The authorities have recently been actively discussing the need for economic development of the remote regions of the country.

The first document concerning such development was Federal Law No.93-FZ “On organizing a meeting of the heads of states and governments participating in the ‘Asian-Pacific Economic Cooperation’ forum in 2012, on development of Vladivostok as a center of international cooperation in the Asian-Pacific Region and on amendments to certain legislative acts of the Russian Federation” dated May 08, 2009. This Federal Law ensured implementation of large-scale construction projects for holding the Asian-Pacific Economic Cooperation summit and also contributed to the positive dynamics of the Far East Region’s development, though it did not provide active measures to further development of the Region.

On November 29, 2012, the Russian President held a meeting of the Presidium of the State Council for the Far East, where he gave instructions to establish a procedure for providing land parcels free of charge for purposes of individual residential construction, in order to make living conditions in the Far East and Transbaikal regions more attractive, as well as to improve the demographic situation.

The result of implementing the President’s instructions in 2015 is the Draft Federal Law “On peculiarities of providing land parcels in the Far East Federal Circuit” (hereinafter the “Draft Federal Law”), which recently was approved by the representatives of the regions of the Far East Federal Circuit and was transferred for further elaboration to the Russian Ministry of Economic Development. 

The Draft Federal Law establishes the peculiarities of the procedure for providing land parcels owned by the state or municipalities and located in the Far East Federal Circuit (hereinafter the “land parcel”) on a free-of-charge basis.

As pursuant to the Draft Federal Law the size of the land parcel provided equals 1 ha per each family member permanently living with the applicant, the mass media dubbed it the draft law “on the Far East hectare.”

In accordance with the Draft Federal Law, each citizen of the Russian Federation, even in a status of individual entrepreneur, has the right to obtain a land parcel on the condition that such land parcel is located at a distance of:

1)   Over 10 km from the borders of a settlement with population over 50,000;

2)   Over 20 km from the borders of a settlement with population over 300,000.  

Taking into account that a considerable number of cities in the Far East comply with the specified parameters, those who wish to acquire a land parcel under the simplified procedure have a variety of options to choose from.

A person will have 5 years to develop the land parcel concerned in accordance with the established type of permitted use.

As the land parcels are planned to be provided free of charge, the Draft Federal Law provides a simplified procedure for such provision. Furthermore, a simplified procedure is proposed for changing the type of permitted use of a land parcel based on the decision of an authorized body in accordance with the application for provision of the land parcel, without the need of having territorial planning documents and holding public hearings.

Pursuant to the Draft Federal Law, individuals can even be granted a land parcel classified as forest land, as long as it is not on the territory of protection forest.

It should be noted that pursuant to the provisions of the Draft Federal Law, foreigners and foreign legal entities, as well as legal entities with foreign or stateless shareholders, cannot subsequently acquire the ownership title to the land parcels.

If approved, the Draft Federal Law “On peculiarities of providing land parcels in the Far East Federal Circuit” will enter into force on July 01, 2016, and some of the law’s provisions will stay in force until January 01, 2035.

At present, one would be hard-pressed to say that the Draft Federal Law is well-developed, as some provisions are given in general terms and need to be clarified substantially. In addition, according to representatives of the Russian Ministry for Far East Development, the program of simplified provision of the “Far East hectares” will help to attract people from other Russian regions, since 30 million people are ready to move to the Far East subject to obtaining the land.

Certainly, the main problem of potential landowners in the Far East is still insufficient infrastructure, and sometimes its absolute absence. However, there needs to be a starting point and therefore the idea put forth in the Draft Federal Law can serve as a good beginning.

Elena Stepanova  Partner                                Moscow   estepanova@cls.ru  Tel.: +7 (495) 970 10 90

Olga Sofinskaya      Associate                Moscow      Tel.: +7 (495) 970 10 90

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Elena Stepanova and Olga Sofinskaya, Moscow Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.