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Legal treatment of the option for acquisition of title over immovable property by foreigners in the european union members states

CHAPTER 4 FREE MOVEMENT OF CAPITAL




Legal treatment of the option for acquisition of title over immovable property by foreigners in the european union members states

In most of the EU Members States, such as Germany, the United Kingdom, Portugal, the Netherlands, Belgium and Luxemburg there are no restrictions in respect of the option foreigners to acquire title over land. In these countries foreigners are treated in the same manner as nationals.

In Germany, under Art. 14 (2) of Grundgesetz, there is no distinguishing between German nationals and foreigners as to the acquisition of title. Similar provision exists also in Art. 711 of Code Civil in France, where Art. 34 of the Constitution provides that the rules in respects of the title regime shall be regulated by statute.

In Finland the last restrictions in respect of the option foreigners to acquire immovable property were repealed at the beginning of year 2000. As of the moment there are no general restrictions foreigners to buy or own immovable property in Finland, with the exception of the Ahvenanmaa archipelago, where residence in the islands is required (this requirement applies to the citizens of Finland too).

In Sweden foreigners can acquire immovable property after placing an application. Permission can be denied only if the property is located close to military sites or in regions particularly popular among the Swedish population. The latter restriction’s aim is to prevent the rising of immovable property prices.

In Austria there are no restrictions only in respect of the acquisition of title over land and immovable property by European Union citizens, because they are treated like Austrian nationals.

Under Art. 44, paragraph 1 of the Constitution of Italy, obligations and restrictions on the acquisition of private ownership over land are imposed by statute, as well as, the definition of the boundaries depending on the region and different agricultural regions, the cultivation of land is encouraged and imposed, the reorganization of big estates, the reorganization of production establishments, the support of small and medium-sized farms.

In Italy and Spain restrictions exist on acquisition of land by foreigners in the border regions. In Spain these restrictions do not apply to EU citizens, while in Italy, the ownership and use of land in the border regions by foreigners, EU citizens inclusive, has to be authorized by the local prefect of the police.

Special restrictions on the acquisition of land in the border regions exist in Greece too, where EU citizens are subject to the same restrictions as the Greek nationals. The rest of the foreigners are subject to a different regime.

As of this moment in the legislation of the ten new countries that acceded EU on 1 May 2004 there are different restrictions as regards the option foreigners to acquire title over land or other immovable property. The plan is these restrictions to ultimately drop out after the transitional periods provided for in the Act of Accession expire. Malta is an exception.

In Hungary these restrictions are provided for in Decree 7/1996 (I.18) of the Government on the acquisition of immovable property by foreigners. According to the Decree authorization is required to acquire immovable property, issued by the regional administration where the immovable property is located. Foreigners may acquire title over immovable property, with the exception of agricultural land and land in protected territories. In some cases, for instance, when a foreigner has resided in Hungary more than five years the issuance of authorization is obligatory. However, in most of the cases it is at the discretion of the competent authority.
Under the Act of Accession Hungary may maintain in force for five years from the date of accession the restrictions laid down in its legislation existing at the time of signature of this Act on the acquisition of the so-called secondary residences (by the end of May 2009 the latest). However, these restrictions shall not apply to nationals of the Member States and nationals of the States which are a party to the European Economic Area Agreement who have been legally resident in Hungary at least for four years continuously.
Hungary has negotiated a seven-year transitional period, when it may maintain in force the existing prohibition on the acquisition of agricultural land and forests by natural persons who are non-residents or non-nationals of Hungary and by legal persons. This prohibition shall not apply to self-employed farmers, who have been legally resident and active in farming in Hungary at least for three years continuously.

The Czech Republic, where there is no constitutional regulation of this matter, has also negotiated similar transitional periods. Under the existing Czech Currency Act, foreign citizens, not residing permanently in the Czech Republic, may not acquire immovable property with the exception of some specific cases such as inheritance and restitution. This matter is also subject of the Ownership over Land Act, the Act on Agriculture (treating the conditions for entrepreneurship in agriculture) and the Immigration Act (treating the right of residence of EU citizens).
Five years is the transitional period for acquisition of a secondary residence, nationals of EU Member States and of the countries, parties to the European Economic Area Agreement, who reside in the country, being excluded.
Seven years is the transitional period for acquisition of agricultural land and forests, self-employed farmers being excluded.

Article 64, paragraph 1 of the Constitution of Poland provides that everyone shall have the right to ownership, other property rights and the right of succession. According to paragraph 3 the right of ownership may only be limited by means of a statute and only to the extent that it does not violate the substance of such right.
The sale of immovable property to foreigners in Poland is treated by the Act on Acquisition of Real Estate by Foreigners of 24 March 1920, as amended in 2001. For the purpose authorization is required by the Minister of Interior and the administration, by the Minister of Defense, depending on the location of the land and by the Minister of Agriculture in the cases of purchase of agricultural land.
Poland has negotiated a five-year transitional period for acquisition of a secondary residence, which shall not apply to nationals of the Member States and nationals of the States, which are a party to the European Economic Area Agreement, who have been legally resident in Poland for four years continuously.
Twelve years is the transitional period for acquisition of agricultural land and forests, self-employed farmers from Member States and nationals of the States, which are a party to the European Economic Area Agreement, who have been leasing land three or seven years (depending on the region), being excluded.

