Russia, being the biggest country on earth with huge available land masses arouses the imagination of many. Whereas in many parts of the world overpopulation is a big problem and consequently the prices of land are skyrocketing, in Russia there is surely no shortage of land (we are not talking about land within the big cities here) and prices are, from a western perspective, very reasonable. But can a foreigner freely buy and sell land in Russia? That is the question we will answer in this blog post.
To answer the question briefly and without room for nuance: yes, a foreign citizen has the right to acquire ownership of land plots in the Russian Federation (and to subsequently sell those), but there are important restrictions, which we will discuss in this blog post.
In this article we will also discuss land in the Crimean Peninsula, since recently important restrictions have been introduced in regard to this land. We don’t give a value judgement on the controversial issue that is Crimea, but stick to what is our job: informing our clients about Russian law.
We are qualified lawyers, but as long as we are not your lawyer, we cannot be held accountable for any action or inaction you undertake based on the information on this website.
On this page
- Main restrictions to foreign land ownership in Russia
- Restrictions that apply both to Russians and to foreigners
- Restrictions that apply specifically to foreign citizens in Russia
- Ways for foreign citizens around the prohibitions
Main restrictions to foreign land ownership in Russia
Let’s start with the fact that, according to the legislation of the Russian Federation, a foreign citizen cannot own the following plots of land:
- Land in border territories
- Land within the boundaries of a seaport
- Agricultural land
- Land plots in Crimea
We shall discuss each of these categories in some more detail below.
Restrictions that apply both to Russians and to foreigners
Although the focus of this blog post is on restrictions that apply to foreigners, we want to point out that many restrictions apply to foreigners and Russian citizens in exactly the same manner.
There are restrictions that apply to everyone, both Russian and foreign citizens. For example, the Land Code of the Russian Federation provides for two main blocks of restrictions on the turnover of land plots: these are land plots that may not be private property and land plots that can only be private property under exceptional circumstances.
Land plots that may not be held in private property by anyone in Russia
Land plots withdrawn from turnover may not be owned by a private person and no transactions may be conducted with such land plots. A complete list of such such land is given in Article 27 of the Land Code.
These are:
- State nature reserves and national parks, unless otherwise provided by this Code and the Federal Law of March 14, 1995 N 33-FZ “On Specially Protected Natural Areas”;
- Buildings, structures in which the Russian Federation Armed Forces, other troops, military formations and bodies are located for permanent activities (except in cases stipulated by federal laws);
- Buildings, in which military courts are located;
- Facilities of federal security service organizations (FSB)
- Facilities of state security organizations
- Nuclear power facilities, nuclear materials and radioactive substances storage facilities;
- Objects, in accordance with the activities of which closed administrative-territorial formations were created;
- Facilities of institutions and bodies of the Federal Penitentiary Service;
- military and civilian burials
- Engineering structures, communication lines and communications constructed in the interests of protecting and protecting the state border of the Russian Federation
Land plots restricted in turnover
Land plots, restricted in turnover, can’t be privately owned, except for cases envisaged by federal laws. In particular, this is Article 16 of the Federal Law № 189-FZ of 29.12.2004 “On enactment of the Housing Code of the Russian Federation”. A land plot is transferred free of charge into the common shared ownership of the owners of the premises in the apartment building, if:
- the house and other real estate objects within it are located on this plot;
- The plot was formed before the entry into force of the Housing Code of the Russian Federation;
- the state cadastral registration was performed in respect of it
The full list of land plots restricted in turnover is provided in article 27 of the Land Code of RF, these are state or municipal property that are:
- Land plots within the limits of specially protected natural territories, not specified in paragraph 4 of this article, unless otherwise stipulated by this Code and the legislation of the Russian Federation on specially protected natural territories;lands of the forest fund;
- Forest land
- Land plots, within which state or municipally owned water bodies are located;
- Occupied by especially valuable objects of cultural heritage of the peoples of the Russian Federation, objects included in the World Heritage List, historical and cultural reserves, archeological heritage sites, and museum-reserves;
- Provided for defense and security, defense industry, customs needs and not within the scope of the prohibition relating to land plots that may not be held in private property that is within the boundaries of closed administrative-territorial formations but does not fall within the scope of the prohibition relating to land plots that may not be held in private property
- Intended for the construction, reconstruction and (or) operation (hereinafter also – location) of sea transport, inland water transport, air transport, navigation support facilities for air traffic and navigation, public railway transport infrastructure facilities, as well as highways of federal, regional, intermunicipal or local significance;
- Occupied by space infrastructure facilities;
- Located under the objects of hydraulic engineering structures;
- Provided for the production of poisonous substances, narcotic drugs;
- Contaminated with hazardous waste, radioactive substances, biogenic pollution, and other degraded lands;
- Located within the boundaries of lands reserved for state or municipal needs;
- In the first and second zones of the sanitary protection zones of sources of drinking and domestic water supply.
Restrictions that apply specifically to foreign citizens in Russia
As indicated above, there are four main categories that foreigners are not allowed to own in Russia. We will discuss these in some more detail.
Land in border territories
There are no exceptions to the prohibition of foreign ownership for this type of land. It is therefore important to know which land falls withing this category.
