On 1 March 2015, major amendments to Russian land legislation regarding the formation and allocation of plots of publicly-owned land, and in particular land used for the purposes of construction, came into force. These changes primarily affect developers and general contractors operating in the Russian real estate market.
What amounts to a large-scale reform of Russian land law commenced with last summer’s adoption of Federal Law No. 171-FZ "On Amendments to the Land Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” dated 23 June 2014 (the "Law"). The Law sets out new rules for the creation, cessation and exercise of rights to land. The Law also reduces the number of administrative procedures in this field and establishes an exhaustive list of cases when plots of land can be allocated without the need for a bidding process.
New key provisions
- The Law provides a new procedure for the formation of land out of publicly-owned plots of land. This will generally be done on the basis of a land survey plan. However, in the absence of an approved land survey plan, a duly approved land layout diagram showing the location of the plot of land on the cadastral map of the territory will be sufficient.
- Auctions became the only permitted manner of bidding for sale and purchase agreements as well as lease agreements regarding publicly-owned land.
- As a general rule, land that is to be used for construction purposes can only be leased through a bidding process; however, the Law outlines as many as 32 exceptions to this rule.
- The Law establishes maximum terms for leases of publicly-owned land. For example, lease agreements for the construction of buildings and structures may be concluded for at least three and at most ten years.
- Lessees of publicly-owned plots of land no longer enjoy a right to renew their lease without a tendering process.
- The Law allows for the establishment of easements on publicly-owned land without having to register the relevant leases (e.g. for the placement of linear objects such as but not limited to power transmission lines, pipelines, railways, for the carrying out of survey work, etc.). It will now be possible to conclude an easement agreement with not only the owner of the land, but also with its legal holder (a lessee, a land user enjoying the right of free use, etc.).
- In special cases it will be possible to use publicly-owned land without the creation of an easement (e.g. to carry out an engineering survey).
- If the lease of a plot of land owned by the state or a municipality expires, it will be possible to dispose of the facilities under construction on the plot of land concerned.
The entry into force of the Law will require all real estate market participants to closely monitor not only the application of the new rules, but also the Russian Government’s adoption of the numerous regulations stipulated by the Law that will be required to set further specific rules regarding the bidding for and allocation of plots of land.