End of Handshake Deals: Agriculture Ministry Unveils Sweeping Lease Reforms (UD279)

The Ministry of Agriculture and Rural Development has released draft legislation (UD279) aimed at modernizing land leasing, mandating formal contracts for over one million farmers and ending the practice of verbal agreements.

Mandatory Written Contracts

The Ministry has proposed a total departure from verbal agricultural leases, which currently account for 75 percent of all arrangements. New regulations require agreements to be finalized via notarial deed, written contracts with a confirmed date, documents certified by ARiMR, or electronic forms.

A three-year transition period will apply to existing verbal agreements. After this term, any land lacking a formal written contract will no longer be legally recognized as leased.

Duration and Structural Stability

All new leases will be limited to a maximum duration of 30 years. The framework introduces a formal distinction between short-term contracts (up to 8 years) and long-term contracts (over 8 years), with specific incentives designed to promote the latter.

New protections prohibit land buyers from unilaterally terminating existing leases upon purchase, aiming to provide greater stability for both tenants and landowners. Furthermore, in the event of a tenant’s death, leases may be transferred to a household member, provided they submit a formal statement of continuation.

Leaseholder Rights and Subletting

The draft provides new operational freedoms for long-term tenants, who may sublease or grant free use of up to 25 percent of their land without landlord consent. This is permitted if more than three years remain on the lease, the action aligns with good agricultural practices, and the tenant is within five years of retirement age.

Impact on Agricultural Subsidies

The formalization of leases is intended to streamline the subsidy system. Under the new rules, direct support applications must be filed by the leaseholders rather than the landowners, a move expected to improve the efficiency of ecological scheme participation covering 7.7 million hectares.