VALUATION OF AGRICULTURAL LAND REGULATIONS

SUBSIDIARY LEGISLATION 199.02

VALUATION OF AGRICULTURAL LAND

REGULATIONS

15th May, 2023

LEGAL NOTICE 60 of 2023.

(1)

The title of these regulations is the Valuation of

Agricultural Land Regulations.

(2)

The scope of these regulations is to establish a standard

valuation method that shall be applied to all valuations of the open

market value of agricultural land.

(3)

These regulations shall come into force within two (2)

months from their publication in the Gazette.

(regulation 3)

Calculating the Fair Price of Agricultural Land

1. For the purposes of this Schedule, the following

abbreviations shall refer to

a.

AgrVal – Agronomic Value

b.

AgrValMax – Maximum Agronomic Value

c.

BVAL – Basic Value of Agricultural Land

d.

FPAL – Fair Price of Agricultural Land

e.

ProVal – Protected Cropping Value

f.

ProValMax – Maximum Protected Cropping

Value

g.

StrVal – Agricultural Structure Value

h.

SumAgr – Total Sum of Agronomic Factors of the

Land

i.

SumPro - Protected Cropping Structure

j.

ValStr - Value of the Structure

The total agronomic factors to be assessed in accordance with

these regulations shall be comprised of the total agronomic value, the

total protected cropping value and the total agricultural structures as

follows

In determining the total agronomic factor, any enhancements or

investments made by the lessee up to eight (8) years from the date of

the assessment shall not be included in the assessment of the

agronomic factors.

The fair price of agricultural land (FPAL) shall be calculated as

follows

FPAL = (Area of land x (BVAL/1124)) + (Area of land x

(AgrVal/1124)) + (Area land covered by Protected Cropping x

(ProVal/1124) + StrVal

(a)

Calculating the Agronomic Value (AgrVal)

The Maximum Agronomic Value (AgrValMax) shall be

set at seventy per cent (70%) of the Basic Value of Agricultural Land

(BVAL). This is allocated to the agronomic aspects of the land and

shall be assessed on the factors identified and listed in paragraph (a) of

Schedule II.

The assessment shall be conducted by experts in the field

who shall give a nominal value to each factor based on the guidance

provided in Schedule II. The total sum of the agronomic factors of the

land (SumAgr) allocated shall be included in the formula below to

determine the Agronomic Value (AgrValue)

AgrVal = (AgrValMax X SumAgr)/100

(b)

Calculating

the

Protected

Cropping

Value

(ProVal)

The Maximum Protected Cropping Value (ProValMax)

shall be set at thirty-five per cent (35%) of the Basic Value of

Agricultural Land (BVAL). This coefficient is allocated to the state of

the permanent structures that may be used to grow crops under these

structures.

The assessment of the state of the Protected Cropping

Structures shall be assessed on the factors identified and listed in

paragraph (b) of Schedule II. The value allocated to the assessment of

the Protected Cropping Structure (SumPro) shall be included in the

formula below to determine the Protected Cropping Value (ProVal)

ProVal = (ProValMax X SumPro)/100

(c)

Agricultural Structures

(i)

Calculating the replacement cost of the

agricultural stores present on the agricultural land with a

footprint of 60m 2 or less (StrVal)

The calculation of the replacement cost of the

agricultural store present on the agricultural land with a footprint of

sixty square metres (60m 2 ) or less shall be linked to the BVAL with a

maximum allocation of seventy per cent (70%) of the BVAL. There

shall be four (4) categories of agricultural stores in accordance with

paragraph (c) of Schedule II. The highest allocation shall be allocated

to agricultural stores having a footprint of more than forty square

metres (40m 2 ). The other allocations shall be calculated as per the

formulas present in the table of paragraph (c) of Schedule II.

(ii)

Structures with a footprint exceeding sixty square

metres (60m 2 ) shall be subjected to a calculation of the

replacement value of the structure (ValStr), using a cost

approach as defined in the European Standard Valuations

established from time to time and calculated as following

StrVal = (ValStr)/2

(1)

In these regulations, unless the context otherwise

requires

"Act" means the Agricultural Leases (Reletting) Act;

"base value" means the value of one (1) tumolo of

agricultural land as established by the Minister responsible for

agriculture in accordance with regulation 4;

"total agronomical factors" means the sum of all land

related agronomical factors as identified and calculated in

accordance with Schedule I;

"tumolo" means a measure of land area equivalent to one

thousand one hundred and twenty-four square meters (1124m²).

(2)

Unless the context otherwise requires, words and phrases

used in these regulations which are not defined herein shall have the

same meaning as assigned to them in the Act.

Agronomic Factors

(a)

Assessment of Agronomic Factors of the Land

Score

Assigned

Justification for the

Guidelines

value

score

assigned score

range

Land with no vehicular

access (only through a

footpath of less than 3m

wide)

Land with vehicular

access of at least 3m wide

0 / +10

in restricted periods of the

year.

Land with unrestricted

vehicular access of at

least 3m wide.

Land without direct

access to new water.

Land without direct

Access to new

access but with new water

0 / +10

water

accessible within a

distance of 500m.

Land with direct access to

new water.

Land with no direct

access to electricity.

