 years from the date of Romania’s accession to the EU. • (2) The provisions from paragraph (1) are not applied to the farmers who are self-employed and are, according to the case: • citizens of the Member States, stateless persons with domicile in a Member State, who establish their residence in Romania; • stateless persons with their domicile in Romania. • (3) The citizens of the Member States or stateless persons with domicile in a Member State prove their self-employed farmer quality on the basis of documents issued by the competent authorities from the Member State or from their country of origin. The stateless persons with their domicile in Romania prove this quality with the certificate issued by the Ministry of Agriculture, Forests and Rural Development. • (4) The persons provided under par. (2) acquire the ownership right on the agricultural land, forests and forest land under the same conditions with those applicable to the Romanian citizens, from the date of Romania’s accession to the European Union. • (5) The destination of the agricultural land, forests and forestland cannot be changed by the persons provided under paragraph (2) in the transition period.

  7. The land market before accessionoutside the built-up area (extravilan) • Period 1998-2005 • Number: 308 thousand land sale-purchase contracts • Area: the sold area totaled 513 thousand ha • Larger areas sold • In 3 western counties • Timis (135 thou ha) • Arad (50 thou ha) • CarasSeverin (24 thou ha) • In one eastern county • Constanta (32 thou ha)

  8. The land market after accessionas registered by ANCPI (2006-2010) • ETERRA1system • 3 counties (starting date 2006) • Number of transactions: 130 thou. • Total transacted area: 302 thou ha (incl. successions) • Average transaction: • BZ, 3.30 ha • CT, 2,37 ha • PH, 1.56 ha • ETERRA2 system • 38 counties (starting date 2008…2010) • Number of transactions: 129 thou. • Total transacted area: 175 thou ha • Average transaction: 1.35 ha

  9. Great variation of agricultural land prices based on UNNPR (notaries) evaluations

  10. Estimated price of the arable land in the rural area, for selected counties in different regions2007-2009, extravilan land, UNNPR evaluations

  11. The land market after accessionsome results from a brief investigation • A mini-survey on the land market situation • 48 questionnaires received from 30 counties • Evolution of Prices • The average price in 2009: 5378 RON/ha (1265 Euro/ha) or 1497 Euro/ha • 37 answers consider that price increased from an average of 1000 Euro/ha in 2006 to 1742 Euro/ha in 2008 • The perception on the transitory restriction • Most respondents (29) did not hear about the restriction applied to foreigners to buy land for 7 years from the accession, while 16 respondents knew about this restriction. • The presence of foreigners is important • 12 respondents indicated foreigners as typical buyers • Half of the respondents knew about foreigners wanting to buy land (25), while the other half did not know (23)

  12. Foreign farmers’ presence in Romania, before and after accession • Typical form of agricultural holding organization, since 1998: commercial company registered in Romania (entity with foreign capital) • The Italians • Very present in Timis, associated with the most active land market in Romania • In 2003, 39 commercial companies with Italian capital were operating in this county, totaled about 25 thousand hectares agricultural land • In 2009, the land operated by Italians in Timis summed up about 125-150 thousand ha, i.e. about one-third of the county agricultural area. • Also present in another counties • RissoScotti in Danube area • The French • 17 farms owned by French farmers • Some of them had started their activity in Romania early (1994-1997), but most of them after 2000. • The Dutch • Individual farmers (at least 20 farmers) • Corporate farms (e.g. First Farms)

  13. A map with presence of foreign farmers in selected countiespercent of arable land own by foreign farmers

  14. Relevance and usefulness of restriction • Restriction maintained after accession do not really impede foreign farmers to start a business in agricultural sector • It was useful in the context of possible speculations in the real estate sector, influenced by global trend in period 2007-2008 • Reason for continuation: financial instability of the country and pessimistic expectations in what regard real income

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