On 23 June the Federal Law No. 171-FZ “On amending the Russian Land Code and certain items of Russian legislation” was adopted to the extent of improving the procedure for state and municipally-owned land plots to be provided. This Federal Law enters into force on 1 March, 2015 except for particular provisions.    

The Draft Law was developed by the Ministry of Economic Development and Trade pursuant to the instructions of the Russian President as well as the 'roadmap' (plan of events) for refining the legal regulation of town-planning activities and improving the entrepreneurial climate in the area of construction. The roadmap was approved by Directive No. 1336-r of the Russian Government dated 29 July 2013:

The expected effective date of the amendments is 1 March 2015.

Main changes

The purpose of the legislative amendments is to improve current procedures under which state and municipally-owned land plots are provided. The main bulk of the amendments are made to the Russian Land Code. The Draft Law will introduce into the Land Code a new chapter V.1 which is entirely dedicated to procedures for state and municipally-owned land plots to be provided.

The Draft Law excludes such a form of competitive bidding as tenders. Thus, an auction becomes the only form of competitive bidding for providing state and municipally-owned land plots. The new development is that it is obligatory for an auction to be held in electronic form.

It is also established that it is only possible to provide a land plot of which the main permitted use is construction, under a lease, save for certain cases.

The Draft Law establishes special grounds for providing land plots without competitive bidding for a fee or free of charge:

  • Providing land plots for a fee without competitive bidding on the basis of ownership (there are 10 special grounds, for instance:
    • Land plots being leased for the purposes of integrated urban development;
    • Plots on which the buildings and structures are located being provided to the owners of such property;
    • Plots for private housing construction being provided to citizens;
    • Leased plots intended for agricultural production;
    • Land plots for peasant (farming) operations);
  • Providing land plots on lease without competitive bidding for a fee (32 special grounds, for instance:
    • According to a special decision of the Russian President/ Russian Government/ a senior official of the constituent entity - for scale and priority social and investment projects;
    • To place properties intended for providing electricity-, gas-, heat- and water supply to legal entities;
    • Plots on which the buildings and structures are located being provided to the owners of such property;
    • Plots on which a facility under construction is located are provided once for construction to be completed).
  • Providing land plots without competitive bidding free of charge on the basis of ownership (8 special grounds, for instance:
    • To a religious institution that has structures with a religious purpose on a land plot;
    • To large families (subject to such ground for the land to be provided being enacted at the level of the Russian constituent entity);
    • To a citizen when fixed-term use of a land plot free of charge expires).
  • Providing land plots without competitive bidding free of charge under a lease (16 special grounds, for instance:
    • To state bodies or local authorities for 1 year maximum;
    • To a religious institution to place buildings and structures with a religious purpose for 10 years maximum;
    • To individuals to carry out business activity on a personal subsidiary basis and for private housing construction for 6 years maximum).

The Draft Law makes substantial changes to provisions relating to entry into lease agreements for land plots:

  • The lessee's pre-emptive right to enter into a lease agreement for a new term without competitive bidding being held is eliminated;
  • An exhaustive list of conditions has been established according to which lessees may enter into a new lease agreement without competitive bidding (most notably, initially, a land plot must have been provided without competitive bidding and by the time the lease term expires, the grounds for providing such land plot without competitive bidding must survive, the previously concluded agreement must not have been terminated, and so on);
  • Maximum time periods have been established for different types of lease (17 cases, for example:
    • For construction or reconstruction of buildings and structures - from 3 to 10 years;
    • For placing linear infrastructure - for 9 years maximum;
    • For a land plot on which a facility under construction is located to complete the construction of this facility - for 3 years maximum).

Provisions with respect to easements have also been substantially changed:

  • Special grounds to establish an easement have been enacted:
    • Placing linear infrastructure, communications structures, informational signs and protective structures which do not preclude the permitted use of the land plot;
    • Performing survey works;
    • Performing works relating to the subsurface use;
  • The list of grounds for an authorised body to refuse to conclude an agreement to establish an easement is established with regard to state and municipally-owned land plots:
    • An application for an easement to be established is submitted to the executive body or local government body which is not entitled to conclude an agreement to establish an easement;
    • The planned use of a land plot under an easement is not allowed according to the federal laws;
    • If an easement is established, this will make the use of a land plot impossible in accordance with its permitted use or will result in material difficulties while using a land plot;
  • Moreover, if an easement is established over a part of a land plot, it is permissible for such easement to be established without cadastral registration of that part being put in place and the borders of an easement will be determined in accordance with the chart of the borders of an easement on a cadastral plan of the territory.

Another new development is that a land plot may be used with the permission of an authorised body in certain cases (without a land plot being provided or an encumbrance being established in the form of an easement):

  • Performing engineering surveys;
  • Capital or current repair of an item of linear infrastructure;
  • Constructing temporary or support structures, warehousing structures and other materials, equipment to provide for construction, and reconstructing linear infrastructure;
  • Performing a geological study of the subsurface;
  • Placing movable retail facilities and advertising structures as well as other facilities.

Also among the important changes envisaged by Draft Law it should be noted that:

  • The Russian Civil Code establishes the procedure for disposing of a facility under construction located on the state and municipally-owned land plots for which a lease agreement has been terminated. Such property can be seized from the owner under a court decision by way of being sold through a competitive bidding process.