No. 71. “Anti-Crisis” Amendments to the Land Lease Laws

31.08.2009

Goltsblat BLP advises that the Moscow Region has passed Law of 17 July 2009 No. 96/2009-ОЗ “On Amendment of Certain Laws of the Moscow Region Regulating Land Relations in the Moscow Region”. Above all, this provides the state and local government authorities with “anti-crisis” opportunities to adjust the rental for state and municipally-owned land plots and the procedure for its payment.

1. Since 1 January 2009, municipalities have, in fact, been entitled to reduce rentals for land: the "scale-up factor” applicable to rentals has been replaced by an “adjustment factor”. The value of the former used to vary between 1 and 3, while that of the latter is set at 0.5 to 3. Similar changes have been made to the land plot location factor.

The adjustment and land plot location factors cannot be individual in nature and are reviewed more than once a year, except for reductions in the values of these factors, which cannot be made more than twice a year.

In addition, it has been established that, if the rights and obligations under a lease agreement for a land plot granted to a legal entity are assigned, the rental is determined by applying the various factors set for the former lessee.

2. The factor of 1.5 (for the period of construction/reconstruction, but for no more than 3 years), in consideration of the conditions for use of the land plot/the lessee’s business, is now applied from the signing date of the agreement, rather than that of its state registration, as was previously the case.

3. From 2010 onwards, for a land plot that has not undergone state cadastral registration and that was provided before the Land Code of the Russian Federation came into effect, the rental is set in relation to:

  • agricultural land plots provided for agricultural production, in the amount of double the base rent for land in the relevant municipality;
  • land of other categories, in the amount of 256 roubles per square metre per annum.

4. Obviously assuming a rise in indebtedness for rentals on land plots belonging to the Moscow Region or in undelimited state ownership, the Government of the Moscow Region now has the right to determine:

  • the procedure and cases for writing off debts on rentals and default interest for leased land plots;
  • the procedure for payment by instalment or deferral of payment of rentals for a period not exceeding 1 year, with the debt being paid off either in a lump sum or by instalment.

5. Changes have been made to rentals for land plots located within the boundaries of the urban districts of Zhukovskiy, Zvenigorod, Kotelniki, Lobnya, Molodezhniy and Khimki.

For additional information, please contact:

Vitaly Mozharowski, Partner,
Real Estate&Construction, Goltsblat BLP,
E-mail: Vitaly.Mozharowski@gblplaw.com

Elena Barinova, Partner,
Real Estate Investment and Finance, Goltsblat BLP,
E-mail: Elena.Barinova@gblplaw.com

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