Land Policy Options
by Paul Munro-Faure
Commission 7, Cadastre and Land Management
FIG
Abstract
FIG and Commission 7 have been strongly identified with the Bogor Declaration, which arose from the United Nations Inter-regional Meeting of Experts on the Cadastre in Bogor, Indonesia, in March 1996. The main objective of the Bogor Declaration was to look at cadastral issues in different stages of national development, but particularly to consider matters relating to land policy, legal, institutional and technical options in this context.
The paper looks at some of the issues raised at Bogor in the context of land policy.
The paper puts forward a framework and criteria for the consideration of land policy options. It considers in particular the wide range of land policy issues that need to be resolved in the light of an individual state’s political, economic and social realities.
Specific examples of how these options can be explored are reviewed, using as a case study one of the areas of land policy identified in the Bogor Declaration for consideration, agricultural land leasing.
Land Policy Options
1. The Bogor Declaration and land policy options
The Bogor Declaration, arising from the United Nations Inter-regional Meeting of Experts on the Cadastre in Bogor, Indonesia, in March 1996, looked at administrative and technical options for the cadastre to serve the different needs of countries at different stages of development. The main objective of the Bogor Declaration was to look at cadastral issues in different stages of national development, and to consider in general terms administrative options, including those relating to land policy.
The declaration states as follows:
"8.2 Land Policy Options
8.2.1 Land policy is a part of the national policy of countries. Such policies generally relate to economic development, social justice and equity, and political stability. The land policy may for instance include or promote the provision of security of tenure, improve access to credit, land reform, land titling and the resolution of issues relating to traditional or customary tenures, facilitate special attention to provision of land for the poor, ethnic minorities and women, facilitate land use and physical planning, real property taxation, measures to prevent land speculation and land disputes. The meeting emphasised the need to establish a coherent national land policy to guide policies within different sectors.
8.2.2 The cadastre can support land policies by providing a legal framework for administering land rights. A land rights framework supports structural change, environmental protection and sustainable management and control of natural resources and environment. It supports land markets, information for planning and monitoring of land use and also provides tools for the implementation of land policies, for instance land consolidation, resolving land disputes or compulsory acquisition of land."
2. The framework of land policy
Before looking in detail at specific issues relating to land policies and how they are developed, the framework within which land policy can be formulated needs to be examined.
2.1 Why the state needs policies relating to land
An initial question for consideration is why a state might need policies relating to land.
The arguments for this stem from the economic and potential fiscal importance of land and buildings in the economy. Land and buildings, as reported in the UN ECE Guidelines for Land Administration from World Bank sources, comprise a remarkable 50% to 75% of a country’s national wealth. The percentage varies according to the stage of development and make-up of the national economy. Latest research in the UK, for example, suggests that aggregate values of land and buildings in the UK comprise a total of 57% of national wealth. General experience would suggest that countries with a lower degree of economic development and consequently fewer alternative investments will have a higher percentage of national wealth in land and buildings, and conversely.
Land and buildings are also often important in fiscal terms as they provide one of the most efficient tax bases known, both being highly visible and not easily transportable. Tax collection rates based on land and buildings are usually very high, and frequently in the high 90’s per cent. This is a particularly important issue in the context of developing and transitional economies, where the latter particularly may experience difficulty in developing the infrastructure necessary for raising income and other taxes efficiently. There is scope for such taxes to raise a significant element of a country’s total tax revenue.
The political, social and environmental importance of land and buildings are also considerable. In developing countries, for example, where traditional customary ownership practices and spiritual values attaching to land may be of particular significance, such importance may counterbalance and, perhaps, outweigh the economic and fiscal.
In this context, states need land related policies giving reasonable clarity, consistency and certainty to provide the confidence necessary to promote the economic essential that land and buildings should be used efficiently; in most national contexts it is considered vital that market forces should operate as freely as possible to ensure that this is achieved. Economic efficiency may not, however, look after the longer term values that society attaches to land, such as environmental values, nor after the customary and spiritual values that may also attach to land. These may well need to be protected by specific legislative and other measures.