The list of border is laid down in the Decree of the President of RF of 09.01.2011 N 26 (updated on 20.03.2020) “On approval of the list of frontier territories, where foreign citizens, stateless persons and foreign legal entities may not possess the right of ownership of land plots”. The Russian document you can find here. There are 380 different border territories in Russia.
Within the city of Saint Petersburg there is one such border territory: the city of Kronstadt (a city within a city).
Within the Leningradskaya Oblast (the territory surrounding the city of Saint Petersburg) the following territories are border territories:
- Municipal Formation “Vyborg District“. (within which the famous former Finnish city of Vyborg is located) and has a border with Finland.
- Kingisepp Municipal District, Leningrad Oblast, which is a direct neighbor of the Estonian city of Narva
- The Lomonosov Municipal District, Leningrad Oblast, with a vast land mass bordering the Finnish Gulf.
- Slantsy Municipal District, Leningrad Oblast, which also has a border with Estonia.
- Sosnovoborsky Municipal District, Leningrad Oblast.
Land in Crimea
Ever since, according to Russia, Crimea became part of Russia in 2014 this area has been the territory of a legal battleground. Since 2014 EU citizens are not allowed to acquire any kind of real estate in Crimea, according to EU law.
Only in March 20, 2020 Russia included a lot of land in Crimea in the category of border territory. This meant that, according to Russian law, land plots owned by foreigners had be sold within a year. Thus, these procedures ended only in March 2021.
The Russian prohibition is however not an all-encompassing prohibition, like the EU one. According to Russian law, foreigners can own real estate in the border territories of Crimea, they just can’t own the land underneath it. This lead to the commentary of Russian goverment officials that foreigners who own a house in Crimea can rent the land underneath the house. If the ground is owned by the municipality, they have a prriority right to rent this land.
Land within the boundaries of a seaport
Land plots within the boundaries of a seaport are laid down in Federal Law of 08.11.2007 N 261-FZ (ed. of 11.06.2021) “On Sea Ports in the Russian Federation and on Amendments to Certain Legislative Acts of the Russian Federation.
Within the city of Saint Petersburg, there are 2 seaports:
- The Big Port of St. Petersburg;
- Passenger Port of St. Petersburg
Within the Leningradskaya Oblast, there are the following seaports:
- Vyborg
- Vysotsk
- Primorsk
- Ust-Luga
Land owned by the state or the municipality
Foreigners in Russia can only acquire ownership of land from the state or the municipality in exchange for a payment, the size of which is to be determined in accordance with the law, Article 39.4 paragraph 4 of the Land Code.
Farmland in Russia
Russia consists of 1638,1 million hectares of land (4047 million accres). Of this land around 222 million hectare is farmland. So that means that around 13,5% of the total amount of Russian land is farmland. That means a serious restriction to a foreigner’s ability to purchase the plot of land that he desires.
The list of lands of agricultural designation is designated by each subject of the Russian Federation independently. The legal regulation of these plots is contained in the Federal Law No 101-FZ of 24.07.2002 “On turnover of lands of agricultural designation.
Ways for foreign citizens around the restrictions to foreign land ownership in Russia
Оne has to keep in mind that a prohibition to own land, is not a prohibition to own any real estate in these territories. With this information in mind, a foreigner in Russia can use the land that he is not allowed to own in the following ways.
Rent
This is obvious, but needs to be mentioned. Foreigners are allowed to rent agricultural land, land in sea ports and land in border territory. If you have your eyes set on a property in one of these zones, maybe renting it could be an alternative for you.
Set up a company with a Russian partner and buy Agricultural land with the company
According to Article 3 of the Law “On the turnover of agricultural land” Russian companies of which more than 50% of the shares is owned by foreign citizens or foreign legal entities may only rent agricultural land in Russia. So, Russian companies of which less than 50% is owned by foreigners or foreign companies may acquire agricultural land in Russia.
Hide Behind the corporate veil
The abovementioned prohibition of Article 3 applies only to farmland and only to direct shareholders of a Russian organisation. So, in theory at least, multinationals can easily set up a Russian subsidiary and let the Russian subsidiary have a subsidiary of its own that is then the owner of the agricultural land plot. According to the letter of the law, this structure is legal, but many scholars condemn it, because it basically allows those with deeper pockets to avoid the obligation.
Becoming a Russian Citizen
This is, of course, stating the obvious. But in order to prevent the restrictions that apply to foreigners wanting to acquire land in Russia one can become a Russian citizen.
Of course this is not a decision to be taken lightly. But from our practice we know for a fact that many foreigners are already weighing the pros and the cons of having a certain nationality.
Being able to acquire a plot of land without any restrictions will in and of itself unlikely be the only decisive factor when making this important decision, but it can very well be one of the factors that a person takes into account when making up his mind.
Changing the agricultural destination of a land plot
In most cases it not possible to change the designation of a land plot. Only in cases where the zoning plan provides for the possibility of changing the designation of a land plot, might you be able to do this. But even in these cases there is a big chance things won’t go your way.
Conclusion
Buying land as foreigner in Russia is possible, but there are many restrictions and nuances, many (but not all) we have touched upon in this blog post. Van Rhijn & Partners can offer you the legal help when renting or buying a land plot in Russia. Feel free to contact us or leave a message below.
