Legal alerts / 24.02.2021

Top 5 legal changes in real estate and construction legislation in 2020

At the end of 2020, we have compiled an overview of the most significant changes in real estate legislation. In this review we deliberately ignored the “coronavirus” changes to which we have previously devoted many of our publications, and instead have concentrated on other changes that are important for business.

We have noted legal changes in the following areas as the most significant:

  • In the area of state cadastral valuation
  • In the sphere of building construction and development
  • In the sphere of urban planning documents
  • In the legislation on shared construction
  • In electricity supply legislation

 

Legal changes in state cadastral valuation (SCV) [1]

 The Frequency of SCV:

An SCV is conducted every 3-5 years (once every 2 years in federal cities) until 1 January 2022 in respect of land plots and until 1 January 2023 in respect of other objects. An SCV is not conducted if the decision to conduct it was made less than six months before January 1 of the year during which such decision provides for the SCV to be conducted.

 After this period – an SCV is conducted after 4 years from the last SCV (within 2 years in federal cities, but only if such a decision is made by the relevant constituent entity of the Russian Federation).

 At the same time, in all constituent entities of the Russian Federation SCVs of land plots must be conducted in 2022, while SCVs of other facilities must be conducted in 2023.

  • A change of cadastral value (CV) due to errors:

Before 11 August 2020 – it was possible to apply for the correction of an error while the cadastral value is current (i.e. before the revaluation).

After 11 August 2020 – within 5 (five) years from the date of the inclusion in the Unified State Register of Immovable Property (USRIP) of the relevant CV information in order to submit such an application.

  • Disputes determining the CV:

From 1 January 2023 (or earlier, if a constituent entity of the Russian Federation decides to apply the new procedure[2]) –disputes about the results of a determination of CV determination[3] are considered in the budgetary institution authorized to determine the CV (in St. Petersburg at present, this is the SPb State Budgetary Institution “Cadastral Appraisal”). The corresponding application may be submitted within six months from the date when the market valuation of the real estate facility was carried out during the period from the date on which the real estate facility is registered with the State cadastral registration body until the date of deregistration.[4] A decision of a budgetary institution is challenged through the courts. At the same time, a claim to have the CV established in the amount of its market value may also be filed with the court.

  • The Federal Service for State Registration, Cadastre and Cartography (known by the Russian abbreviation Rosreestr) has approved the forms of the following documents in the area of SCV[5]:
  • an application for the correction of errors made in the determination of the cadastral value. The new form applicable from 1 January 2021. In such form, several facilities with an error can be specified at the same time;
  • an application for the cadastral value of a real estate facility to be established in the amount of its market value. The new form is applicable from 1 January 2023;
  • a certificate of the determination of the cadastral value. The new form is applicable from 12 October 2020.

 

 Legal changes in building construction and development

The validity of a construction permit is automatically extended for 2021 if its expiration date falls in the period from 7 April 2020 until 1 January 2021. A similar rule for the extension of the terms of validity is set for the urban development plan of a land plot for the purposes of an expert examination of design documentation and the obtaining of a construction permit.[6]

Until January 1, 2024 in respect of capital construction facilities for which a construction permit was issued before January 1, 2020 and for which commissioning permits have not been issued:

  • a refusal to issue a commissioning permit is encountered in a case where capital construction facilities do not comply with the permitted use of the land plot and/or) restrictions established in accordance with the land and other legislation of the Russian Federation, on the date of when the construction permit is issued (rather than the date when the commissioning permits are issued as generally established by the Urban Development Code of the Russian Federation);
  • If more than one and a half years have passed since the date when the urban development plan of a land plot was issued, on the basis of which the design documentation of capital construction facilities was prepared (from the date of the approval of the territory planning project for a linear facility), during the examination of the design documentation of such capital construction facilities, the compliance is assessed of such design documentation with the legal requirements that were in effect on the date when the construction permit was issued for such capital construction facilities
  • the filing of an application to amend a construction permit less than ten (10) business days prior to its expiration is not a ground for a refusal to amend the construction permit

The period is established for the preparation of a draft decision to grant a permit to deviate from the maximum parameters of permitted construction, and for the reconstruction of capital construction facilities – this period is within fifteen working days from the date of receipt of the application for such permission.[7]

For dividing a land plot, it is not required to obtain a new urban development plan of the land plot. Now the RF Urban Development Code expressly stipulates that an urban development plan of a land plot is not required, and a previously issued urban development plan of a land plot does not become invalid if an urban development plan of a land plot and the construction permit were previously obtained in respect of the land plot being divided / the division of an area into a land plot. [8]