2.2 What areas are appropriate for consideration in land policies and how are they considered?
Several areas are mentioned in the Bogor Declaration as appropriate for consideration under land policy as follows:
This list is indicative rather than definitive, however it does provide a flavour of the wide range of issues that might be considered in relation to land. The Bogor Declaration "... emphasised the need to establish a coherent national land policy to guide policies within different sectors ..." and stressed the role of the cadastre in this context for:
This range of possible land policy areas conceals a host of different national approaches, with a range of different experience between different countries on relevant areas of land policy, a range that is highlighted below in the case study on agricultural land leasing law and in detail in the Appendix.
Notwithstanding this, there are tendancies to restrict the range of possible policy directions in some areas. International agreements may, for example, result in centralising tendencies for policies relating to land. These have tended to be particularly significant when relating to issues such as the environment, which by definition are strongly international. The UN, for example, at the conference on Environment and Development (UNCED) in 1992 and at the Habitat II conference in 1996 generated statements of policy intent concerning environmental issues relating to land (and coastal and marine) policy. Many such statements may reflect existing practices, or will provide targets that may find their way at least in part into relevant national policies. At the regional level, the European Community has provided a forum for harmonisation of land (and other) related policies in such fields, as has the recently formed Meeting of Officials in Land Administration (MOLA) in Europe under the aegis of the UN Economic Commission for Europe.
Whether or not centralising or harmonising tendancies are relevant to individual areas of policy, it is apparent that all policies are dynamic, whether they are related to land or otherwise. Policies change over time because the relevant frameworks in which the policies are identified change over time, whether because of changes in political priorities, changes in our understanding of physical processes, or changes in economic parameters.
A final point to consider when looking at the Bogor Declaration’s conception of a "... coherent national land policy ..." is to what extent governments transfer such a conception into reality. Experience in developed, transitional and developing nations suggests that few governments in fact develop "... national land policy ..." as a specific, distinct matter of policy, although several (including Malaysia) may have, for example, a National Land Code which may codify the relevant law.
In this sense, therefore, it may be more productive to adopt the realpolitik attitude of considering "... policies with impacts on land ..." rather than "... national land policies ...", because in practical terms that is how policies tend to be developed, reflecting the breadth of interaction that needs to be considered in the framework of land policies. An example of this would be in the context of creating a secure system of registration of rights for mortgage lenders in mortgaged properties, where the requirements may be more appropriately specified by the mortgage lenders in conjunction with, amongst others, land administration specialists, rather than solely the latter.
3. Developing the framework of land policy
In overall terms the framework for land policy needs to consider several areas where policies relating to land will be relevant. These include the physical, the economic and fiscal, the social, and the political frameworks as summarised and exemplified in the text boxes in this section.
Although these specified areas are considered separately in this section, the reality is that there is very frequently strong interaction between them, and between different measures within them.
An example of this in the context of the physical framework is provided by territorial and planning controls which may determine the use of land according to the appropriate basis in the law. Such controls on the use of land will have potentially strong economic and fiscal impacts. Use and the statutorily defined use of the land will be a significant factor in determining its value in terms of capital and rental value in the market. This in turn may well affect the ability of an owner to raise capital against the security of the land, and hence appropriately finance the business on the land. There may also be impacts on the taxation value of the land, depending upon how this is defined in law.
The economic and fiscal framework covers the wide variety of economic policies ranging from the fundamental, whether the economy will run on a market economy based approach or a centrally planned approach, through to the sector specific, such as what and how agricultural support policies will be implemented. Both have major implications for land policy. For the examples given, the former determines the state’s view on land (as land) ownership, with the normal centrally planned view being that the land belongs to the state and cannot be owned by individuals. The implications, as the transitional economies are currently experiencing, of moving to a market economy view where land may be privately owned, are enormous, and have repurcussions in physical, social and political frameworks. As regards the latter, agricultural support policies will feed through into higher agricultural land prices, which will distort economic decision-making.
Economic and fiscal framework The economic and fiscal framework for land policy typically will include those measures affecting the economic and fiscal environment that have an impact on land. These will include for example:
|
Physical framework The physical framework for land policy typically will include those measures affecting the physical environment. These will include for example:
|
Within the economic and fiscal frameworks there will also be interactions that need to be considered. When considering changes in taxation policy all aspects of taxation policy need to be considered together. In many countries there are moves towards market value based taxes on land (and buildings) which cannot be looked at in isolation from how the land market works in the specific circumstances of the country in question, nor from how proposed new taxes will impact upon those liable in view of their overall tax burdens.
