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Measures to support those who rent property of the city of Moscow

04.04.2022
3 min read
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Pepeliaev Group advises that the Government of Moscow has adopted[1] a set of measures to provide economic support to those who rent land plots and non-residential premises.

In the crisis situation, the Government of Moscow, as the primary landlord of property in the capital, is aiming to mitigate the consequences of the crisis. The anti-crisis regulation can be divided into 2 parts: (i) general measures to support businessmen; (ii) measures to support the construction industry.

What support measures are available to an ordinary businessman who rents city property?

The primary support measure is a moratorium on increasing rental rates in 2022. It is assumed that this measure will prevent significant adjustments of rental rates in view of the high inflation level. Moreover, this conservation will create certainty of the amount of expenses on rent and will facilitate long-term planning.

In addition, business tenants will be able to obtain a deferral of rent payments for April, May and June until the end of 2022, which will also reduce tenants’ costs. We can assume that, along with this, tenants will have to pay interest if they want to use the deferral. An interest-free deferral will be granted to certain tenants.

What support measures are available for construction businesses?

  1. The Government of Moscow has paid particular attention to the construction sector. In addition to the general support measures, for certain tenants of a land plot for construction purposes the existing rent rate will be preserved for the next year of rent also. Besides, during the first year of rent, they have a right to obtain an interest-free deferral of rent for the second quarter of 2002 for a period of 6 months. It is assumed that, taking into account the rouble devaluation, this measure will help continue construction projects.

  2. The Government of Moscow has taken upon itself a portion of the costs connected with the increase of the key rate by fixing it at the level of 9.5% in certain cases. For example, in certain cases, when a construction lease agreement was entered into, a deferral of rent for the first year was provided in certain cases with interest based on the key rate accruing on a quarterly basis on the amount of the deferred payment. In the current conditions, such an 2.5-fold increase of the amount of interest would be destructive for a construction in progress.

  3. The procedure has been liberalised for securing the obligations to pay rent and to pay for the change from one permitted use to another for construction purposes.

  4. The Government of Moscow has provided an opportunity to set a symbolic rent of 1 rouble in certain cases (construction under a lease agreement which has already been concluded, lease of a land plot to complete construction and implementing large scale investment projects) when a land plot is leased for the purposes of the construction of industrial and manufacturing facilities. It is assumed that this will help make the construction of industrial facilities commercially profitable, increase diversity and create new jobs.

What to think about and what to do

Businessmen who rent property of the city of Moscow are advised to consider the support measures, check them against their business plans and assess whether they are worth using. It is possible that they include instruments which will help significantly reduce costs and direct the released funds towards solving more urgent problems.

Help from your adviser

Pepeliaev Group’s experts continue to monitor the changes in regulation which are aimed at protecting businessmen. Sometimes companies miss out on an opportunity to use certain support measures, are unaware of potential risks and encounter difficulties with obtaining such measures. In such cases we are ready to provide comprehensive legal support to companies which rent city property.

Pepeliaev Group's services include advising on the application of the “anti-sanctions legislation”, analysing the risks arising if certain support measures are used, representing companies before state authorities and other services aimed at obtaining lawful support measures without hindrance.

[1] Resolution No. 407-PP of the Government of Moscow dated 22 March 2022.

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