On the basis of the Act on the Accession of 2003, Estonia and other 6 new members of the EU were each granted a transitional period for maintaining the existing legislation restricting the acquisition of agricultural land and forest until 1st of May 2011. The act in force during the transitional period, the Restrictions on Acquisition of Immovable's Act (hereinafter the RAIA in effect) had three main goals: first, to put restrictions stemming from public interest on the acquisition of agricultural lands and forest lands in order to avoid those lands getting in the hands of a person who does not know how or does not wish to use it according to its purpose, so that the lands would not be cut up or their purpose changed; second to put regulation in accordance with European Union law; and, third; for security reasons, to deny persons who are not citizens or legal persons of Estonia or a member state, the right to acquire land in some territories adjacent to the Russian Federation and some certain Estonian islands (see the RAIA in effect § 1 section 1 and the explanatory note to the draft RAIA, page 1). Now the transitional period mentioned before is over and the Estonian Parliament (Riigikogu) has introduced a draft legislation of the new Restrictions on Acquisition of Immovable's Act (hereinafter new RAIA), that brings significant changes compared to the regulation of the RAIA in effect and omits several restrictions in effect until now.
The main changes that the end of the transitional period brings with itself regard the acquisition of large agricultural lands and forest lands. First the circle of persons who can acquire over 10 hectares of agricultural lands and forest lands without any restrictions will widen. These changes will mean in practice that the circle of persons who have to apply for a permit from the county governor to acquire over 10 hectares of agricultural land or forest land will widen. The RAIA in effect set out that the aforementioned properties could be acquired without any restrictions only by an Estonian citizen (we find in necessary to note that the RAIA in effect and the new RAIA describe persons and situations where the act does not apply). A citizen of a contracting state to the European Economic Area or a legal person or branch office thereof could acquire over 10 hectares of agricultural land or forest land only if the person had in the last three financial years been producing agricultural products or been active in the field of forest management accordingly. A person who isn't a citizen of a contracting state to the European Economic Area or a legal person thereof can acquire an immovable used as profit yielding land, the land use type categories of which include 10 ha or more of agricultural or forest land only with the authorization of the county governor. The new RAIA differentiates between natural and legal persons when it comes to the acquisition of land that includes agricultural or forest land.
Natural persons, who are citizens of Estonia, a contracting state to the European Economic Area or a contracting state of the Organization for Economic Co-operation and Development (OECD; hereinafter contracting state) can, without any restrictions, acquire land which includes agricultural or forest land (under and over 10 ha). Thus the circle of persons who can acquire the aforementioned properties has been widened considerably (as a reference: if the EEC includes the 27 member states of the EU and Iceland, Norway and Lichtenstein, the OECD currently has 34 member states, including the US and Japan).
The acquisition of agricultural and forest land over and under 10 ha by legal persons has been differentiated. The acquisition of lands which include fewer than 10 ha agricultural and forest land by any legal person residing in a contracting state, is permitted without restrictions. The acquisition of lands which include over 10 ha of agricultural and forest land by a legal person residing in a contracting state is permitted if the legal person has produced agricultural products (except fruit and fish products) or managed forests respectively three financial years prior to the acquisition. Just as the RAIA in effect, the new RAIA also permits the acquisition of land, which includes over 10 ha forest land by a legal person, who has produced agricultural products for the last three financial years prior to the acquisition. This has been set in law because historically farmers have had agricultural as well as forest land on their property and it is presumed that farmers know how to manage forests.
Other third persons who are not nationals or legal persons of a contracting country can acquire lands containing agricultural and forest land only with the permission of the county governor. In addition to the widening of the circle of persons the new RAIA has an amendment by which a person does not have to have had an agricultural of forest land experience in Estonia as experience in any other country qualifies as well.
A little bit of statistics at the end. According to a survey by the European Commission (Brussels 16.7.2008, KOM (2008) 462, available at http://eur-lex.europa.eu), as of the 1st of January 2010, foreigners own 54 600 hectares or 2,4% of agricultural and forest land in Estonia. The survey says that foreigners overwhelmingly prefer the renting of land to the buying of land. The explanatory note to the new RAIA states that the county governors issued altogether 1230 RAIA permits from 2003 to 2009 to buy immovables with land used as profit yielding land. Altogether 162 applications for permits were denied. Since the new RAIA makes it easier for foreigners and foreign companies to acquire agricultural and forest land in the future, the owning of agricultural and forest land should become more desirable for foreigners and foreign companies, which in turn is good for Estonia's economic development.
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