In the physical context, the move to private ownership of land in the political and economic frameworks of the transitional economies gives rise to the need to reconsider existing approaches to land administration. The typical orientation of land and buildings related agencies in the former socialist economies was horizontal, dividing the land from the buildings. That of the market economies is more typically vertical, with land and buildings typically being owned and treated as a unity. This affects both the administrative structures and how, for example, physical planning will be regarded and carried out.
Political framework The political framework for land policy typically will include those measures affecting the political environment that have an impact on land. These will include for example:
|
The political framework may cover those issues at the heart of many of the questions raised in other frameworks; it is in the political framework that decisions on democracy, human rights, and the relationship between the state and the individual are taken. These have implications in those areas already discussed. What is the political view on democratically accountable decision-making? Should it extend to the physical framework and be a determining factor in territorial/planning control? Is the political concensus that the basis for tenure should be state or private ownership of land, with its considerable economic implications? Do human rights extend to rights of protection of those perceived to be less fortunate, such as tenants, against those seen as more fortunate, such as landlords? Even, historically, whether landownership should be seen as a pre-requisite to exercising voting rights?
Social framework The social framework for land policy typically will include those measures affecting the social environment that have an impact on land. These will include for example: Landlord and tenant relations Lessees’ rights to buy Customary rights Public access rights |
The social framework includes a wide variety of issues for consideration. Particularly important issues in the context of developing countries are issues relating to customary rights, not least because these may offer a relatively difficult "fit" with the generally perceived operations of a market economy. Concepts of land held in trust for future generations, and of inalienability pose challenging problems, for example, when considering the use of land a collateral for bank security. As noted in the previous section, land policies are dynamic by nature. They change over time as our perceptions and understandings themselves change. The social framework provides useful examples of this, one of which, landlord and tenant relations in the agricultural sector, will be examined in detail as a case study.
4. Options in the framework of land policy
The consideration of the different interactions in the previous section should give rise to a healthy scepticism as to the availability of stock solutions to complex questions of land policy. They also provide evidence that there is not a finite set of land policy issues, and hence options, under consideration.
The reality is that many decisions and developments in these different areas have land related implications and what is needed may be a good understanding of how these inter- (and intra-) relationships work elsewhere and may work in the specific circumstances of a given state, and an effective set of criteria against which judgements on policy can be made.
4.1 Antecedent conditions affect options
Options for land policy are further complicated by the fact that antecedent conditions will have an enormous impact on what is possible and what is not possible. Antecedent conditions will have determined the "snapshot" of the various frameworks suggested above in the preceding time period, and will include also the legal and management/administrative structures noted in the section below, and the availablity of resources for change.
4.2 Desirable aims of land policy; identification of appropriate criteria
Rather than propose a set of options then, it seems more appropriate to put forward sets of criteria that may be appropriate. The criteria identified will differ according to the direction that the state wishes to follow and according to the area of policy under consideration. A state placing a high priority on retaining features of customary relations will have a different set of criteria to one which is keen to follow the road to a full-blooded market economy. In the context of the transitional economies keen to embrace the market economy the following criteria might be considered in the context of instigation of a functioning land market:
5. Translating the framework into practice
The framework and criteria are translated into practice through two main mechanisms.
The first requirement is that the framework and the required outcomes (criteria) should be enshrined in law. The basis for doing so will depend upon the constitution and democratic processes operating; for example, whether the implementing law is by decree or by democratically passed legislation.
Legal definition of framework The framework of land policy needs to be appropriately identified in law to fulfill the criteria adopted:
|
The process by which law is prepared and developed is a very important part of ensuring that effective land (or any other) policy results. The initiative for the legislation, whether from government or other interested parties usually results in sets of proposals which form the basis for the drafting of law. Governments do not, however, have a monopoly on foresight, and it is desirable to bring relevant research and the experience of other relevant parties, NGOs, trade associations, individuals and others, to bear on the design of policy and law. An example of how such a process has operated in the United Kingdom is summarised in Annex 2 of the Appendix which provides details of the case study on agricultural landlord and tenant issues as a matter of land policy.
The process of consultation also extends to issues of implementation of the policy. This is likely to involve the need for information through, for example, registration of land ownership, and through more general land related information relating to such issues as land use, value and so on. These fields of information may be provided through a variety of means, for example through separate information sources, or perhaps increasingly in the future, through an integrated approach.
