Major changes to land ownership take effect in Russia today
Source: Channel One TV, Moscow, in Russian 0600 gmt 27 Jan 03
[Presenter] The law on tenure of agricultural land enters force today. It was adopted in the middle of last year. It permits the free sale and purchase of land designated as agricultural, thereby underpinning citizens' constitutional right to privately hold and manage land.
[Correspondent] You can now sell, gift, bequeath and mortgage land. According to analysts, the historical importance of this law is on a par with the renowned Stolypin land reforms at the beginning of the 20th century [which encouraged individual rather than collective farming].
[Aleksey Gordeyev, deputy prime minister and minister of agriculture, captioned] As of now, all transactions that take place must comply with this federal law. As of now, the purchase of land designated as agricultural will be prohibited for foreign nationals. There will be tougher penalties for improper use of such land. Also, it aims to avoid the concentration of large tracts of land in the hands of a single individual. There are restrictions to this effect in the law. In addition, plots of land that people have held for two years should be registered in accordance with the Civil Code.
[Correspondent] The law was passed after three relatively quick and painless readings in the Duma. Nine years ago, rural people received land certificates - this was a kind of countryside equivalent of the notorious privatization vouchers. Twelve million people got them but few took up their rights. According to statistics, just 2.8 per cent of rural inhabitants used their plots of land for farming. And less than 1 per cent used them to expand smallholdings. It's no secret that land has been de-facto bought and sold for decades, and the new law merely legalizes the existing state of affairs...
As soon as the law enters effect, anyone holding land will be entitled to manage and dispose of it as he sees fit. But not immediately. Any real-estate transaction has to be registered. That means that businesses or smallholders must, at their own expense, prepare a pile of paperwork and registrars are entitled to return that paperwork if they have any doubts about it. The process could take years. How are little old ladies in the countryside, who don't know these laws, supposed to cope? Most regions do not have a land register or even a land quality survey. Without these, there is no way of properly assessing and valuing land. And how to translate that into price terms? In northern regions a plot of land can be bought for 5,000 roubles [roughly 150 dollars]. But in some areas just outside Moscow a sotka [hundredth of a hectare] can go for 5,000 dollars or more. In real terms, however, [i.e. with respect to earnings] the two prices are probably similar.
There are no expectations of a real-estate boom after the law comes into effect. In 40 parts of the federation, local land laws appeared before the federal one and there was no rush to buy and sell land there. Will large companies buy up land? Most of them currently prefer to lease. Managers at many companies agree that turnover of land in the Russian countryside will depend not only on the way the market develops but also, and to a greater extent, on the state's ability to support agriculture and make it more attractive. Otherwise, there will no point in owning property.