The Czech Republic is introducing changes to environmental legislation that will make the development on agricultural land harder. The legislation, which is currently pending parliamentary approval, will impose a ban on developing retail and warehousing projects, as well as most photovoltaic power plants, on high-quality agricultural land (Classes I and II), larger than one hectare. It will also increase the fees for removing any agricultural land from the Agricultural Land Fund (ALF), which is a prerequisite for development. These changes will have implications for developers, investors and landowners who are planning or who are involved in such projects.
The development of agricultural land in the Czech Republic is limited by environmental legislation. In practice, to develop agricultural land, special permits must be obtained from the authorities to first remove the agricultural land from the ALF. Removal of the land from the ALF is subject to a fee calculated based on the land’s agricultural value. There are five categories of agricultural land, with “Class I” land representing the highest quality land.
Recently, the Czech Government accepted a significant amendment to the existing environmental legislation, which aims to encourage the development of brownfield and lower quality land while protecting the highest quality agricultural land.
The amendment, which is currently awaiting approval by the Czech Parliament, introduces a significant change to the development of agricultural land: a ban on the removal of high-quality agricultural land (Classes I and II) from the ALF for retail and warehousing projects larger than one hectare. This ban also applies to photovoltaic power plants, except for agro-photovoltaics, which are subject to a special regulatory framework.
The development of retail and warehousing projects on lower quality agricultural land (Classes III, IV and V) will not be restricted. However, if the amendment is adopted, the prices for removal of lower quality agricultural land for the purpose of such developments will increase. For example, the amendment suggests that prices could jump from CZK 24 to CZK 300 per square meter for Class III land and from CZK 18 to CZK 240 per square meter for Classes IV and V under specific conditions. The development of residential and administrative projects on the highest quality land will not be restricted by the amendment but a general increase in the fees for removing land from the ALF for any purpose will be made.
The proposed amendment may also affect ongoing warehousing and retail projects larger than one hectare:
- if such large-scale projects are already included in the municipality’s planning documentation, the highest quality land for such projects can only be removed from the ALF for five years from the amendment coming into force; and
- existing permits to remove the highest quality agricultural land for such large-scale projects will become invalid if a building permit for the project is not issued within five years from the amendment coming into force.
In summary, the Czech government intends to further limit the development of prime quality agricultural land and support the development of brownfield sites. The development of large warehousing and retail projects on the highest quality agricultural land will be prohibited, and the price for developing such projects on lower quality land will increase notably. Residential and administrative projects can still be developed on the highest quality agricultural land, but the fees for removing the land from the ALF will also increase.
For more information on these changes to the development of agricultural land in the Czech Republic, contact your regular CMS advisor or local CMS experts.