There will be a requirement to have the capacity to use the available information and hence be able to implement and promote the relevant policy effectively. Appropriate administrative structures or activities within existing structures will need to be developed, given an appropriate capacity in the form of relevant training and skills. This almost certainly institutes a requirement for relevant training and education capacity to be developed.
Land management/administration requirements Appropriate information and management/ administration requirements need to be put in place, and adequate resources made available,to ensure that the relevant laws are effectively implemented:
|
6. Case study; agricultural land leasing laws and their relations with cadastral development
The case study included in the Appendix looks in detail at the review of agricultural land leasing in the context of Kyrgyzstan, a small transitional economy in Central Asia.
The material includes a review of the wide range of experience and trends in agricultural land leasing in a range of market economy countries and consideration of the implications of specific provisions in laws in this area.
There are significant potential relations with the development of a land registration system, which is being piloted at present, and which is timetabled for full scale implementation in late 1998.
It is important for ease of leasing for there to be clarity of ownership as to who has the rights to lease a given area of land. Registration of leasehold interests will also enable the protection of the lessee’s rights, avoiding double leasing of areas, or overlapping of leases. The system may also protect lenders who may take the lease as security against a loan.
7. Conclusions
The successful formulation of land related policies requires a clear understanding of the national framework, coupled with a clear view of why and how the policies are to be implemented.
This must be based upon sound information sources.
Policies must be appropriately defined in law. For them to be effectively implemented, people in the public and private sectors responsible for implementation must be trained with the appropriate skills and knowledge.
Policies and the effects of their implementation must be monitored effectively to ensure that they are effective in securing the originally required ends.
Appendix. Agricultural Land Leasing Laws
Contents
A.1 Basic requirements for agricultural land leasing laws
A.2 Comparative experience in agricultural land leasing laws
A.3 Agricultural land leasing requirements
A.4 Proposals for agricultural leasing law and for facilitating leasing of agricultural land
The laws of a country reflect the specific problems, circumstances and history of a nation. Agricultural land leasing laws are no exception to this. There is a great variety of agrarian law, regulation and policy shaping the agrarian structure of a given country. These laws are dynamic and change over time to reflect changing needs and circumstances.
There is therefore no "final solution" to whether there should be a specific agricultural land leasing law in a given country, nor what an appropriate form for such a law would be.
The identification of appropriate forms for the law should be based, therefore, on a review of the requirements of the law specific to the country in question.
It is, however, useful to have regard to existing agricultural land leasing laws elsewhere in order to identify the areas that are typically dealt with in such laws.
A.2 Comparative experience in agricultural land leasing laws
Existing agricultural land leasing laws in a diverse selection of nine market economy countries are reviewed in brief in annex 1. A detailed review of how agricultural land leasing law has been developed in England and Wales is found in annex 2 of this appendix.
The areas typically dealt with in such laws, and their impacts, are as follows:
Typical areas of provision |
Typical provisions |
Possible impacts of provisions |
| Duration of lease/tenancy | Protection of tenants by ensuring a minimum term | Enhanced security allows greater
guaranteed time to the tenant to amortise investments,
encouraging greater investment in improvements The longer the guaranteed minimum term, the greater the discouragement to landowners to lease as it reduces the flexibility of their future decisions with their land investment Provisions of this kind artificially enhance the value of the tenant’s interest at the expense of the landowner’s, further discouraging the landowner from leasing |
| Revisions of rent; frequency controls |
Balancing the landowner and tenant by
providing for reasonable frequency in rent revisions. Protection of tenants by controlling rents below open market rental value. |
Market practices over frequency of rent
review may change over time. Monitoring of such
requirements should be undertaken to prevent the law
getting out of step with the market. Rental controls are sometimes inadvertantly penal, especially if they incorporate fixed tables of values which are not regularly reviewed. Reducing the rental return of the landowner will discourage renting of land |
| Typical areas of provision | Typical provisions | Possible impacts of provisions |
| Specific requirements; freedom of
farming, improvements, compensation, subleasing, assignment |
In some cases, there may be significant
restrictions on the tenant’s farming practice Tenants can make agreed improvements (sometimes subject to arbitration) with the right to reasonable compensation In cases where tenant’s position is strongly protected, sublease and assignment may be prohibited. In more free market arrangements lessee’s may have rights to sublease and assign. |
