Information Bulletin on the Real Estate & Construction Practice (Issue 1, 2018)
NEWS
AHML to focus on the fundamentals
In September 2017, the Agency of Housing Mortgage Lending (AHML) dissolved the Fund for the Promotion of Housing (FFH), with the AHML assuming all the functions and authority of the FFH. However, AHML has discontinued its insurance activity. According to official sources, the Central Bank of Russia (CBR) revoked the AHML license for insurance activity in December 2017. AHML likely will focus only on supporting the mortgage lending market and mortgage-backed securities.
The highest building in Europe is open in Moscow
Federation Tower (Federatsiya), the multipurpose complex and the highlight of the Moscow City district, is now open. The closed joint stock company (CSC) Bashnya Federatsia, part of the AEON business group, received the official permits to occupy and operate the new building.
The Ministry of Housing and Town Planning (MHTP) is starting a “blacklist” for contractors of construction materials
The deputy minister of housing and town planning, Hamit Mavliyarov, said that Russia will create a Register of bad faith manufacturers and suppliers. That measure is necessary to ensure the optimal quality of construction material and to prevent manufacturers from disregarding technology. According to Mavliyarov, poor-quality materials should not enter the market. If a supplier or manufacturer provides inferior products, it will appear on the register.
The Ministry of Housing and Town Planning (MHTP) promises a “smooth” transition from shared construction to the project financing model
Road Map, a government document outlining the process for making the transition from shared construction to a project financing model of citizen investments, does not include any radical measures. The official document outlines several steps for abandoning the practice of shared construction. The first stage, for example, does not require real estate developers to eliminate shared construction projects. Entrepreneurs who initially wish to use the shared construction model of investments may receive a reprieve from the new strict requirements in real estate and construction legislation.
Moscow authorities announced a competition for designing initial houses for a renovation program
Marat Hasnullin, the deputy of the mayor of Moscow, announced that local authorities are searching for new construction areas. They already have identified approximately 236 areas with 3.5 million square meters of potential future construction, and work has begun on 136 areas. Local authorities are interested in designs for new houses, and a competition is the best way to identify new talent and the most professional contenders.
The development of Gazstroymash is complete
The reconstruction of Gazstroymash, the former plant situated within the boundaries of the N 36 Krasnuy Oktyabr industrial area of southern Moscow, is complete. As a result of the construction, the large Varshavskoe shosse 141 housing complex took the place of a non-active production area. The housing complex provides eight buildings, each with 12, 13, or 25 floors, a Kindergarten, multilevel parking, and a shopping mall.
The development of industrial areas is not new in Moscow. Sergey Levkin, the head of urban policy for Moscow, reported that 120 hectares of industrial areas underwent reconstruction in 2017. Those renovation projects provided 1.9 million square meters of housing, along with social and cultural facilities.
The new system for submitting project declarations is functioning
In January 2018, the new information system for developers to file construction documents digitally began functioning. Before the changes, developers had to file construction documents in XML format through the official site of the Moscow mayor.
Furthermore, as of February 2018, the new project documentation system is aligned with the most recent legislative requirements for real estate and construction. In particular, there is no need to specify the area of apartments and auxiliary rooms, only the total area of all residential or non-residential premises. The new service does not require information about the common property associated with an apartment building, aside from information about common-use premises and technological equipment.
NEW BILLS AND ACTS
Online public hearings for construction projects is in place
The State Duma, the legislative body of Russia, had enacted a new law that is expected to substitute the usual public hearings with an online version of that procedure.
Before the amendments, the Russian Town Planing Code required face-to-face public hearings that limited the number of people who could participate in the procedure.
As the explanatory note for the new legislation indicates, the current law does not contain a requirement to record information about a participant’s place of residence or to verify their identity. As a result, there will be no financial expenditures to create new online services, unlike portals for other government services.
Experts expect that the awareness of planned construction will increase and that organizational expenses, for the time being, will diminish significantly.
The new master plan for Balashikha to 2035 is approved
Local authorities approved the master plan of development of Balashikha, a city near Moscow. According to official reports, the new master plan includes the development of transportation and social infrastructure. It provides more than 50 kindergartens, nearly 40 schools, seven art schools, 20 health facilities, facilities for services, culture, and sport, and new roads and parking areas. The project will contribute to employment creation.
ADMINISTRATIVE AND JUDICIAL PRACTICES
The investor failed to obtain a permit for the reconstruction of a residence on Krasnaya presnya into a hotel and restaurant
At its January 25 session, the Urban Planning and Land Commission (UPLC) did not permit the reconstruction of a building on Krasnaya presnya. Particularly, it refused to amend land-use and construction rules for a plot of land with 0.07 hectares on 20 Krasnaya presnya St.
According to official details, the investor needed a permit to expand the building from 967 square meters to 1,300 square meters to serve as a hotel and restaurant. The UPLC rejected the investor’s plan because the reconstruction threatened the comfort of nearby tenants.
The termination of the right to operate state property involves the termination of all related public responsibilities
The Division of Economical Disputes of the Supreme Court (DED SC) resolved the dispute between state agencies and legal entities with regard to subordinating public responsibilities. The DED SC held that the public obligation of preserving objects of cultural heritage is an important part of the right to operate state property. Thus, transferring the right to operate the public property or its termination implies the release of the legal entity from preserving monuments of culture and history.
Government documentation on real estate property does not indicate a relationship between contractual parties
The Division of Economical Disputes of the Supreme Court (DED SC) resolved the dispute between the Administration of the City of Khimki and Toris Limited Liability Company (Toris LLC). The DED SC held that the court should determine the details between the contractual parties before ruling on the possibility of erecting buildings. In settling the dispute, the DED SC admitted its adherence to a literal interpretation of the law and pacta sunt servanda principles.
The owner of an apartment building is obliged to sustain the property, even in the absence of a service contract with a housing office
The Division of Economical Disputes of the Supreme Court (DED SC) resolved the dispute between Zhilischno-kommunalnaya systema LLC, a housing office, and Magazin 113 LLC, the owner of non-residential spaces. The DED SC held that the owner must bear the burden of ownership, thus, Magazin 113 LLC has the responsibility to maintain its property. In settling the dispute, the DED SC also pointed out that an entity delivering services is to receive legitimate payment.