Legal obstacles prevent developers from working in Crimea

Crimean residential real estate continues to grow in price. Despite the annually increasing demand for housing, construction companies from the mainland of Russia are in no hurry to start work on the peninsula. According to a survey conducted by the Republican Institute of Political and Sociological Research (RIPSI), the large-scale work of developers in the Crimea is hindered by "birth trauma" associated with the entry of the territory into the Russian Federation in 2014.

According to Rossiyskaya Gazeta, referring to analytical data, about 0.5 square meters of housing per inhabitant are built annually in Crimea. This is several times less than the volume of construction of houses in the Kuban (1.35 square meters).

Experts see the reason for such a discrepancy between supply and demand in problems with documentation and registration of transactions.

The RIPSI survey showed that in practice, real estate development companies and real estate agents face at least three major problems that increase the risks for housing construction in Crimea. In the first place – the contesting of transactions on the alienation of real estate by third parties. More than a third of respondents have experienced this practice.

The second place in the list of high-risk factors is caused by the actions of the judiciary or representatives of municipal authorities who change the status of land use of a particular territory after the purchase and sale of a land plot is completed. More than 25% of market participants have experienced this practice.

The third most important factor deterring mainland developers was the inability in practice to register ownership of a land plot occupied by self-construction. As the researchers found out, every fifth respondent faced this problem.

According to the norms of law enshrined in the federal law on the admission of Crimea and Sevastopol to the Russian Federation, real estate documents issued in Ukraine before 2014 have the same legal force as those issued in Russia.

However, the practice of challenging the property rights of the Ukrainian period continues. Current officials also resort to it, seizing plots of land into state ownership for the construction of infrastructure facilities and the construction of roads.

The federal authorities demand that Crimea increase the pace of housing construction in 2022. The issue was raised at a meeting of the State Council on the Construction Industry and Housing and Communal Services. Representatives of the Notary Chamber of Crimea also speak about the possibility of relying on notarization of transactions in the process of proving the circumstances of the occurrence of property rights. But everyone will have to solve the issues of creating an attractive climate for investors in the region together. Representatives of local authorities and businesses should play an important role in this.