Charge Changes: Moscow Revises Fees for Changing Permitted Use and Purpose of Land Plots
Legal Update No 690
Bryan Cave Leighton Paisner (Russia) LLP (formerly Goltsblat BLP in Russia) advises of new developments1 in the Moscow laws on payments for land.
The Moscow land regulations set charges for changing (а) the permitted use (PU) of private land plots and (b) the purpose for which the city leases out its land.
The fee for changing the PU of privately owned land plots outside the Third Ring Road (TRR) is largely symbolic (0.01% of cadastral value), except for housing and/or hotel construction/reconstruction projects. These are subject to the standard PU change fees, no matter where they are located. There is also a recent Moscow Law2 contemplating adjustments to how such fees are determined and paid.
Similar changes affect fees for modifying the purpose for which a land plot is allocated or, more specifically, the rent component which is based on the land plot’s development density and can be as high as 80% of cadastral value. As a general rule, this will no longer be charged for land plots outside the TRR. If, however, the new allocation purpose involves residential construction/reconstruction, the development density-based component will still apply, whatever the location. Changes have also been made to how certain specific cases are regulated, such as when these fees are charged upon expansion of existing capital structures.
The intention behind the revised framework is presumably to channel developers’ investments to outside the TRR.
These charges do much to swell the city’s coffers: in the first six months of 2019, as much as 47.2 ha were granted for construction/reconstruction on the basis of the addenda changing the allocation purpose, the Moscow City Property Department says. The city collected RUB 9.64 bn in investment payments for leasing land for construction purposes.
1 Introduced by Moscow Government Decree 866-PP dated 10 July 2019
2 Moscow Law No. 25 dated 5 June 2019
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