Removing restrictions on tenant allows
greatest freedom to acheive economic efficiency Certainty about how improvements will be treated gives confidence which encourages investment Rights to sublease and assign provide flexibility in the use of resources. Restrictions on subletting, or assignment reduce the tenant’s freedom of action in use of resources |
| Maximum/minimum holding size/conditions | Maximum holding size intended to prevent
"excessive" landholdings/landlordism Minimum size intended to ensure minimum economic holding size |
This generally relates to ownership rather tham leasing of land. Such provisions are difficult to enforce effectively and restrict the freedom of the farmer/landowner to use the resource most efficiently |
| Rights of extension/renewal rights of purchase; pre-emption and enfranchisement |
Protection of tenants by providing
security after lease expiry Giving tenants rights to purchase/enfranchise land is fairly common when dealing with state land, and does exist in connection with private land. Tenants are sometimes given rights of preemption by law if the landowner decides to sell the land |
Some rights in this area, if not allied
to strongly pro-tenant provisions elsewhere, may have a
positive impact, provided that they are drafted with
adequate safeguards to the landowner’s position. Enhanced security allows greater guaranteed time to amortise investments, encouraging greater investment Encouraging increasing owner occupation of holdings by giving tenant rights of pre-emption if landowner wishes to sell, and/or enfranchisement (purchase of landowner’s interest)Provisions of this kind will almost certainly discourage landowners from leasing land. |
| Rights of appeal, appeals procedure, often through specialist tribunals | To allow for appeal/arbitration where specific issues including technical/professional can be effectively dealt with | Likely to lead to quicker, cheaper, fairer hearings as specialists determine outcome |
The trend exemplified by several member countries of the EU (including England and Wales, the Netherlands, Spain and elsewhere), is towards deregulation, with more flexibility for landowners and lessees to agree freely the terms of the lease.
The trends in the transitional economies of Central and Eastern Europe have been of rapid development of leasing land once adequate legal interests have been restituted/privatised. Recent reports from Hungary, for example, show that the majority of land is now farmed under some form of lease agreement.
A.3 Agricultural land leasing requirements
The priorities identified in the decrees for the implementation of the land and agrarian reforms are to increase and strengthen market economy relations in agriculture. This is expected to be the continuing policy direction. The completion of the land reforms and the institution of the land market are important priorities.
Agriculture needs flexibility in the mechanisms for resource allocation in the market. Land and agrarian reform processes are resulting in the privatisation of land. In an emerging market economy where there is a lack of clarity about ownership and a natural and practical disinclination to sell land, encouraging the leasing of land is an important option to encourage land to be available for successful farmers.
At lthis stage, given small individual land allocations and entitlements, there is unlikely to be a problem of over powerful extensive landowners dictating harsh terms to tenants. There is therefore no reason to suggest a legislative regime that is unduly protective of the tenant, a view that is in accordance with the direction such legislation is moving in in established market economies, as noted in Annex 1. The principle should therefore be of the minimum of interference in the freedom of farmers and landowners to agree their own terms.
As noted in section A.2, the experience of many transitional economies has been that leasing of agricultural land rapidly becomes a vital feature for the allocation of land resources. Encouraging leasing is therefore the earliest and most effective way of securing the benefits of an active land market at as early a stage as possible in the land reform process.
Farmers and landowners would gain encouragement and confidence from a straightforward, focussed agricultural land leasing decree that is supported by appropriate explanatory material, by drafted model leases, and by relevant training.
A.4 Proposals for agricultural leasing law and for facilitating leasing of agricultural land
The requirements are for clarity, certainty and for the creation of confidence for both lessors and lessees.
It is strongly recommended that consideration be given to a specific law regulating leasing of agricultural land, reflecting the specific requirements of the agricultural sector.
It is recommended that the points made in the analysis above should be taken into account in the drafting of the law.
It is recommended that model leases reflecting the provisions of the new law be developed for widespread dissemination and use to encourage the use of leasing.
It is recommended that appropriate explanatory commentaries are prepared to accompany the model leases to ensure understanding of the issues involved.
It is recommended that the the agricultural advisory services should be well briefed on issues relating to the new decree and equipped with appropriate materials for distribution.
It is recommended that appropriate training be made available in relevant areas (legal/court system, etc) in both the public and private sectors.
