OWNERSHIP RIGHT ACQUISITION
Real estate ownership rights in Albania can be acquired through several legal forms. In each case, ownership right acquisition follows two phases:
- Ownership right acquisition through a public authority act or a notarial act (usually a purchase contract, a land donation or a land exchange).
- Ownership right transfer completion through a relevant act registration or a Registry Office or Real Estate Office contract.
The main method to acquire real estate ownership rights is through the purchase contract.
Pursuant to Law no. 7980, dated 27.07.1995 “On the sale and purchase of land”, as amended, and Law no. 8337, dated 30.04.1998 “On the Ownership Transfer of Agricultural Land, Forests, Pastures and Meadows”, several limitations apply to foreigners who intend to purchase land in Albania. Foreign individuals and/or legal persons are entitled to purchase land solely upon investment completion in accordance with the appropriate construction permit, in a value no less than threefold the value of the purchased land. As pertaining to agricultural land, forests, pastures and meadows, no foreign individuals and/or legal persons are entitled to acquire ownership rights. The latter are, however, entitled to lease agricultural land for a period of up to 99 years. Lease of agricultural land, forests, pastures and meadows is carried out in accordance with the Civil Code provisions.
The above restrictions do not apply when a new Albanian company/association is established, despite the citizenship of its owner/s. Furthermore, in accordance with the Stabilization and Association Agreement which came into force in June 2009, Albania has agreed that national legislation will gradually improve no later than seven years from this agreement’s entry into force.
One of the principal reforms of the Government of Albania has been the arrangement of a real estate registration system to be administered by the Real Estate Registration Office and to be used to document ownership titles and other real estate legal rights according to legal documentation that ascertains real estate ownership. The abovementioned system is also expected to be used to prepare, maintain and administer real estate records, cadastral maps and other documentation ascertaining ownership and/or other legal rights over real estate.
STATE OWNED PROPERTY
State-owned property can be transferred to private operators in three ways:
- Sale by privatization;
State-owned property is given to third parties by transferring leasing right or emphyteusis through public procurement procedure.
State-owned property that may be leased are considered: buildings, functional surfaces (not underneath a building), free terrain, machinery, equipment and production lines of state institutions, enterprises and trade companies fully owned by the government (henceforth “state companies”) and unproductive lands. State-owned property, leased by emphyteusis as specified in paragraph 1, are considered solely the real estate of state institutions, and state-owned enterprises and associations.
Public procurement application criteria to lease state property are as follows:
- Level of investment;
- Level of employment;
- Offer of monthly rent obligation.
Central and local governmental institutions may set additional criteria.
Public procurement application criteria for leasing State-owned property by emphyteusis are as follows:
- The real estate investment level dedicated to property improvement must be above 200 percent of the property value declared for public procurement;
- Purpose and overall level of investment on the property to be leased by emphyteusis;
- Level of employment;
- Offer of monthly rent obligation.
Central and local governmental institutions may set additional criteria.
FEES AND FLOOR VALUE FOR LEASED/LEASED BY EMPHYTEUSIS STATE-OWNED PROPERTY
Tariffs and floor values for state-owned properties leased or emphyteusis
- Monthly obligation floor value for State-owned property leased/leased by emphyteusis is determined as a sum of the monthly interest on the building and functional surface which is leased by emphyteusis, and is calculated as follows:
- For buildings (considered such, as defined in the enactments and regulations in force, pertaining to the sphere of territorial planning), floor rates of monthly lease are defined in the Table “A.”
- For functional surfaces, floor rate of monthly lease is 20 percent of the floor rate of monthly lease defined for buildings. The terrain under a building is included in the rent tariff of that building.
- Unproductive lands, as defined in the Law nr. 8752, dated 26.03.2001, “On the establishment and functioning of the structures for the management and protection of land”, as amended, the floor rates of month lease are the same as those of agricultural lands.
- When renting free land, thus when only land is leased or leased through emphyteusis, the floor tariff of the monthly rent is 100 ALL/m2
- For the assets of state institutions or state-owned companies of national character (cultural, historical, museum, archaeological), promulgated by legal acts, the floor tariff of the monthly obligation defined above is multiplied by 2 (two).
- When the building has two or more floors, for the effect of calculating the monthly rent, the surface of each floor will be taken into account.
- To determine the value of the monthly rent obligation for the leased movable property (machinery, equipment, technology lines, machinery and equipment in mining galleries, etc.), the state institution, enterprise or state company that administers this property, determines the annual rent value, which is 1/10 of the VAM (current minimum value), calculated as the difference of the accounted initial value minus the depreciation over the years, based on Decision of the Council of Ministers no. 401, dated 23.10.1989 , multiplied by the price index of the respective month, published by INSTAT.
- For voluminous facilities such as: reservoirs, deposits and silos, leased for trading purposes, within the boundaries of the cities: Tirana, Berat, Durrës, Fier, Korçë, Lushnjë, Pogradec, Sarandë, Shkodër, Elbasan, Vlorë, Gjirokastër, Kavaja, Kruja, Laç, Lezha, the floor lease tariff is 400 ALL / m3 per month, while outside the boundary lines of the above cities, as well as in all other areas, the rental fee is 200 ALL / m3 per month.
- For sports grounds, defined as such by legal acts and when to perform sporting activities, the floor tariff of monthly rent is 10 ALL / m2 per month.
