Land sales may be curtailed with proposal to treat agricultural land as 'special asset'
A move by the EU to treat agricultural land as a 'special asset' is being proposd to stop speculators buying land for investment purposes.
The European Commission has issued guidelines in recent days saying that farmland is a "special asset" and sales can be restricted to help limit price speculation and preserve local communities.
It says that agricultural land is a scarce and special asset, which merits special protection, and that EU Member States have the right to restrict sales of farmland to preserve agricultural communities and promote sustainable agriculture. But it also warns that in doing so they must comply with EU law, in particular rules on free movement of capital.
The new guidance says countries can place limits on the amount of land involved, and give tenant farmers or neighbours first refusal in certain land sales.
At the moment, the Commission is indicating to Member States what they can do to regulate the sale of farmland, based on case law of the Court of Justice of the European Union.
Key features of Commission's guidance
The Communication clarifies that Member State are competent to decide on measures to control sales of farmland. As clarified by the Court of Justice of the European Union, some restrictions may be acceptable under certain conditions:
- prior authorisations from national authorities for the acquisition of land;
- limits on the size of the land to be acquired;
- pre-emption rights allowing certain categories of buyers to purchase farmland before it is sold to others. Buyers benefitting from these rights may include tenant farmers, neighbours, co-owners, and the State;
- State price intervention.
It goes on to say that disproportionate restrictions on cross-border investment are also unlawful. Based on case law, it is in particular disproportionate to:
- Impose self-farming obligations;
- Prohibit companies from buying land;
- Require qualifications in farming as pre-conditions for buying land.
The Commission said recently that the interest of foreign investors in farmland seems to be rising and that the global financial crisis, in particular, had effects on investment in farmland.
It is now up to Member States to decide if they wish to use the Commission guidelines to draw up new legislation to protect the farming sector.
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