It is recommended that impacts of the law be monitored by the Ministry of Agriculture and Food to inform its policy advice in this area.
Annex 1: Experience in agricultural land leasing legislation in selected market economies
Points to note:
1. General
1.1 Several countries impose restrictions on dealing with agricultural land, including re acquisition, subdivision, size, ownership by aliens/outsiders, and inheritance
1.2 Several countries have requirements for land to be actively farmed, with in some cases the state having a right to lease unfarmed land, or take it.
1.3 Several countries give a pre-emptive right to the state or specified individuals (often tenants) where the owner decides to sell land
2. Farm Tenancy Law
2.1 In many countries agricultural leases are an important element of the agrarian structure which are usually governed by specific legislation.
2.2 Several countries try to encourage security of tenure for tenants by giving them statutory protection through minimum lease terms, or limiting the landlord’s rights to terminate a lease.
2.3 Several countries restrict rentals chargeable by the landlord, in some cases with provisions for arbitration, although there has been a move towards more open market rentals.
2.4 Tenants are normally obliged to farm the land "properly", although there is often considerable freedom of husbandry. There may be environmental protection provisions included in leases, particularly where the lessor is the state.
2.5 Tenants may often have the right to make capital improvements, with some rights to compensation for the improvements on expiry of the lease, usually if the landowner’s prior consent has been secured.
2.6 Some countries actively encourage owner-occupation, giving the tenant the right of pre-emption if the owner decides to sell the land.
2.7 Several countries have a separate system of supervision by a specific government agency or tenancy court, with some requiring (on paper at least) that proposed leases are submitted for prior approval.
2.8 The trend exemplified by several member countries of the EU (including England and Wales, the Netherlands and Spain), is towards deregulation, with more flexibility for landowners and lessees to agree freely the terms of the lease.
| Country | Law, date | Duration of lease/ tenancy | Revisions
of rent; frequency and controls, impact on value |
Improvements, compensation, sublease, assignment, etc | Maximum/ minimum holding size/conditions |
Rights
of extension/ renewal, rights of purchase |
Rights of appeal | Aims of law; future policy developments |
| Netherlands | Agricultural Lease Act,
1958 35% of Dutch agricultural land is leased; the leased percentage is declining |
For written leases approved by Land Control Board:12 years for whole farm 6 years for land without buildings. For verbal/unapproved leases: valid indefinitely, termination only possible when contract is put into writing under the Land Control Board | (Low) maximum rents are
prescribed by the government Value of tenanted land may be 55% of its vacant possession value |
Information not available | Information not available | Extensions de jure for 6 years, unless given notice. Tenant has right of pre-emption in case of sale | Appeals to special courts; Tenancy Tribunal at cantonal and Court of Appeal levels |
Protection of
tenants’ rights and of agriculture.. Government is looking at liberalisation of leasing and removal of Land Control Boards’ limitations |
| United States | Generally based on state
laws Significant percentage of agricultural land farmed by tenants |
Short-term leases (eg 1
year) are common, as are fixed term leases and oral
annual leases No government agency supervision of lease formation |
Rent commonly paid in cash, at freely negotiated rent, or as a share of crops | May be right to recover mature crops when lease terminated during year. Tenants must farm in husbandlike manner, may not commit waste on land | Not specified in law | No rights of extension or purchase by lessees | No special courts; disputes handled by state courts | Market based relations with freedom of contract between landlord and tenant |
| Norway | Act of Tenancy, 1965 | Leases of land without buildings not regulated for periods up to 10 years. Longer leases have to be approved by the County Agricultural Board | Rent fixed freely between the parties | If land is not being used properly County Agricultural Boards may require owners to use properly or to lease for a period normally not less than 5 years | May not be subdivided without approval of County Agricultural Boards, including re leases exceeding 10 years | Information not available | Appeal on rent disagreement to the County Land Board;rents may be unlawful if unreasonably high | General aim is to ensure that all agricultural land is used for the greatest benefit to society and for those whose occupation is in agriculture |
| Germany | Dealt with in special Chapter in Civil Code | No statutory minimum lease term. | Information not available | Tenant obliged to cultivate land in an ordinary manner, with limited rights to convert to non-agricultural use. Only need landlord’s consent to change agricultural use if affects the reversion | Information not available | Under certain conditions a tenancy contract may be extended by the agricultural tribunal up to a maximum term of 18 years (farms) or 12 years (plots) | Tenant may appeal to agricultural tribunal for approval | Information not available |
