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. Last Updated: 07/27/2016

Agents Criticize Land Law

The Russian government has created a legal framework for buying and selling small blocks of land but Russian real estate developers said the law will not help them buy and sell property.

In December, parliament abolished the old Soviet ban on private ownership of land and passed a law giving citizens the right to own and sell property. But until this month, the law could not be used because it lacked rules for registering land sales.

Vyacheslav Grigoryev, head of Moscow's committee on land use, said that the government has now created those rules, allowing Russian citizens to sell their plots to other citizens with the deal being officially registered by the local land committee.

The law, however, is not yet operative because the government has yet to set the fees for land transfers. Grigoryev said it would take "some time to put the new rules into practice", because the fees have not been established.

But when they are set, the right to transfer land will apply only to Russian citizens who received the land from the state for gardening or building. The rules do not apply to real estate companies that trade land, keeping their business only semi-legal.

Despite these legal problems, Grigoryev said, real estate developers around Moscow have already begun operating in Moscow's suburbs, using creative ways to get around the law and meet the growing demand for land.

He said that some developers have struck land deals with local authorities in exchange for money or some other payment such as building a school or a road.

A representative of Inter, a real estate company that sells land around suburban Moscow, said his company had obtained plots of land 60 kilometers from Moscow by making such a deal.

But the representative, who declined to give his name, said that Inter had to conceal the fact that it was trading in real estate because of the lack of a legal basis for companies to buy and sell land.

Inter insists that its clients join a special "gardener's union", which theoretically controls the land. Clients even receive a membership card.

Inter sells land at $1, 200 per quarter hectare block. Most of its clients are businessmen, planning to build country homes on their plots, said the company's salesman. Under the law, according to a real estate agent, foreigners cannot buy the houses, but must rent them or act through their Russian partners.

Land prices depend upon the distance from Moscow and on the pollution levels in the area. Agra, another company that buys and sells land, offers blocks 20 kilometers northwest of the Moscow circle road for $7, 000 per quarter acre. The company's representative said that areas west, northwest and southwest of Moscow are most attractive for buyers.

Other firms have actually moved into real estate development. The Regional Real Estate Agency offers fully-built cottages 30 kilometers west of the Moscow circle road for $150, 000.