Real Estate

Poland: New Limitations on Investments on Agricultural Land

From 26 May 2013 Poland has limited investments on high-quality agricultural land.

General principles of investments on agricultural land in Poland

Investments on agricultural land in Poland are limited by law. The limitations start from the stage of land acquisition (eg, a foreigner must obtain a permit from the Ministry of Interior) and continue on to the stage of construction.

Zoning issues

Every planned investment must be consistent with a local master plan binding for a given property. The local master plan is a local law adopted by the municipality for specified area presenting a possible designation of properties covered by the plan. If there is no local master plan in force, an investor has to obtain a zoning decision. The zoning decision is an administrative decision issued by the municipality for a given property and designates the possible investment on a specific (rather small) area and for the specific investor.

Since the adoption of the local master plan takes time and money (at least a year, and possibly years), most of the area of Poland is not covered by such plans. Therefore, in most cases investors apply for the zoning decision, which fortunately is much easier, faster, and less expensive than the adoption of a local master plan for a planned investment. If the planned investment is consistent with the local master plan, or if the investor obtains the zoning decision, he can apply for the building permit.

Change of agricultural land designation 

Agricultural land is generally protected in Poland and should not be used for non-agricultural purposes. To change the destination of agricultural land of high quality (classes I-III) into non–agricultural, the local master plan must be adopted, and it cannot be done on the basis of a zoning decision. The municipality has to obtain consent from the Ministry of Agriculture for such a change of land destination.

Most structures located on agricultural land require a change of the land’s destination, so most structures located on high-quality agricultural land require that the local master plan be adopted.

New limitations

“Compact area” term

Before 26 May 2013, the adoption of the local master plan and consent of the Ministry of Agriculture were not required if the so called “compact area” of high quality land under the change of destination was not larger than 5,000 square meters. However, there were disputes what the “compact area” mean; for example, whether this is an area of every single plot or an area of all neighbouring plots covered by a given local master plan. These disputes meant that investors in some situations were able to change the land destination without the local master plan being adopted, especially if the area of high quality land was not significant. This possibility was often used by the wind farm developers who invest on agricultural land, but they use a relatively small area of land for the strictly construction purposes.

New regulations

Due to the disputes about what is a “compact area”, the Polish parliament tried to clarify this issue and introduce a definition of the “compact area” into law. In fact, behind this clarification was the issue of possible investments on agricultural land in Poland and the influence of the central government in such investments. Surprisingly, the Polish parliament finally decided to delete the “compact area” term from the statute because it was the only way to eliminate doubts about this term!

According to the new statute, which entered into force on 26 May 2013, an investment located on high-quality agricultural land must be based on the local master plan, even if only one square meter of such land is used for the investment. Moreover, adoption of such local master plan requires consent of the Ministry of Agriculture. To make matters worse, a landowner or future investor is not a party to the administrative proceeding regarding such consent and is not able to challenge a decision of the ministry.

Reflection

Investing on agricultural land in Poland has never been easy, but now it is even more difficult. The good news is that the authors of the new law probably realised what they had done and are now trying to introduce the term “compact area” back into the law.

The 2013 amendment to the Polish rules of investments on high-quality agricultural land will seriously delay or even stop such investments.