| Country | Law, date | Duration of lease/tenancy | Revisions
of rent; frequency and controls, impact on value |
Improvements, compensation, sublease, assignment, etc | Maximum/ minimum holding size/conditions |
Rights
of extension/ renewal, rights of purchase |
Rights of appeal | Aims of law; future policy developments |
| France | Code Rural | No freedom of contract; every lease is for a minimum fixed period of 9 years | Amount of rent strictly limited | Mixed uses outside farming prohibited until recently. Lease may be terminated for bad husbandry | Land sales not controlled, but operation by the buyer is. Minimum settlement acreages (SMIs) are defined according to a national "norm" (25ha), with local and crop ariations. Authorisation of enlargements of farms beyond locally specified multiples (two, three or four SMIs) | Automatically renewable, tenant has legal option to purchase; owner has right to recover possession to farm | Special land tenure trial courts adjudicate on disagreements between landlord and tenant | Encouragement of owner-occupation |
| Denmark | Agricultural Holdings Act,
1989 Tenancy of whole farms on only 2.4% of total agri area, 19% of agricultural land rented. Tenancy of whole farms is rare, so little need has been felt for statutory protection of tenants |
Maximum term of lease of whole farms is 30 years. Term must be specified in written lease | Rent must be specified in written lease. Rents solely determined by market | Legal entities are not allowed to acquire or rent agricultural holdings. Tenants must live on holding whether they manage the farm or not. Tenants must not own or farm land from more than five agri holdings. | Maximum holding size is 125ha unless proof that more is needed to dispose of manure from animals. Licence required from land authorities if an owner of a holding wishes to purchase a new holding abve 30ha | No right of renewal of lease; no rights of purchase | Information not available | General aim to support individual, owner-occupied, family farms |
| England and Wales | Agricultural Holdings Act,
1986 (AHA) Approx 36% of agricultural land is tenanted, a proportion that has declined because of the protection given to the tenant. Agricultural Tenancies Act, 1995 (ATA) provides more open market letting arrangements |
Annual AHA tenancies generally with security of tenure for three generations. Freedom of contract over duration. of ATA tenancies. Leases of more than two years become annual tenancies on expiry, on twelve months’ notice | AHA rent reviews assessed according to statutory formula. Subject to three year rent reviews. Value of tenanted land may be 50% of its vacant possession value. Under ATA freedom to agree rent and review. If not specifically agreed, subject to three yearly review | Specific compensation for improvements and growing crops under AHA. Cannot sublet, assign. ATA provides specific compensation for improvements and growing crops, subject to landlord’s prior approval | No maximum or minimum specified under AHA or ATA | Security of tenure for up to three generations under AHA, with no rights to preemt purchase. Under ATA, no security of tenure beyond that stated and again no rights to preemt purchase. | Appeal to the Agricultural Tribunals provided for under the AHA. ATA provides for arbitration under the Arbitraton Act, 1950 | Security of tenure and protection of tenants under AHA; moving recently to open market freedom of solutions and encouragement of lettings under ATA |
| Country | Law, date | Duration of lease/tenancy | Revisions
of rent; frequency and controls, impact on value |
Specific requirements; improvements, compensation etc | Maximum/ minimum holding size/ conditions |
Rights
of extension/ renewal, rights of purchase |
Rights of appeal | Aims of law; future policy developments |
| Fiji | Agricultural Landlord and Tenant Act, 1967 (ALTA). More than 90% of all land is under leasehold tenure. Where this is agricultural land it comes under ALTA | ALTA provides for two ten year extensions to tenancies, usually in addition to an initial ten year term | Reviews every five years on basis of table of values for different land classes fixed by a Committee of Valuers | Requirements for good husbandry. | Not specified, although the legislative protection and other provisions only apply to holdings in excess of two and a half acres | ALTA provides for two ten year extensions to tenancies, usually in addition to an initial ten year term | ALTA establishes the Agricultural Tribunal, and on appeal the Central Agricultural Tribunal, a committee of the Supreme Court | Protection of tenants’ interests. ALTA leases start to expire in 1997, causing great uncertainty over tenants’ futures and adversly affecting their investment |
| Belgium | Law of 4 November 1969, as
amended by the Law of 7 November 1988 Approx two-thirds of land is tenanted |
