LEGAL STATUS AUTHORITIES INVESTMENT BUSINESS IMMIGRATION PROCEDURES CURRENCY LEGISLATION TAXES CUSTOMS REGULATIONS ACCOUNTING LICENSING LAND & REAL ESTATE LABOUR LEGISLATION OFFICE SOLUTIONS INVESTMENT IN REAL ESTATE PROPERTY MANAGEMENT BANKS BUSINESS CENTRES REAL ESTATE AGENCIES
LAND AND REAL ESTATE
Federal Regulations on Titles to Land and Real Estate
According to section 2 of article 9 of the Constitution of the Russian Federation, land and other natural resources may be owned privately, by state or municipal authorities, or held under other conditions of ownership.
Civil and Land Codes of the Russian Federation
Chapter 17 of the Civil Code of the Russian Federation defines the rights of landowners and other holders of rights to plots of land.
In accordance with the Civil Code, persons owning a land plot are entitled to sell, donate, pledge, lease or otherwise dispose of it, so far as the corresponding land plots are neither excluded from the land turnover nor subject to restrictions under effective legislation.
In addition to titles of ownership, the Civil Code also regulates the following property rights regarding land plots:
• inherited life estate;
• life tenancy;
as well as the procedure for terminating the rights to land plots.
The Land Code of the Russian Federation regulates the following issues:
• land protection;
• rights to land: types, nature, origin, termination and limitation;
• protection of rights to land and settlement of land disputes;
• land payments and land valuation;
• land planning, state cadastre registration of land plots and categories of land;
• land control and responsibility for land protection and land tenure violations.
The specifics of agricultural land transactions and the relevant limitations are regulated by special Federal Law #101-FZ of 24 July 2002 'On Agricultural Land Transactions'. In particular, according to this Law, foreign individuals, legal entities and stateless persons, as well as Russian legal entities in which more than 50% of the share capital is owned by foreign individuals, legal entities or stateless persons, can only lease (not own) agricultural land.
St. Petersburg Government Regulations on Land Rights
Under the Land Code, the following issues are within the authority of the independent regions of the Russian Federation:
• management and disposal of land plots owned by a region of the Federation;
• allocation and withdrawal of land plots for the needs of an independent region of the Federation;
• development and implementation of regional programs on land tenure and protection of land located within the boundaries of an independent region of the Federation:
• other authority which is not referred to the authority of the Russian Federation or local government bodies.
As of 01 April 2009 the executive authorities of St. Petersburg have approved:
a) a proforma lease contract for a plot of land,
b) a proforma lease contract for a plot of land provided in order to prepare city-planning documentation with regard to developing an area, determine the feasibility of construction, as well as develop design documentation,
c) a proforma lease contract for a plot of land provided for exploration work,
d) a proforma investment contract,
e) a proforma lease contract for a plot of land provided for the completion of construction/reconstruction of a real estate asset,
f) a proforma lease contract for a plot of land on investment terms,
g) a proforma lease contract for a plot of land on investment terms, including the lessee's obligation to contribute cash to the budget of St. Petersburg for the development of city infrastructure,
h) a standard agreement on the sale/purchase of a land plot in the process of privatisation,
i) a proforma agreement on the sale/purchase of a land plot with the residential (nonresidential) building located on the land plot,
j) a standard agreement on transferring the title of ownership to a land plot to individuals (or transferring the land plot into the common shared ownership of individuals),
k) a proforma agreement on the fixed-term free usage of plot of land,
l) a proforma lease contract for the integrated residential development of a plot of land,
m) a proforma agreement for the development of a plot of land provided on terms of perpetual (indefinite) use,
o) an additional proforma agreement to the lease contract for a plot of land on the land's development,
p) a proforma agreement for the built-over land development
and have established the price of land in St. Petersburg.
Lease Payments for State-owned Land Plots Located in St. Petersburg
Methods for determining lease payments for land plots are established by Resolution of the Government of St.Pe-tersburg #1561 of 14 September 2004 'On the Methodology for Determining Lease Payments for Land Plots'. The above methodology stipulates the procedure for calculating lease payments for state-owned land plots located in St. Petersburg, which is to be used unless otherwise established by the Government of St. Petersburg.
Lease payments are calculated on the basis of several factors which take into account the consumer qualities of the related land plot and the lessee's types of activity:
• Increasing factor Kfl (reflects the proximity of the land plot to metro stations, terminals, railway stations and main highways);
• Increasing factor Kf2 (used when the land plot accommodates service providers and trading companies which sell alcoholic beverages with an ethyl alcohol content exceeding 13%);
• Increasing factor Kf3 (used when the land plot accommodates facilities used for the installation of gambling machines);
• Decreasing factor Kf4 (used when the land plot accommodates the facilities indicated in item 1.7 of the aforementioned methodology, e.g. trading companies which sell newspapers, magazines and books only);
• Kp - size factor of functional utilisation of the area;
• Kz - area factor;
• Ko - seasonal decreasing factor of remoteness;
• Ks - decreasing factor of construction or reconstruction of real estate assets on investment terms;
• Decreasing factor (without any specific name allocated thereto) applied to lessees which are industrial companies involved in restructuring.
