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Legal update in Real Estate


On March 11 the traditional open event of the AEB Real Estate Committee on innovations in the Russian legislation was held. The meeting was organized in the online format.

While opening the session, the moderator of the discussion, Tatiana Kovalenko, the chair of the Real Estate Committee, pointed out that both the economy in general and the commercial real estate market in particular have become quite adaptive to the new conditions, which are almost routine for everybody now, under the influence of the pandemic restrictions over the past year.

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Ilia Lokhanin, Lawyer of the Construction Law, Environmental Law and Infrastructure Projects Department at Rödl&Partner, presented preliminary results on how the restrictions caused by the Covid-19 pandemic affected the commercial real estate market during 2020 and what measures to protect companies in the affected industries the government has taken in terms of rents.  In particular, one of the most prominent trends in commercial real estate, according to statistics, was the increase in percentage of vacant premises, both office and shopping. In addition, the investments have decreased significantly, and the size of the average transaction has fallen by half. With all the measures taken by the government to support tenants (such as the delay in payment of rents, the right to demand a reduction in rents, etc.) an essential problem was to reach an agreement between the tenant and the owner. And, as noted by Ilia Lokhanin, judicial practice shows that in case of absence of such consent it becomes necessary to prove that the tenant's business belongs to the most affected industries, according to the approved list, and, to establish this fact, one of the key factors is the wording of the purpose of the premises in the rental agreement.


Anton Alexeev, Counsel at Egorov, Puginsky, Afanasiev & Partners, has talked on the so-called "Law on All-Russian Renovation" (Federal Law No. 494-FZ of December 30, 2020) – on the amendments to the RF Urban Planning Code which were adopted at the end of last year in order to ensure the Complex Development of Territories (CDT). The expert compared the CDT provisions in the previous and the updated versions and revealed the main innovations. In particular, he outlined the introduction of the"renovation" mechanism in the concept of CDT - by increasing the list of criteria according to which regional authorities may include apartment buildings in the program of complex development of territories. Anton Alekseev also pointed out the extended powers of the authorities in terms of approving the decision on the CDT and the inclusion of buildings within the boundaries of the corresponding territory. The risks for property owners, which were noted during the speech, remain - in spite of the requirements to take into account the opinion of population and holders of the property. Although the adoption of the federal law implies development of many by-laws in regions, which may take some time, the expert advised owners to keep systematic information monitoring, and if the rightholders themselves have some need for CDT, to be the first to come forward with this initiative in order to offer the conditions from the very beginning.


Dmitry Bogdanov, Senior Lawyer at CMS Russia, followed the topic of legal innovations in real estate in recent months. He talked about allowances made for the construction industry during the pandemic (such as the opportunity to start preconstruction works immediately after the project documentation is submitted for expert review - i.e. before obtaining a construction permit). The expert also pointed out the reduction and specification of the time limits for a number of procedures, although he noted that the adopted adjustments may not significantly affect the terms of construction. Further digitalization of the procedures in the industry, including the total conversion of some services into electronic format, can be attributed to positive trends. Dmitry Bogdanov, similarly to the previous speaker, drew attention to the complex development of territories. He pointed out the main "points of pain" of CDT and the renovation program in Moscow, related, in particular, to the protection of market participants' interests.
The expert touched on the topic of creating the public-law company "United Contractor in Construction" which caused further discussion among the meeting participants on the trends of the state influence on the real estate market. Additionally, the panelists considered possibilities and perspectives for the participation of other market players, besides the direct contractors, in the renovation program in the Russian regions.