Land without direct

Access to

access but with electricity

2.5

0 / +5

electricity

accessible within a

distance of 500m.

Land with direct access to

electricity.

Parcel is within the

coastal zone as identified

in the Coastal Zone and

Marine Area Police.

Parcel is within a distance

of 1km from the coastal

Exposure to

zone as identified in the

0 / +10

strong winds

Coastal Zone and Marine

Area Police.

Parcel is further than a

distance of 1km from the

coastal zone as identified

in the Coastal Zone and

Marine Area Police.

Area of parcel is less than

one (1) tumolo or less

than 5m wide.

Area of parcel is more

than one (1) tumolo but

less than 5m wide.

Ease of use of

Area of parcel is more

agricultural

0 / +10

than one (1) tumolo and

machinery

more than 5m wide.

Area of parcel is more

than three (3) tumoli and

more than 5m wide.

Land with a slope

gradient of more than

10%

Land with a slope

Slope

0 / +5

2.5

gradient of between 5%

and 10%

Land with less than 5%

slope gradient.

Risk of flooding in more

than once in three (3)

years.

Risk of flooding in more

Flooding

0 / +5

than once in three (3)

2.5

years and once in nine (9)

years.

No risk of flooding.

Land with more than 25%

protected

landscape

features u, jew >50% of

the perimeter of the field

has rubble walls.

Presence of

Land with 5% to 25%

fixed elements

protected

landscape

0 / +10

of the

feature.

landscape

Land with less than 5%

protected

landscape

feature and, or <50% of

the perimeter of the field

has rubble walls.

Fields with soil depth of

less than 30cm in depth

Fields with soil depth of

Soil depth

2.5

more than 30cm but less

0 / +5

than 50cm in depth

Fields with soil depth of

more than 50cm depth

Soil Classified as "Clay,

sand, silt."

Soil Classified as "Loamy

sand, sandy loam, silt

Soil texture

2.5

loam, sandy clay loam,

0 / +5

class

silty clay loam, silty clay,

sandy clay."

Soil Classified as "Loam,

clay loam."

Soil salinity more than

4000uS/cm

Soil salinity > 2000uS/cm <

Soil salinity

2.5

0 / +5

4000uS/cm

Soil salinity less than

2000uS/cm

Soil top layer (15cm from

surface) containing more

than 35% stones of > 6cm

Soil top layer (15cm from

Presence of

surface)

containing

2.5

0 / +5

stones

between 5% and 35%

stones of > 6cm

Soil top layer (15cm from

surface) containing less

than 5% stones of > 6cm

< 50% of the perimeter of

the field has a boundary

wall.

Boundary walls

0 / +5

> 50% of the perimeter of

the field has a boundary

wall.

No water storage (less

than 1000m³) or access to

groundwater.

Presence

of

water

reservoir with more than

1000m³ with no access to

ground water.

Water storage

0 / +10

infrastructure

No water reservoir with

more than 1000m³ with

access to ground water.

Presence

of

water

reservoir with more than

1000m³ with access to

ground water.

Total sum of agronomic factors of the land (SumAgr)

(b)

Assessment of Protected Cropping Structures

No Protected Cropping Structure

present

Protected

Protected

Cropping

Structure

Cropping

0 - 25

present however greenhouse is in need of

Structure

serious repair

Protected

Cropping

Structure

0/ +100

25 - 75

present however structure is in need of

repair

Protected

Cropping

Structure

75 - 100

present and does not need any repairs.

(c)

Calculating the replacement cost of the

agricultural stores present on the agricultural land with a

footprint of sixty square metres (60m 2 ) or less.

< 15 sq. m

((BVAL X .70)/60) X 15

15 sq. m to 20 sq. m

((BVAL X .70)/60) X 20

20 sq. m to 40 sq. m

((BVAL X .70)/60) X 40

> 40 sq. m

(BVAL X .70)/60

(1)

The methodology for the valuation of the open

market value of agricultural land shall be calculated by applying the

total agronomical factors resulting on the agricultural land being

valued, to the base value of agricultural land as adjusted to reflect the

actual size of the agricultural land being valued in accordance with

Schedule I.

(2)

The total agronomical factors shall be assessed and

determined in accordance with Schedule II.

(3)

The base value of agricultural land shall be established in

accordance with regulation 4.

(1)

The Minister responsible for agriculture shall

establish and publish by means of a Government notice in the Gazette

the base value of one (1) tumolo of agricultural land.

(2)

The base value of agricultural land shall be revised every

five (5) years from the coming into force of these regulations and each

revision shall be published by means of a Government notice in the

Gazette.

(3)

In establishing the base value of agricultural land, the

income approach shall be adopted as established in the European

Valuation Standards published from time to time by the European

Group of Valuers’ Associations in order to determine the open market

valuation of agricultural land based on average net income yields

resulting from data derived from the Farm Accountancy Data Network

(FADN) established by Commission Implementing Regulation (EU)

2015/220 of 3 February 2015 laying down rules for the application of

Council Regulation (EC) No 1217/2009 setting up a network for the

collection of accountancy data on the incomes and business operation

of agricultural holdings in the European Union using the direct

capitalisation method where the capitalisation rate shall be of three per

cent (3%).