A new bill aims at consolidating the legislation on agricultural land ownership and use

A Bill for a new Agricultural Land Act (“Bill”) was published on 5 November 2019 for public consultation and comments. The draft legislation seeks to systematize and consolidate the legislation regarding the ownership and use of agricultural land. The Bill reproduces and further develops much of the current legislation while introducing some new provisions arising from the dynamics of the public relations. Last but not least, the new Bill aims to address and remove certain inconsistencies in the current regulations.

The new act is due to enter into force on 1 October 2021.

  • Prohibition on change of designation of agricultural land after its acquisition

To preserve agricultural land as a basic national wealth and ensure it is used as per its designation, the new Bill prohibits change of designation of agricultural land for a period of 7 years as of its acquisition. This period would start running again following each change of ownership, except in case of inheritance.

The above rule provides for several exceptions, mainly relating to sites of national importance or in cases where a change of designation is provided for in the general development plan of the respective municipality. To date, most of the municipalities have not yet adopted and approved their general development plans. Despite the exceptions provided, such prohibition is expected to prevent the continued practice of purchasing agricultural land in order to later construct on such land, as well as to ensure it is used as per its designation.

  • EU citizens will now be able to acquire agricultural land in Bulgaria

Another key change is related to the European Commission procedure for imposing restrictions on the purchase of agricultural land by foreign natural persons and legal entities. The Bill envisages that citizens and legal entities from EU Member States, as well as from states which are a party to the European Economic Area Agreement, will now be able to acquire ownership rights over agricultural land. The requirement of minimum five-year domiciliation prior to the purchase will be removed.

By amending the so-called Offshore Act[1], commercial companies, in which companies registered in preferential tax regime jurisdictions participate directly or indirectly as partners or shareholders, are explicitly prohibited from acquiring and holding the ownership right over agricultural land.

  • Maximum term of agricultural land lease and rental agreements

In order to achieve a better balance in the relationships between owners and users by avoiding long-term contracts with unfavourable contractual terms, several new requirements not yet regulated by law have been introduced. A maximum term for conclusion of contracts for agricultural land use has been prescribed. The proposed term of the contracts shall not exceed ten years, and in respect of territories occupied by perennial crops – this term is thirty years. The requirement of a minimum five-year period for rental agreements remains valid. The new rules will also apply to contracts concluded prior to the entry into force of the Bill.

A requirement has been introduced for lease contracts to be signed by  minimum 25% of the co-owners, while the requirement for a minimum of 50% of co-owners regarding rental contracts remains valid.

  • Priority to young farmers and small-scale producers

New regulation on tenders for leasing or renting agricultural land from the state land fund provides for conducting special tenders open only to individuals under the age of 40, as well as to limited liability companies incorporated by such persons.  These tenders will be conducted provided that the results from the enquiries held by the Regional Directorates for Agriculture show interest in participating in the tender.

Small-scale producers are additionally encouraged by providing that tenders for leasing or renting state-owned land are open only to tenderers who, together with their related parties, cultivate no more than 10,000 acres of agricultural land, regardless of the form of land cultivation, type of ownership or age.

The Bill also contains detailed rules relating to administrative procedures for establishing massifs for land, voluntary consolidation of agricultural land with transfer of ownership, registration of agricultural land use acts for the purposes of support under Single Area Payment Schemes (SAPS) and others.

Renting in Agriculture Act, Preservation of Agricultural Land Act, Protection of Agricultural Property Act will be repealed after the Bill enters into force, while the other acts on the matter remain in force, as amended by the novelties introduced in the Bill.

[1]Economic and Financial Relations with Companies Registered in Preferential Tax Regime Jurisdictions, the Persons Related to Them and Their Beneficial Owners Act