The upcoming Flemish Pachtdecreet: which (new) types of agreements?

By June 15, 2023 No Comments

The Council of State has given its advice on the proposal of the Flemish Pachtdecreet, in a report of 9 May 2023. Members of Parliament can now deliberate further in the Commission on the basis of this advice. These Commission discussions are reported to Parliament’s plenary session. 

The intention is to have the Pachtdecreet proposal voted on in plenary before the leave. The entry into force is likely to be foreseen for August 1 or September 1, 2023.

In this contribution we would like to take a moment to consider the different types of agreements that people want to provide. Important, everything must be written in writing. We give a summary. (new= **) 

It must be said right away that the changes are less drastic than in the Walloon Region. 

1.  Classic lease: principle of legal extensions is maintained ↔ Walloon Region

The lease period is freely determined by the parties, on the understanding that it is concluded for at least 9 years.   
In the absence of a valid termination, the lease is automatically extended for a new consecutive period of 9 years. 
There is no limit on the number of renewals. In Wallonia, on the other hand, since 1 January 2020, a limitation of 3 extensions has been provided for, after which the lease agreement will end by operation of law, without notice being required. Flanders has therefore not opted for this system of fixed extensions. 
**However, a new cancellation option has been provided, in particular the lessor will be able to cancel in order to alienate the leased property (in whole or in part), under the following conditions:
–  lease relates to land
–  the notice of termination must be given at the end of the current lease period
–  the termination may not be given during the 1st lease period, unless the 1st lease period has a minimum duration of 18 years
–  the possibility of termination must be expressly included in the lease agreement
2.  Long lease
A long lease is concluded for at least 27 years.
At the end of this lease, the lessor can terminate (notice period of at least 3 and maximum 4 years) to personally exploit or transfer to his privileged relatives or to alienate part or all of the leased property.
If the long lease has been drawn up by authentic deed, the lessor may increase the legal lease price by 50% in the case of land and 25% in the case of buildings.
3.  Career lease
A career lease is an agreement with a fixed term, but with a minimum of 27 years. 
The fixed duration is equal to the difference between the tenant’s current age and his statutory retirement age. This means that the tenant may not be older than 40 years to be able to conclude a career lease. If there are several tenants, the age of the youngest is taken into account.
The agreement ends by operation of law without notice being required.
If the career lease has been drawn up by authentic deed, the lessor may increase the legal lease price by 50% if it concerns land and 25% if it concerns buildings.
4.  **Agreement of minimum 9 years for “smaller owners” 
This is a new form of lease agreement that owners who own a maximum of 1.5 hectares of agricultural land in total can opt for.
The agreement is concluded for a minimum of 9 years.
Strict conditions do apply:
–  it must concern land that has not yet been leased
–  it must be in writing and may only be done once
–  the lessor is the holder of any right in rem to one or more cultivated lands with a surface area of ​​maximum 1.5 hectares
–  lessor may not be a legal person
Ultimately, this will only be possible in a limited number of cases for smaller landowners who still have free land.
5.  Legal exceptions not covered by the lease law
a.  Location 
Certain agreements do not fall within the scope of the lease law. The main exception was and will still be the culture contract. In the Pachtdecreet proposal, one condition is omitted and it also provides for the possibility of concluding a culture contract for multi-year cultivation. Another novelty concerns the nature contract. Attention, these are still exceptions, so strict supervision must be observed to avoid requalification to lease. 
b.  Culture contract
The culture contract (“seasonal lease”) remains subject to very strict (cumulative) conditions:
–  between 2 operators of land and pastures used in their farm
–  use for less than 1 year
–  for one specific agricultural crop
–  after having carried out preparatory work
**The condition of fertilization works has been dropped by law, but was no longer feasible in practice since MAP 6 (2019). This issue is now legally enshrined. 
c.  **Cultural contract for multi-year cultivation
The same conditions as the normal culture contract apply, but additional conditions must concern:
–  a maximum use of 3 years
–  a multi-year cultivation of a maximum of 3 years
–  the cultivation will have to appear on a list that will be established by the Flemish Government. 
Attention, successive and different crops are not covered. It must concern 1 multi-year cultivation. 
d.  **Nature contract for land in green destinations
A novelty is the possibility to conclude a nature contract.
The conditions are the following:
–  unleased land
–  completely in RUP under category forest area or nature reserve or Regional Plan, APA, BPA as forest area, green area, nature reserve, nature reserve with scientific value, nature development area or nature reserve
–  is part of land managed in accordance with art. 16e Nature Conservation Decree = nature management plan highest nature quality or recognized nature reserve.
–  clearly state the exclusion in the agreement
6.  Summary and other options
As regards the types of agreements, it must be noted that the changes are quite limited, especially if we make a comparison with the Walloon Region.
In the Walloon Region, the number of extensions has already been limited to 3, which means that most leases will end by operation of law after 36 years. 2 new agreements were also provided there, being the “end-career lease” and the short-term lease equal to or for a maximum of 5 years.
If you want to make a plot available to a farmer for a (limited) number of years outside the application of the Pachtdecree, you will have to rely on a loan agreement (= free of charge) or if the conditions are suitable (= exceptional waiting situation) until the occupation. If one opts for a leasehold agreement (= right in rem), this will have to be concluded for a minimum of 27 years, otherwise it will be reclassified as a lease.