Question: How is the agriculture sector of business at the moment, in Romania?
Answer: Despite the prevailing view, that agriculture is risky, investors' interest has noted visible growth in this sector over the last few years. Since demand for food and other agricultural products is expected to increase in the near future, investors anticipate high-profits from the exploitation of the agricultural sector.
In the context of spurring worldwide interest in agriculture, Romania is one of the countries preferred by international foreign investors seeking to buy land in Romania. Romania holds an important share of the European crop land, due to its grain production. Geographically, the country is well placed within export routes. Romania's climate is also suitable for a wide range of agricultural investments.
Despite all favorable conditions, Romania's agricultural sector can be considered unexplored, with poorly equipped companies; therefore foreign investment has the premises to have a high impact on the country's agricultural development.
Exchange of land, including land purchasing by foreigners improves productivity, technology and enhances access to capital, hence stimulating economy development. Based on these principles, E.U regulations request a single free market with respect to land. Romania has requested a transitional period during which the existing provisions of legislation were still in effect until 2013. Foreign investors were prohibited from purchasing agricultural lands in Romania until 31st December 2013.
The most common method to make Romanian land investments is by setting up a legal entity such as a limited liability company, registered in Romania. Now, in 2014, foreign investors are able to purchase agricultural lands in their own name.
Question: I am interested in buying land in Romania now. What laws should I consider?
Answer:The Romanian law for foreigners interested in buying land in Romania changed starting 1st of January 2014. Starting this year, EU-residents as well as non-EU residents are able to freely buy land in Romania. The process has a pretty simple framework.
A person can also opt for a due diligence analysis conducted by a professional lawyer. This includes verification of the property's Title Deeds, Land Survey documents and obtaining an extract from the Romanian Land Registry. After completing this very important step, a pre-agreement should be drafted binding both parties to the sale, ensuring the property has been checked. After this procedure, a 10-20% deposit should be made; however this step may vary from case to case. Completing the sale requires both parties to be present (or duly appointed representatives), as well as a notary that will collect the relevant state taxes on transaction in addition to his/her fees. Signing the contract and registering the transaction in the Land Registry completes the sale.
The acquisition of agricultural land Romania by foreign investors is expected to boom after in 2014-2015, due to the profitable premises of doing business in this sector. The acquisition process may vary from case to case, depending on many factors that might influence the sale process. However the frameworks of the whole process are straight forward, implying a relatively fast way to build success in the agricultural business. For more details about this subject, please read our article about buying real estate in Romania, if you are a foreign investor.
by Cristian Darie