Land Plot Permitted Use Change Fees in Moscow and Ground Rent in Moscow and the Moscow Region: New Rules

28.12.2020

Legal Update No 820

Bryan Cave Leighton Paisner, formerly Goltsblat BLP in Russia, advises that the Moscow Government has passed Resolution 2019-PP dated 19.11.2020 (MGR-2019) amending City of Moscow legal acts governing determination of land plot rent and fees for permitted use change for development purposes.

The changes introduced by MGR-2019 include:

  • Rules for determining the rent under leases providing for (re-)construction of a capital facility have been approved: the rent is now to be calculated using a location-related multiplier (the closer to the centre of Moscow, the higher the rent).

  • Fees charged for changing the permitted use of a land plot for development purposes are also to be multiplied by a location factor. The multiplier for land plots located within Moscow is 2.0 but, for land in the Troitsk and Novomoskovsk Administrative Districts, a higher multiplier of 8.0 is to be applied. So double and eight times the current rent will be payable on these territories, respectively.

  • The category of investment projects for developing industrial production and (or) administrative and business facilities has been replaced with a new category: a places of work project.

    Places of work mean capital facilities and (or) their parts (premises)

    • with an intended purpose matching the key permitted uses of the land plot on which the facility is being developed,

    • that meet the established requirements, including on:

      • location (projects to be implemented outside the Third Ring Road are eligible),

      • the area of the facility being developed, and

      • permitted uses of the land plot accommodating the project.

    If a project is assigned the status of a places of work project in Moscow and a relevant investment agreement is concluded:

    • the land plot tenant is granted rental benefit (and, if the application for this status is submitted before 1 July 2021, also a deferral of payment of part of the rent for the first year of the lease);

    • the land plot owner is granted a benefit of lower fees for changing the permitted use of the land plot.

    • If the land plot owner implements a project on several land plots, the total fees for changing the permitted use will be reduced proportionally with respect to all the affected land plots.

The Moscow Region has also adopted Law No. 242/2020-OZ dated 1 December 2020 “On Amendments to the Moscow Region Law on Regulation of Land Relations in the Moscow Region”, changing the rules for determining the rent payable for land plots.

Particularly, some of the multipliers used for rent calculation depending on the land plot’s permitted use have been changed by bringing the permitted use types in line with the Land Plot Permitted Use Classifier (as per Order No. 540 of the Russian Ministry for Economic Development dated 1 September 2014 “On Approval of the Land Plot Permitted Use Classifier”). A number of multipliers have been adjusted, e.g., land plots intended for siting a pharmacy, pharmacy branch, pharmacy booth or warehouses will be subject to a multiplier of 6 instead of the previously applicable 4.2.

The changes will govern calculation of rent due for land plots after 1 January 2021.

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