St. Petersburg Governmental Regulations Regarding Real Estate Issues
The Committee for City Property Management (KUGI) deals with all issues related to the lease and sale of city-owned real estate (property) of St. Petersburg, and has agencies in each district of the City. Decisions regarding real estate are made by a district commission or the city commission of KUGI, depending on the status of the site. For queries regarding a particular site owned by St. Petersburg, the KUGI Agency of the district in which the site is located should be contacted first. Information may be provided regarding the particular property, required documents and future steps to be taken.
The Government of St. Petersburg also deals with the sale of city-owned real estate assets in St. Petersburg.
The Department of the Federal Registration Service for St. Petersburg and the Leningrad Oblast (UFRS) is in charge of the state registration of real estate titles and any encumbrances and restrictions pertaining to such titles, as well as transactions with real estate. In response to queries in writing, the UFRS provides information on current titles to specific items of real estate. Such information is made available for a certain fee.
Lease Payments for Non-residential Premises Leased from St. Petersburg
Methods for determining lease payments for non-residential premises are established by Law of St.Petersburg #387-58 of 14 July 2004 'On the Methodology for Calculating Lease Payments for Non-Residential Premises Leased out by St. Petersburg.
The relevant Regulations, approved by the above Law, provide four valuation methods:
• method of mass evaluation;
• method of individual evaluation;
• method for calculating lease payments for leasing non-residential premises on an hourly basis; and
• method for calculating lease payments for special-purpose structures used for placement of sailing devices on water bodies.
Mass evaluation is the main method. Individual evaluation is applied to certain non-residential premises and the method for calculating lease payments for leasing non-residential premises on an hourly basis concerns gymnasiums, lecture-rooms and assembly halls owned by state institutions under the right of operating management, while calculating lease payments for special-purpose structures used for placement of sailing devices on water bodies is applied to special-purpose structures located within the boundaries of St. Petersburg on the Neva river and in the Neva estuary.
When calculating lease payments by mass evaluation, several factors are used to rate the consumer quality of the premises leased:
• location of the building;
• area of the leased premises;
• number of floors;
• general condition of the premises;
• type of entrance;
• building type; and
Persons engaged in activities of social significance may be granted lease incentives in the instances and in accordance with the procedure stipulated by Law of St. Petersburg #377-57 of 19 July 2005 'On the Procedure for Granting Lease Incentives for Non-Residential Real Estate Assets Leased by the City of St. Petersburg'.
Investment activity in the field of real estate in St. Petersburg is regulated by Law of St.Petersburg #282-43 of 17 June 2004 'On the Procedure for Providing Real Estate Objects Owned by St.Petersburg for Construction and Reconstruction'.
Investment sites may be made available to a potential investor on a tender (contest, auction) basis or to a specific investor for specific purposes. Investment sites may be granted to specific investors for specific purposes only in exceptional cases stipulated by the aforementioned Law.
The Government of St.Petersburg takes a decision to either grant the investment site to a specific investor for specific purposes or to put it up for tender, approves investment conditions and the criteria for determining the winner of the tender.
A tender is open with regard to participants and is held in the form of a contest or an auction. Tenders in the form of a contest are performed when it is necessary to determine the conditions for the creation and use of the result of the investment, connected not only with the transfer of monetary funds. In particular, real estate objects may be provided on the basis of a project contest in the sphere of architecture, town-planning, culture and socially significant projects. The winner of an auction is the entity or individual that offers the highest price for the subject of the tender. The winner of a contest is the entity that proposes the best conditions as judged by the bidding committee.
A corresponding contract is concluded with the winner of a tender, or an investor who has obtained an investment site for specific purposes (KUGI concludes land lease agreements on investment terms or investment contracts; the Property Fund of St.Petersburg concludes sale-purchase agreements on land plots).
Information on investment sites and procedures for conducting investment activities may be obtained from the Strategic Investment Agency, a state institution under the Investment and Strategic Project Committee of the Administration of St. Petersburg.
The Strategic Investment Agency is located at
11, Pl. Ostrovskogo, St. Petersburg, 191023, Russia; tel. +7 (812) 312 24 30, +7 (812) 570 21 32
In addition, information on investment sites and procedures for conducting investment activities in St. Petersburg are available at the following web site: www.commim.spb.ru