An allowable percentage (5%) for the deviation of the area of capital construction facilities has been introduced in relation to data in the project documentation in order to obtain a commissioning permit (subject to the number of floors, rooms, parking spaces indicated in the technical plan in accordance with the project documentation / construction permit).[9]

The optional benefit of choosing an auxiliary type of permitted use of a land plot is possible without data being entered in the Unified State Register of Immovable Property. Such non-inclusion is not a reason for liability under part 1 of article 8.8 of the Code of Administrative Violations (the use of a land plot other than for the proper purpose). [10]

  

Legal changes in urban planning documents

 Legal changes in the content of urban planning documents.[11]

 Legislation of the constituent entities of the Russian Federation may establish specific aspects of the content of general plans of settlements and urban districts. For example:

  • the general plan of a settlement and the general plan of an urban district may provide for territories without established functional zones;
  • within the boundaries of settlements and urban districts areas may be defined outside the boundaries of a populated locality; this is not expected to change their existing use and there is no need to prepare a master plan of such populated locality;
  • territorial planning regulation instead of data on the types, purpose and names of the facilities of local significance of a settlement or urban district planned for location, their main characteristics, and location may contain data on the need for the specified facilities of local significance without specifying their main characteristics and location.
  • Strengthening the powers of local administrations in the preparation of urban planning documents.[12]

 

It is established that the approval of local town-planning design standards and the introduction of amendments to local town-planning design standards may be carried out by the local administration if this is provided for by the legislation of a constituent entity of the Russian Federation. A constituent entity of the Russian Federation also has the right to establish that land use and development rules may be approved by the local administration.

  • In St. Petersburg, the procedure and grounds have been approved for the cancellation of area planning documentation (“Documentation”) in whole or in part, while certain parts have also been recognized as unenforceable. [13]

 For this purpose, it is necessary to make an application to the St. Petersburg Committee for Urban Development and Architecture. There are exhaustive grounds for the cancellation of Documentation in full[14], and exhaustive grounds for the cancellation of separate provisions of Documentation.[15]

 Also approved is an exhaustive list of cases of in which some parts of Documentation can be recognized as not subject to application: the minimum proportion of the landscaping of land plots and/or the minimum number of places for parking (placement) of individual vehicles, as well as in terms of the building area of capital construction within the boundaries of land plots:

  • if during design the total area of the capital construction facility is reduced relative to the maximum total area set forth in the Documentation, which entails a reduction of the required number of parking spaces (placement) for individual vehicles and the minimum proportion of the landscaping of land plots;
  • if during design the maximum total area of the capital construction facility established in the Documentation is observed, with a simultaneous increase of the area of the capital construction facilities, which also entails a decrease of the required number of places for the parking (location) of individual vehicles and the minimum proportion of landscaping of the land plots;
  • if as at the date of approval of the Documentation the calculation of the minimum share of landscaping is carried out for a formed or existing land plot with a conditionally permitted type of use, which in accordance with the current urban planning regulations is attributed to the main type of permitted use.
  • In St. Petersburg, a new version of the boundaries of unified zones for the protection of cultural property, land use regimes and requirements for urban planning regulations within the boundaries of the zones have been approved.

 Cartographic materials as well as the descriptions of the specified boundaries have been updated. The principles of defining the borders of zones of protection of cultural property, as well as general and special requirements have been established for the regime of land use and the requirements for the urban planning regulations within the boundaries of united zones of protection of cultural property. The rules have been defined for compensation for losses caused by changes in the united protection zones.[16]

 

Legal changes in the legislation on shared construction

 To transfer funds from an escrow account, a developer only needs to provide a commissioning permit (or information about the placement of such information in the Unified Information System of Housing Construction) and it is not required to provide information from the Unified State Register of Immovable Property confirming the state registration of the ownership of one shared construction facility that is part of an apartment building, as was previously the case.[17]

  •  The developer has the right to use funds from the developer’s current account for the preparation of design documentation and engineering surveys for engineering support networks required to connect an apartment building (other real estate),[18] as well as for the preparation of design documentation and engineering surveys for the construction (reconstruction) of engineering, transport and social infrastructure.
  •  The pledge of a land plot/pledge of the leasehold right to a land plot will be terminated as at the date of the state cadastral registration of the relevant apartment building. This no longer requires the transfer of all shared construction facilities in the apartment building.[19] The entry about a pledge in the Unified State Register of Immovable Property in such case is extinguished automatically by Rosreestr at the same time as the cadastral registration without the submission of an application to this effect.