Every farm lease is made for a period of at least 9 years | Information not available | Freedom of husbandry. but may have lease forfeited in cases of bad husbandry. Tenants can build farm structures without landlord’s consent. Tenant may remove on determination of tenancy or request compensation from the landlord. Compensation provisions are more generous where specific landlord/court consent is secured prior to construction. Compensation also for value of trees planted by tenant | Information not available | Automatically renewable for 9 years unless notice to quit - most importantly where landowner wishes to farm. Tenant has right of preemption of sale for agricultural uses | Information not available | Freedom for farmers , including tenant farmers,to organise agricultural business |
Sources: Gotzen, R Agrarian Land Law in Belgium; Wulff, H Agrarian Land Law in Denmark; Lorvellec, L Agrarian Land Law in France; Winkler, W The Law of Agricultural Land Use in the Federal Republic of Germany; Brussaard, W Agrarian Land Law in the Netherlands; Austena, T Agrarian Land Law in Norway; Rodgers, C P Agricultural Tenure, Land Use and Conservation in the United Kingdom; Grossman, M R Agricultural Land Use Law in the United States. In Grossman, M R and Brussaard, W Agrarian Land Law in the Western World, 1992, CAB International, Wallingford, Oxon, UK. Munro-Faure, P The ALTA Digest and Supplements,1980, 1985, IVEMF, Suva, Fiji
Annex 2: Experience in review process in agricultural land leasing law in England and Wales
The first main dividing point in agricultural landlord and tenant relations in England and Wales was the Agriculture Act of 1947 which was consolidated into the Agricultural Holdings Act 1948. Prior to this the relationship of annual agricultural tenancies had been governed largely by the contract of the tenancy and by its common law interpretation. This generally favoured the landlord who was usually in a stronger financial and bargaining position than the tenant. From 1875 until 1947 there had been some limited initiatives to improve the situation of the tenant, as it was considered that the weakness of the tenant’s position prevented him taking long term financial decisions and was adversely affecting the farming economy.
The 1947 Act introduced a system of controls over notices to quit which effectively gave the tenant security of tenure for life. This strengthening of the tenant’s position increased progressively until 1984, with controls on rent, additional compensation of four times the rent for notices to quit, and rights to succession of tenancies for two further generations beyond the initial tenant (in possession in 1976).
These changes made it increasingly unattractive for landowners to let land, because they would potentially become subject to secure tenants under controlled rents for periods possibly as long as 100 years! As a result it became very difficult for someone wishing to become a farmer to find agricultural land to rent. When tenancies came to an end landowners usually either sold the land, or farmed it themselves under an appropriate arrangement. This progressive movement was reinforced by the fact that land without a secure tenant is worth on average perhaps double the value of the same land with a secure tenant. The number of entirely rented holdings consequently declined dramatically from 1950 to 1985, from 48.7% of all holdings to an estimated 18.8%.
The 1980’s saw recognition of the serious damage that this was doing to agriculture in England and Wales. It had become virtually impossible to rent land for farming, and purchasers of land intent on farming needed to be able to invest a very high proportion of the capital required for the land and equipment out of their own pocket at no return. The government started a lengthy consultation procedure with all interested parties, including many NGO’s, to try to resolve the problems. A great deal of research was undertaken to identify the most appropriate measures for the circumstances in England and Wales.
In 1984 the pendulum began to swing back with legislation that removed the rights of succession for new tenancies, introduced various retirement provisions, and adjusted the rent assessment formula.
The second main dividing point in the legislation was in 1995, with the Agricultural Tenancies Act. This Act reflects a wider trend internationally towards deregulation and simplification of law, allowing people to make their own decisions.
The law aims also to increase the availability of land for letting on freely negotiated terms, but with specified statutory safeguards, to provide a flexible and long term legal framework.
The main provisions of the law are:
Following the coming into effect of the law on 1 September 1995, the Ministry of Agriculture has tendered for research to be undertaken on the economic evaluation of the new policy. NGOs, including the RICS, have continued to undertake their own research to monitor the impact of changes.
The Ministry of Agriculture has also led an information campaign explaining and promoting the use of the new Act in leasing agricultural land .
The information campaign and ongoing monitoring of impacts by government and other interested parties is essential to ensure coherent and intelligent development of policy.