Rural land should be valued for its agricultural yield and not its recreational potential, the court has declared in a recent judgment involving a landowner who unsuccessfully tried to evict the farmers.
Alfred Manduca and Allegra Limited had called on the Rural Leases Control Board to evict two farmers – Joseph Micallef and Feliċ Muscat – from Mġarr land measuring 12.3 hectares. The farmers were paying €37.27 a year for the land. The board decided against the eviction.
Manduca and Allegra then sought compensation from the court, which awarded the landowners €26,000 in compensation from the government but based that amount on the value of the land as agricultural land.
In its ruling, the First Hall of the Civil Court in its constitutional jurisdiction, presided by Judge Toni Abela, said architects in Malta often based their estimates of rural land on criteria that were not linked to agricultural activities.
But decisions about agricultural land in Malta needed to be tied to local social and economic realities, the court said.
In the case of Malta, these factors included the small size of the island, lack of all kinds of natural resources, the dense population and an increasing scarcity of agricultural land.
The court’s comments are in line with recent law changes that allow the fee for a rural lease to be increased based on the value of rural land used for agricultural purposes.
Still, Mr Justice Abela said that in this case, the current lease fee was unfair.
He explained that the landowner had recently transferred the land – which includes a farm and greenhouses – to a company he owned together with his children (Allegra Ltd) for €1.1 million. The court believed this was done in anticipation of their request for eviction of the farmers.
On the other hand, according to the court architect, the value of tillable land (excluding the farm) was €233,500.
The court insisted that just as the market value is taken into consideration when dealing with property of a commercial and urban nature, agricultural considerations – rather than recreational ones – should be applied to agricultural land.
“Whatever the person who acquires the land does with that same land is something that does not concern this court… there are other national laws that protect the environment and agriculture.”
A separate case concerned land in Żejtun, measuring 7,493m2, leased out to Anthony Zammit by Pawlu Bonavia for a yearly €51.51. The landowner claiming the land’s value stood at €400,000.
However, when he inherited the land, Bonavia had claimed, for tax purposes, that the land’s value stood at €95,000.
The court decided to base its estimates on those declared by the heir in the causa mortis, reprimanding the applicant for declaring one price for tax purposes and a much more generous one when seeking compensation.
The court threw out the applicant’s request for compensation, noting that when the European Court of Human Rights had in the past ruled that Maltese qbiela legislation was discriminatory with landowners, it did not consider the Maltese social and economic realities.
What do the recent changes in the law mean?
Until recently, there was no mechanism that allowed for an increase in the fee for rural leases.
If the owner of a field wanted to raise what is known in Maltese as the qbiela, the increase was limited by the value of the surrounding fields. But since the surrounding fields were themselves limited by these same conditions, the qbiela could never be increased.
This often led the Constitutional Court to rule that Chapter 199 of the Laws of Malta (Agricultural Leases – Reletting – Act) was discriminatory with landowners.
So, in 2022, the government amended the Act, allowing landowners who wanted to increase the lease to suggest a fair price to the Rural Leases Control Board.
Once the board receives a request from a landowner, it would ask the farmer tilling that land how much he was willing to pay in yearly rent.
The amendments stipulate that the board will also have to separately consider the value of the agricultural land for agricultural use (rather than residential, recreational or commercial).
In order to facilitate the board’s computation, the government then published a legal notice in March 2023 with guidelines on how to value agricultural land for agricultural use.
Permanent Secretary within the Ministry for Agriculture Sharlo Camilleri told Times of Malta the computation starts off with a base price set by the government every five years. Last May, the government published the first such base price in the Government Gazette: €2,570 per tumolo.
The lease cannot exceed 1.5% of the value of the land
This is the minimum value of one tumolo of rural land.
The value then increases depending on the characteristics of the particular field, as stipulated by a points system published in the March 2023 legal notice. These characteristics, known as agronomic factors, include the depth of the soil, wind exposure, slope gradient, the presence of greenhouses and agricultural stores among others.
If the field ticks all the boxes, the value of the land (including the base price) could increase to €7,500 per tumolo.
Who will compute the value of agricultural land for agricultural use?
The March legal notice says the assessment shall be conducted by “experts in the field”. Camilleri confirmed with Times of Malta that these experts are the same ones mentioned in the main Act (199).
The main Act allows the prime minister to appoint two panels: one made up of architects and civil engineers and the other one made up of people “competent and knowledgeable in agricultural matters”.
Once the Rural Leases Control Board has these experts’ value of the land in hand, it will consider the values that the landowner and the farmer have suggested separately, and set the final price.
According to the new rules, the lease cannot exceed 1.5% of the value of the land.