Changes in the payment of rents for land

The Land Transfer Act and the transitional law supplementing it were amended in January. The amendment was aimed at preventing the practice of landowners and tenants fixing unrealistic rents in their contracts.

Indeed, a typical practice of fraud was for the parties to fix prices in the agreements that were much higher than the market price in order to keep other operators in the sector away from the areas in question. The actual rent was paid in cash in a way that was difficult to verify.

From 1 January 2022, tenants will be able to pay their rents to landowners by bank transfer or postal order instead of cash.

The change in the law in January will also make it easier for the tax authorities to trace the payment of rent, as a bank or postal receipt will be required to verify whether the amount paid corresponds to the amount stipulated in the contract or not.

However, there are still some cases where it is still possible to pay rent in cash.

These cases are,

• if the amount of the land or lands subject to the lease is less than 1 hectare;
• if it is a lease between family members;
• in case of a lease of a farm-stead;
• where the tenant is an agricultural operator's organisation owned at least 25% by the landlord or at least 25% by a close relative of the landlord; or
• where the tenant is a family agricultural company in which the landlord is a partner.