In Estonia the Ownership Act of 1995 provides an option for imposing statutory restrictions on acquisition of title by foreign legal entities or persons arising from public interest.
Under the Restrictions on the Acquisition of Immovables Act of 01.04.2003 the following persons may, without further conditions, acquire title over ten and more hectares of agricultural and forest land:
à) Estonian nationals;
b) nationals of the States, which are a party to the European Economic Area Agreement, who have permanently resided in Estonia for the last three years, before the moment of entry into the contract of sale and who have been engaged as a sole proprietor entered in Estonian registers in the production of agricultural produce at least during three financial years;
c) legal persons entered in the Estonian commercial register whose activities as specified in the articles of association include the production of agricultural produce and who have been engaged in the production of agricultural produce at least during three financial years. The persons who do not fall within the above mentioned categories may acquire title over agricultural or forest land only with the authorisation of the county governor. There are restrictions on the acquisition of immovables in some Estonian islands and border regions due to national security reasons. These restrictions can be overcome with the authorization of the Government.
Estonia has negotiated a seven-year transitional period for the acquisition of agricultural land and forests.
After the end of the transitional period in respect of natural and legal persons of the States, which are a party to the European Economic Area Agreement, the requirements provided for acquisition of agricultural and forest land shall be applied only as far as such requirements shall be applied to the Estonian natural and legal persons. After the end of the transitional period in respect of the persons from the States, which are a party to the European Economic Area Agreement the requirements for residence, entering into the appropriate register, gaining experience in the production of agricultural produce and forest management shall not be applied.

In Latvia the law permits the ownership of land by joint ventures with foreign participation, provided the Latvian nationals hold the majority of the capital and registered foreign companies from countries with which Latvia has agreements for the protection of investment.
Latvia has also negotiated a seven-year transitional period for the acquisition of agricultural land and forests, which shall not apply to self-employed farmers, who have been legally resident and active in farming in the country at least for three years continuously.

Lithuania, where under Art. 47 of the Constitution foreign establishments may acquire title over land and forests by virtue of statute, has also negotiated the same transitional period.
Under the Temporary Statute on Agricultural Land Acquisition of 28.01.2003 natural persons may acquire title over agricultural land, provided they are registered as farmers or have qualification certificate issued by an authorized government institution. This shall not be applied if after the land acquisition, the piece of land owned does not exceed three hectares of agricultural land.
Legal persons may acquire agricultural land, provided they have earned at least 50% of their income from agricultural activities in the last two years.
No restrictions for European Union citizens are provided.

Slovakia, where under the Currency Act only Slovak legal persons may own immovable property, while foreign natural or legal persons may own immovable property only after the establishment of a legal entity registered in Slovakia, has negotiated a transitional period under the same conditions.


In Slovenia until 1997 a text existed in the Constitution, which prohibited foreigners to acquire title over land. In conformity with the commitments made by the country under the Association Agreement, this text was amended in 1997 to the effect that foreigners may acquire title over immovable property under conditions provided for in a statute or in an international treaty ratified by the National Assembly.
In Slovenia European citizens have the right to purchase immovable property, provided they have lived in the country at least three years.


The existing legislation in Malta also provides for restrictions on the option foreigners to acquire title over immovable property. Under Act ¹ XXXVII, known as the Immovable Property Act, foreigners may purchase residences in Malta, but under certain restrictions. They have the right to buy only one residence and that residence should have a market value not less than 30,000 Maltese lira for apartments and 50,000 Maltese lira for houses, an authorization by the Minister of Finance being required.
In the process of the EU accession negotiations Malta negotiated a permanent agreement, which agreement will be attached as a Protocol to the Treaty of Accession of Malta. Under the Agreement the existing restrictions shall be maintained in force after Malta’s accession to EU, with certain changes:
1. The restriction on the acquisition of secondary residences shall not be applied to EU citizens, who have resided in Malta at least five years.
2. After the accession no authorization shall be required for the acquisition of first residence.
3. After the accession no authorization shall be required when EU citizens, permanently residing in Malta, wish to acquire immovable property related to their business. However, they shall not be able to acquire second property, unless they have resided in Malta at least five years.
After the accession the requirement for authorization shall remain for acquisition of immovable property by foreigners, when the Government of Malta deems the property to be of historical importance or the property is located in a historical place.
In some areas of the country, which are explicitly indicated as developing areas, immovable property may be freely acquired without any restrictions by any person, whether Malta national, EU citizen or even non-EU citizen.
It should be taken in mind that the Agreement between Malta and EU is acceptable only due to the unique geographic and demographic situation in the country and cannot be used as a precedent in the negotiations with the rest of the candidate countries.


The information is prepared by the National Assembly Legislation and European Law Directorate





©SG 2003