Posted March 1997

Bertinoro I
High-level Technical Seminar:
Private and Public Sector Cooperation
in National Land Tenure Development in Eastern and Central Europe
University Residential Centre
Bertinoro, Italy
1-5 April 1997

Land Tenure and Property Markets in Lithuania

Public viewpoint

Background

Security restrictions on maps, geodesy coordinates and information on land were removed. State enterprise, financed from the state budget and with the help of donors assistance, started to produce small and large scale maps, make the restoration of ownership rights in real property, to implement land reform and perform main works of land cadastre and land register. Private sector produces tourist and special maps, make cadastre surveying of land parcels, evaluate real property. Private notaries approve agreements and other transactions related to property.

Existing laws, providing for the integration of land and other real property registers, is a basis for the security of restituted ownership rights in creating confidence between private owners, farmers, business men and banks. There are greater possibilities that banks will provide credits under reasonable interest rate and business men will invest more money to the economy of the country and agriculture.

National Land Survey of Lithuania is partly responsible for the works of land reform, land cadastre and land register and bears full responsibility for the national geodesy reference system, topographic maps in scale 1:5000 and smaller.

The existing institutional structure for the management of land and other real property is not convenient for users and it does not meet the interests of the public and the state in developing land and property market in Lithuania and integrating Lithuanian agriculture and economy into the European Union. At present the possibility for reorganization of existing structures is under discussions and the establishment of Real Property Agency under the Government of Lithuania is being considered.

Main strategic objectives are the following:

• acceleration of the process for the restoration of ownership rights in real property;
• establishment of unified real property registration system;
• creation and maintenance of geodetic background and topographic maps on a new coordinate system of Lithuania;
• integration of unique parcel and other real property identifiers;
• to allot sufficient amount of money for the restoration of ownership rights in real property, land cadastre and production and maintenance of maps;
• creation of geo-reference data base;
• provision of private sector with data and necessary maps;
• management and security of archive data;
• attraction of finances and increasing of cost recovery;
• improvement of services provided to the customers;
• preparation of laws and their improvement;
• development of state policy related with real property management and security.

Summary

1. It is very important that politicians, government and ministries officers, bankers, business men and other citizens realize economic importance of real property management and importance of the creation of real property markets in Lithuania for economic development of the country. There is a need to improve strategic program for real property privatization and management, and to provide for the main guidelines of activities that land market would start its operation more rapidly.

2. To create legal, financial and organizational circumstances for agriculture to focus into economically managed land parcels. To search new ways that persons entitled to restitution of ownership in land and who are not able to work it, the right of ownership transfer to the others or sell to those who have possibilities to work it.

3. It is very important to pass laws and to improve the existing ones which must determine how land market should function and to create circumstances for more effective operation of the land market. Laws, regulating the restitution of citizens' ownership in land and legislation on land reform, should be stable.

4. There are clearly problems resulting from the novelty of the concept of the real property market. There is in particular a lack of practical experience of the functioning of real property markets and of information available on transaction and values. Data recorded in registers on sale price is understood to be very unreliable for tax avoidance reasons.There is a need to find the ways how to collect data about real property sale and ensure that this information is reliable, everybody can access and understand it. Such information can help:
   • to improve people's understanding about real property markets, publicity of the markets;
   • to make decisions on real property management;
   • make decisions on how, what and when real property tax should be established

5. To create a unified real property registration system. Registration of land and buildings (apartments) should be made in one organization but not in different ones. The creation of effective and secure real property registration system is an essential thing for the successful market functioning and welfare of the country's economy.

6. An unified real property registration system will stimulate, increase and support investments and secure citizens' ownership rights in land, public and state interests. Banks and business men can more rely on the system which guarantee ownership rights, when farmers and other producers could borrow money mortgaging their property in order to get funding for equipment, machinery, seeds, fertilizes, construction works and other investments.

7. Low speed of land privatization hinders the development of land market. There is no stable legislation. Private sector is not sufficiently involved in land reform works. There is no competition between organizations handling land reform. Land reform is funded from the state budget means and the efficiency of use of these means is hard to estimate.

8. What ministries and organizations are responsible for the registration of land and other real property. Not settled organizational structure do not allow to develop effective and secure real property registration system. Bureaucracy barriers between separate ministries do not allow to create effective real property management and registration system.

9. The development of land market is hindered by the fact that while selling or giving as a gift land parcel it is required to make precise surveying of parcel boundaries. The price for survey is higher because GPS network densification is not enough everywhere. There are such cases when the price for survey of a small land parcel boundaries in rural areas is nearly the same as sale price of a parcel.

10. There is a tendency that it is proposed to make very precise maps in rural areas. This idea is supported by some foreign countries which would like to sell their own equipment and technology. Cheap and fast mapping technologies should be introduced for rural areas, as for example Orthophoto mapping. New maps are necessary for land parcel surveying and land registration.

11. There is a lack of specialists both in public and private sector who are able to understand market economy and can reasonably work in the process of land and property management. There is a demand for skilled real property valuers who are acquainted with real property legislation in detail, with building constructions, economy and management.

12. It is very important to make a research of existing levels of real property market transactions in urban and rural areas and try to find means how to introduce real property market value as soon as possible according which real property taxes and compensation for property taken for public needs is calculated.

13. Countries-donors should take into consideration legal, technical, institutional and financial issues, related with real property market, of the recipient country. There is a need to evaluate properly the choice of technologies, to attract public and private sector and academic institutions in creating and implementing modernization programs of land administration system.

14. It is very important to have overall strategy for land market development. There is a lack of recognition that institutional and management issues are more important than technical issues, for example procurement of equipment.

15. The creation of land market is a long-term process. It requires proper investment in order to speed up the creation of land market. At present it is impossible to recover the initial costs. It is an investment to the future welfare. There is a need to introduce a new policy - fees to the users should be increased gradually and dependence on the state budget should gradually reduce.

16. There should be closer co-operation of public and private sectors, distribution of activities introducing control of works. There is a need to stimulate the competition between state enterprises and when there is proper time to privatize some parts of their activities.