 

Legal changes in Electricity Supply Legislation

On July 1, 2020, the rules were simplified for the technological connection to power grids of power-receiving devices of certain categories of consumers of electric power. [20]

The changes apply to consumers that are:

  • Legal entities or private entrepreneurs with maximum capacity of power-receiving devices up to 150 kV;
  • Individuals with a maximum capacity of power-receiving devices up to 15 kV.

 

With regard to such consumers, the rules for technological connection provide as follows:

  • In the case of technological connection at the voltage level of 0.4 kV and below, it is stipulated that the grid organization must provide the applicant with an opportunity to carry out the actual connection to the network and the actual receipt (supply) of voltage and capacity in accordance with the legislation and on the basis of contracts concluded by the applicant in the retail market;
  • the conclusion of a contract by issuing an invoice to the applicant for payment for technological connection, and the payment of such invoice. The contract will be deemed concluded from the date when the invoice is paid;
  • the possibility of payment by interest-free installments in the amount of 90 percent for a period of up to 3 years on condition of quarterly payment in equal installments;
  • the placement by the grid organization on its official website in the consumer’s personal account of the terms of the contract, technical conditions, invoice and instructions for the applicant;
  • an obligation of the grid organization to install and commission the electricity metering device.

 

From July 1, 2020, the rules for the commercial accounting of electric energy have changed.[21]

Responsibility for electricity meters has shifted to energy companies (the purchase, installation, replacement, and admission to operation) – guaranteeing suppliers in apartment buildings and to grid organizations in the case of other consumers and entities of the electric power industry. [22]

These organizations must equip consumer facilities that are put into operation with smart metering systems (“smart” meters), which can be connected to smart metering electric energy (power) systems and have certain characteristics (multi-rate, the availability of an interface for automatic data transmission, availability of power limitation relays, etc.). As a result, energy companies automatically collect readings from meters, impose restrictions on electricity consumption in respect of non-payers, receive information about external influences on the meter, and the consumer, in turn, is exempt from the obligation to purchase meters, from verifying them, as well as from transferring readings.

 

[1] On August 11, 2020, certain provisions of Federal Law No. 269-FZ dated July 31, 2020 “On Amendments to Certain Legislative Acts of the Russian Federation” concerning changes in the procedure of the State Cadastral Valuation (SCV) of Real Estate Facilities came into force.

[2] For example, from January 1, 2021 a number of regions switched to the new procedure:  Resolution No.753 of the Government of Leningrad Oblast dated November 18, 2020, Resolution No. 837 of the Government of Nizhny Novgorod region dated October 08, 2020, Resolution No. 542 of the Government of Omsk  Region dated December 16, 2020,  Resolution No. 973 of the Government of Perm Region dated December 11, 2020,   Resolution No. 534 of the Government of Ryazan Region dated November 13, 2020 and others.

[3]  As part of the application of Articles 21 and 22.1 of Federal Law No. 237-FZ dated July 3, 2016 “On State Cadastral Valuation”.

[4] For the purpose of calculating taxes the market value will be used from 2021 from the date when the changed cadastral value starts to be applied. (Clause 49, Article 2 of Federal Law No. 374-FZ dated November 23, 2020 “On Amendments to Part One and Part Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” amended Clause 1.1, Art. 391 of the Tax Code).

Until the Code was amended, the Federal Tax Service clarified: the recalculation of taxes according to the market value is possible only from January 1 of the year in which the taxpayer applied to the budget institution. (Letter No. BS-4-21/12820@ of the Federal Tax Service of Russia dated  August 7, 2020  “On the Application of Information on the Cadastral Value for Real Estate Taxation Purposes after Federal Law No. 269-FZ dated July 31, 2020 came into force”).

[5] Order No. P/0286 of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr) dated August 6, 2020 “On the Approval of the Application Form for the Correction of Errors in the Determination of Cadastral Value, and Requirements for the Completion of the Application for the Correction of Errors in the Determination of Cadastral Value” – entered into force on 1 January 2021.

Order No. P/0287 of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr) dated August 6, 2020 “On the approval of the application forms for the establishment of the cadastral value of real estate in the amount of its market value and the documents formed in connection with the consideration of such application, requirements for their completion, requirements for the format of such applications and other documents in electronic form” – entered into force on 17 October 2020.

Order No. P/0285 of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr) dated August 6, 2020 “On the approval of the form of the certificate of the determination of the cadastral value, requirements for its signing, for the composition of systematic information on the determination of the cadastral value, as well as requirements for the format of such certificate and the documents submitted with it in electronic form” – entered into force on 12.10.2020.