- For assets under administration of the Government Services Directorate, the minimum monthly rental charges shall be according to “Table B” attached to this decision. The Directorate of Government Services for the Palace of Congresses premises, in special cases, applies different tariffs to those provided for above, with the approval of the Council of Ministers.
- For property administered by the Directorate of Governmental Services, the floor rates of monthly lease are detailed in Table “B” attached to this document. In the case of the facilities of the Palace of Congresses, the Directorate of Governmental Services applies rates which are different compared to those provided above, with the approval of the Council of Ministers.
- For facilities that are leased or leased through emphyteusis, with an area of 200 m2, the monthly obligation fee is recalculated with a discount, in cases when the entity receiving the lease confirms in its annual accounts that it has made investments within the property received by lease or emphyteusis for the improvement of this property, as well as the entity has purchased and installed lines, machinery and equipment in the following values:
|Investment level in million ALL||Lease deduction rate in%|
|over 50 million ALL||10%|
|over 80million ALL||20%|
|over 100 million ALL||30%|
|over 150 million ALL||40%|
- Reduction of the value of the monthly obligation from the realization of investments is valid until the expiration of the lease or emphyteusis contract.
- At the request of the tenant, for justified cases, the landlord may review the indicators and deadlines of the business plan during the performance of the contract and make a change to the agreement between the parties, without changing the essential / special conditions presented in the competition, and when participant in the competition has been only one bidder. In these cases, the agreement is accompanied by the relevant changes to the business plan and contract.
THE €1 SYMBOLIC FEE CONTRACT
- State-owned property with an area of above 500 m2, shall be given to third parties accompanied by a lease contract with the symbolic fee of €1, in accordance with case-by-case decisions of the Council of Ministers.
- When, after the completion of public procurement competition procedures, the winning party proposes to use the leased State property for activities such as:
- manufacturing activities with investment levels of over 300 000 000 ALL (three hundred million);
- inward processing of goods, which will provide not less than 50 jobs;
- agribusiness activities, such as: collecting, processing and selling agricultural products or livestock, with investment levels over 100,000,000 ALL (one hundred million)
The institution, which conducts the procedure and exercises the right of the representative of the state owner for the state property, proposes to the Council of Ministers to approve the binding of the lease contract, not at the winning price, but at the symbolic price of 1 (one) Euro / contract. The proposal is accompanied by a negotiated contract between the parties.
- education and media activities, with investment levels over 200,000,000 ALL (two hundred million).
- construction, maintenance and deconstruction of maritime vessels with investment levels over 500,000,000 ALL (five hundred million) In cases where the proposal comes from local government bodies, the proposal to the Council of Ministers is made by the ministry responsible for local government.
3.The ministry responsible for the economy proposes to the Council of Ministers the lease of state property without competition and with a symbolic price of 1 (one) euro / contract, when it has a proposal through an “unsolicited” offer for the development of special areas, with an investing value over 100 000 000 (one hundred million) ALL, with the purpose of establishing organized social centers that influence the resolution of social problems or the exercise of activities in the field of sport or culture, or in the field of tourism or cultural heritage.
- Before signing the lease contract, with a fee of 1 euro / contract, the tenant is obliged to pay the contract security guarantee, at the rate of 2 (two) percent of the value of the investment undertaken in the competition. The guarantee shall be returned after the completion of the investment.
- In contracts with a fee of 1 euro / contract, sanctions are imposed in cases when the tenant does not meet its terms. At the end of the investment, for any vacant job, the tenant subject will be fined with ALL 50,000 (fifty thousand) per year. In cases of nonrealization of the total investment value in the period foreseen in the contract, the tenant subject is fined by 10 percent of the unrealized investment value. This sanction shall be imposed upon submission of annual financial statements certified by authorized accounting experts. If, even after 6 months of investment, the contract is not executed, the contract is ended by the state institution that has bound it, establishing a fine to the extent of the submitted guarantee in that period. Following these actions, in agreement between the parties, the lease contract may be rebound with rental rates as defined in chapter III of this decision, once all the conditions set out in the base contract have been met.
- Rent contracts, concluded before the issuance of this decision, where manufacture activities under the inward processing (Fason) regime are realized, are turned into contracts with a symbolic fee of 1 (one) euro / contract, after the issuance of this decision, maintaining as contractual warranty that of the lease contract. The case specifications and the procedures for amending these contracts are made by the Minister responsible for the economy.
- In cases when the tenant fulfils the conditions set forth in point 2 of chapter V of this decision after the fulfilment of all the conditions laid down in the base contract, then the lessor proposes to the Council of Ministers the transfer of the contract to a contract with a symbolic fee of EUR 1, maintaining as a contractual warranty that of the lease contract. The case specifications and the procedures for amending these contracts are made by the Minister responsible for the economy.
Evaluating the performance and contribution of the real estate sector in our country, the increase in demand for immovable property in the real estate market continues to undergo changes in response to customer expectations. The real estate sector is experiencing a development trend that definitely enhances its contribution to the national economy.
The office space market is growing, especially in big cities like Tirana, Durres, and Vlora. In recent years there has been a tendency to construct business centers equipped with the latest technology, which offer complete services for the tenants and purchasers of business environments. Demand for this type of facilities has been growing and the construction industry has responded by providing high-quality and technologically equipped buildings.
Another growing trend observed in the real estate sector is the interest in properties on the coastline. The interest has, at present, shifted to touristic villages, where the main reasons are the good infrastructure, green landscape, and security.
Detailed information on Annex Attached, Table “C”