Updated 2.30pm with farmers' reaction
Architects are being advised not to carry out arable land valuation in line with new regulations that have brought "relief" to farmers as the price set by the government takes into account the land’s agricultural value.
Reacting, farmers have however said it is no longer up to architects to value agricultural land.
On Wednesday morning, Kamra tal-Periti president Andre Pizzuto told Times of Malta that the new valuation mechanism, including the fixing of an "artificially low" base price by the government, is unacceptable and does not follow international valuation standards.
He said that while drawing up the legislation that establishes how arable land should be valued, and, consequently, setting a base price of €2,570 per tumolo, the government had never contacted the chamber.
“The Kamra tal-Periti was never consulted over the matter by the government – as it is obliged to do. Periti are required to draw up land valuations in compliance with the Kamra's valuation standards which are in turn derived from standards set by The European Group of Valuers' Association (TEGoVA).
“One cannot solve the issue of expensive qbiela - rural leases - by obliging architects to risk their warrants by signing valuations that ignore international standards. Had the authorities bothered to contact us they would have known this is unacceptable. We are therefore advising architects not to participate in the valuation process until further notice from the Kamra tal-Periti."
Farmers: Valuations do not need to be done by architects
However, Għaqda Bdiewa Attivi said, in reaction, that according to the new legislation, the assessment must be carried out by 'experts in the field', and not necessarily by architects.
"In truth, we do not think that architects can be considered experts in the agricultural field."
Abroad, crop estimation is a professional subject in itself and agrarian architects ensure agronomic and rural aspects are taken into consideration in such valuations.
"Unfortunately, this is not the case in Malta, so we can understand the Chamber of Architects' resistance to this new reality.
"Through this legal notice, the government has sent the message that the farm is not like any other real estate and its assessment should reflect this. May the Chamber of Architects come to this realisation as well."
Farmers added that architects should be aware of the economic model, through which rural land is valued according to its economic potential.
Ever since a court in 2020 declared that the rural leases law is unconstitutional, dozens of farmers have ended up in court, with private landowners challenging the so-called qbiela law.
In such instances, the court would ask an architect to value the agricultural land in question. Architects would use a comparative method: check the price of nearby land and take into account whether the land has non-agricultural characteristics that would push up the price, such as a sea view, vehicular access, and rooms usually built to store tools.
With this value in hand, the court would then calculate the equivalent of 1 to 1.5% of this value, and compare it with what the farmer is actually paying. If the farmer is not paying the same price, then the law is considered unconstitutional and the farmer will not be protected under the law, paving the way for his eviction.
But last year the government stepped in, suggesting that arable land lease should be based on the land’s agricultural value.
The government then published subsidiary legislation detailing how agricultural land should be valued.
This formula is made up of the base value (updated every five years) and the agronomical characteristics of that specific arable land.
The base value is the national average of farmers’ income from each tumolo.
The characteristics of the field include soil depth and access to water and electricity. Malcolm Borg, who heads the Għaqda Bdiewa Attivi explained that characteristics that are favourable to farming increase the value of the land.
On Friday, the government announced that the base price is now set at €2,570 per tumolo.
This means, Borg added, that by using the 1.5% rent rate established by law, the rent will vary between €35 and €107 per tumolo per year. Lease agreements shall be for a minimum of eight and a maximum of 16 years.
“This is a huge sigh of relief for farmers. Increased rent and the consequential eviction for some farmers, was one of the biggest existential threats for the sector.
“The final price range is affordable, and farmers are very happy with this… they were really fearing the worst.”
Architects asked not to carry out valuations
However, on Wednesday Times of Malta was informed that the Chamber of Architects was asking its members to not carry valuations in line with the new legal notice regulating agricultural land.
The Kamra tal-Periti is claiming the legal notice is directing architects to produce fictitious values for agricultural land that have no underpinning in the market.
The circular sent to architects and seen by Times of Malta adds “it appears the purpose of this exercise is to artificially contain the value of farmland and direct periti away from reporting a fair market value in line with international and national valuation standards”.
The chamber therefore “advised” architects not to file valuation reports in line with the legal notice as they could give rise to professional negligence and expose architects to litigation by “aggrieved parties due to the apparent unconstitutionality of such subsidiary legislation”.
How the price of agricultural land spiked
In 2021, an exercise by Times of Malta found that one tumolo of land (1,100m2) was being advertised for at least €40,000. Advertised prices spiked to €266,000 for two tumoli of arable land in Rabat and €1.5 million for three tumoli with one large room in Siġġiewi.
A repeat of the exercise late last year found a similar three tumoli of land in Mtaħleb, being sold for €1.5 million. In Dingli, a plot of ODZ land “ideal for recreational purposes” measuring half a tumolo with one room is being sold for over €100,000.
Farmers looking into acquiring arable land are being asked for between €80,000 and €100,000 per tumolo, and this is unaffordable for most, as an average of 12 tumoli are needed to start a full-time agribusiness.
Farmers make an average profit of just €200 on each tumolo of tilled land that produces three crops in one year, according to the exercise by Times of Malta and farmers.
This would vary depending on whether the crop is rainfed or not, and also whether the land is used as a vineyard or to grow other fruit trees. Additionally, farmers who survived a pandemic and inflation caused by the invasion of Ukraine have also seen an increase in the price of fertilisers, mulch, plant protection products and drip irrigation, further eroding profits by 30 per cent.