[6] Par. 1, Annex 3 to the Resolution No. 440 of the Government of the Russian Federation dated April 3, 2020, and Letter No. 33225-IF/03of the Ministry of Construction of Russia dated August 24, 2020.

[7] Federal Law No. 468-FZ dated December 29, 2020 “On Amendments to the Town Planning Code of the Russian Federation and Certain Legislative Acts of the Russian Federation”.

[8] Federal Law No. 202-FZ dated July 13, 2020 “On Amendments to the Federal Law “On Participation in Shared Participation Construction of Apartment Buildings and Other Real Estate and on Amendments to Certain Legislative Acts of the Russian Federation” (the Federal Law “On Participation in Shared Construction”).

[9] The Federal Law “On Participation in Shared Construction”

[10] Ruling No. 42-P of the Constitutional Court of the Russian Federation dated October 16, 2020.

[11] Federal Law No. 264-FZ dated 31 July 2020 “On Amendments to the Urban Development Code of the Russian Federation and Certain Legislative Acts of the Russian Federation.

[12] Federal Law No. 264-FZ dated 31 July 2020 “On Amendments to the Urban Development Code of the Russian Federation and Certain Legislative Acts of the Russian Federation.

[13] Law No. 383-91 of St. Petersburg dated July 29, 2020″On Amending the Law of St. Petersburg “On Urban Planning in St. Petersburg” and the Law of St. Petersburg “On the Preparation of Planning Documentation for Territory in St. Petersburg and Amendments to Certain Laws of St. Petersburg”.

[14] For example, if the approved Documentation prevents the adoption of a decision on the integrated development of the territory on the initiative of the Government of St. Petersburg, within the boundaries of the territories in which the implementation of activities for integrated and sustainable development of the territory (or parts of such territories) is envisaged in accordance with the Land Use and Development Rules of St. Petersburg.

[15] For example: (i) if it is impossible to place capital construction facilities in accordance with the parameters of the development of the territory and the characteristics of capital construction facilities established in the territory planning documentation due to the placement of public spaces displayed on the General Plan of St. Petersburg or the inclusion of the territory in the list of public green space areas in accordance with the law of St. Petersburg which came into force after the approval of the territory planning documentation; (ii) upon cancellation of the functional purpose of a capital construction structure located on a land plot outside the borders of the zone of the planned location of a capital construction structure, provided that such structure was not taken into account in the calculation of the provision of the territory (provision of citizens with living space) with social infrastructure facilities.

[16] Law No. 369-89 of St.Petersburg dated July 29, 2020 of “On amendments to the Law of St.Petersburg “On the Boundaries of the Integrated Protection Zones of the Cultural Heritage Items Located on the Territory of St.Petersburg, Land Use Regimes and Requirements to the Urban Planning Regulations within the Boundaries of the Zones”. In accordance with Art. 3 this document will come into force on 1 February 2021, except for the provisions concerning land plots within the protection zones of the cultural property listed in Attachment 3, which will come into force on 1 August 2021, and the provisions concerning land plots within the protection zones of the cultural property listed in Attachment 4, which will come into force 10 days after the date of official publication (published on the official website of the Saint Petersburg Administration http://www.gov.spb.ru on 3August 2020).

[17] Part 6 Art. 15.5 Federal Law “On Participation in Shared Construction”

[18] Part 1 of Art. 18 of the Federal Law “On Participation in Shared Construction”

[19] Changes to Part 8.1 of Art. Of the 13 Federal Law “On Participation in Shared Construction”

[20] Resolution No. 262 of the Government of the Russian Federation dated March 10, 2020 “On Amending Certain Acts of the Government of the Russian Federation Concerning the Conclusion of Power Supply Agreements (the Purchase and Sale (Supply) of Electricity (Capacity) Prior to Completing the Technological Connection Procedure and Repealing Some Provisions of Certain Acts of the Government of the Russian Federation”. Amends the Rules for Technological Connection of Consumers’ Energy Consuming Devices, Electricity Production Facilities, and Power Grid Facilities Owned by Network Organizations and Other Persons to Power Grids, approved by Resolution No. 861 of the Government of the Russian Federation dated December 27, 2004.

[21] Federal Law No. 522-FZ dated December 27, 2018 ( Art. 37 of Federal Law No.35-FZ dated March 26, 2003 “On the Electric Power Industry” was supplemented with part 5 and part 6).

[22] Consumers of electric power (capacity) purchasing electric power on retail markets, electric power (capacity) production facilities on retail markets, and electric grid facilities owned by grid organizations and other entities.

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