The law on apartments: how their legal status is regulated

It's time for change in the apartment market. Changes in legislation that are being prepared by the government should once and for all equate apartments with housing. What will happen to prices, supply and demand after this is a good question.

Meanwhile, apartments as a special housing format are becoming increasingly popular. Buyers value them for their competitive price compared to apartments, but rarely think about the differences between them. We tell you what apartments are like today, and what the main events are happening on the market in 2021.

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Apartment features

You need to understand that apartments and apartments are two completely different concepts. From a legal point of view, an apartment is residential real estate, and apartments are classified as non-residential real estate.

That is, apartments, in essence, are not housing, but simply some kind of premises equipped for living like a hotel room. This nuance is associated with several important points about the apartments, which will be discussed below.

The fact that apartments are not residential premises has its advantages. For example, there is no division into residential and non-residential zones, which simplifies the coordination of redevelopment during renovation. But the main advantage of the apartments is something else; we will return to this point later.

Is it possible to register in the apartment?

How is registration in apartments carried out today ?

The registration system for registration is based on the existing Federal Law No. 5242-1 of the Russian Federation, as well as Russian Government Decree No. 713. According to these documents, apartments are not residential premises in which residence can be permanent.

Permanent residence in the apartments cannot be granted based on the above-mentioned laws. The only option is to register at the place of residence for temporary registration in hotel housing options. The period of such registration can range from 1 month to 5 years. When purchasing apartments, you should know that registration in them is not possible under any circumstances until now.

What's wrong with the legal status of the apartments

In addition to purely practical ones, there are also more fundamental questions about apartments. They concern the legal status of this property and have remained unresolved since its appearance on the Russian market about 20 years ago.

The concept of “apartments” has not yet been defined in any law. Instead, the wording “non-residential premises” is used. According to their legal status, apartments are on the same level as commercial real estate, storage rooms and parking spaces.

Due to the fact that apartments are not recognized as housing and at the same time are not some special format of real estate, their residents may encounter a lot of everyday problems. For example, apartments are not subject to housing legislation, so their owners will not be able to complain about noise from neighbors. But there are also more serious reasons for concern.

Apartments under DDU and bankruptcy of the developer

Since apartments are not housing, when purchasing under an equity participation agreement (DDU 214-FZ), shareholders of such premises risk being left without their property if the developer goes bankrupt. You can learn more about this from our article “We bought an apartment, but the developer went bankrupt. How to defend the rights to non-residential premises?

To solve the problem, in January 2021, the president of the Regional Public Association for the Protection of the Rights of Participants in Shared Construction “Right to Protection,” Andrei Tyutyunin, introduced a bill to the State Duma that would make it possible to equally protect the rights of purchasers of all types of non-residential premises, without dividing them.

“The need to legislatively regulate the legal status of apartments is long overdue. Indeed, such a widely used concept in civil circulation as “apartments” is not in the legislation at all, which creates various kinds of difficulties: from small ones, such as the inability to register in the premises, to extremely large ones in the form of a real chance of losing even the right to receive what was acquired under 214-FZ and paid for real estate in the event of bankruptcy of the developer. We consider the latter to be the main problem. Moreover, all the risks described above apply equally to purchasers of not only apartments, but also all types of non-residential premises, except for parking spaces and storage rooms up to 7 square meters. m,” Andrey Tyutyunin, lawyer.

They have been trying to determine the status of the apartments since 2015

Five years ago, by order of the Moscow Government, legislators developed the first version of the federal law on the status of apartments in Russia. According to its provisions, the apartments were to be equated to a special category of housing. Subsequently, the concept was repeatedly refined with the participation of the Ministry of Construction, but was never implemented.

In April 2021, the press service of the Federation Council reported that the authorities were returning to the issue of the status of the apartments. The developed draft law defines a new type of residential premises - “apartments in a multifunctional building.” This approach allows us to distinguish between the requirements for residential buildings and the apartments and apartments located in them.

The updated draft law has now been sent to the government. After receiving comments and suggestions, work on the bill will continue in cooperation with the Russian Ministry of Construction. According to Russian Deputy Prime Minister Marat Khusnullin, the issue of the status of the apartments should be resolved by the end of 2021.

Temporary registration in apartments at the place of stay, algorithm of action

Temporary registration in apartments is the most acceptable option today to legalize your residence in them.

You can register for the apartment according to the following plan:

• prepare originals and copies of the passport and certificate of ownership of the premises
• a package of documents is submitted to the office of the Federal Migration Service in person or to a multifunctional service center
• after considering the application and making a positive decision, the owner of the apartment will have to appear in order to receive a temporary registration mark in the documents

When registering temporarily, you may need a rental agreement, as well as arrival or departure sheets.

The main advantage of apartments is their cost

Apartments are usually cheaper than apartments. Compared to ordinary apartments, the difference in price can reach 15-20%, and in some cases up to 30%. It is largely due to this that the apartments are popular among those who want to save money on purchasing housing in Moscow.

For example, the minimum cost of apartments on the primary market in Moscow today is 2.4 million rubles - for that kind of money you can buy a studio with an area of ​​14-19 square meters. m in the Sayany-Park apartment complex in the Yaroslavl district. At the same time, the minimum price of an ordinary apartment with similar parameters in the capital is from 3.1 million rubles - this is a studio of 14 sq. m. m in the residential complex “My Space on Frezernaya” in the Nizhny Novgorod region. The price difference is 23%.

However, the price advantage of apartments may soon disappear. By the end of 2021, the issue of the status of apartments must be resolved - if this happens, an increase in prices for this type of real estate cannot be ruled out, says managing partner of the real estate company Maria Litinetskaya.

According to analytical data, the current cost per square meter in apartments of the mass segment and business class in the Moscow region ranges from 108 thousand to 174 thousand rubles. The bulk of such new buildings are concentrated in the Old Moscow market.

Useful links on the topic “What are apartments”

1. Standards and requirements for the construction of cottages and houses
2. Features of the lease agreement for a safe deposit box
3. Standard residential rental agreement
4. Social norm for electricity
5. What is cadastral value and how to find it out
6. Housing for young people
7. Checking the “legal purity” of the apartment
8. Features of the loan agreement
9. Why do you need a realtor?
10. Terms and conditions of the rental agreement
11. How to rent out an apartment
12. Rules for registration of citizens of the Russian Federation at the place of residence and place of stay

How things are now in the capital's apartment market

As of the end of April 2021, the primary apartment market in the Moscow region included 96 properties under construction with completion dates until 2023 and later. The bulk of such new buildings are business class - 26 projects. Also in the capital you can find 37 business-class apartment complexes and 17 luxury projects.

Structure of apartment supply by class

The bulk of apartments are in business class projects. In second place are new buildings of economy and comfort class - there are 26 such complexes in Moscow, which accounts for 33% of the total supply structure. The least number of luxury projects is represented - only 17, which is 21% of the total volume of apartments.

From the beginning of 2021, sales started in the following apartment complexes:

According to the Metrium analytical review, in the first quarter of 2020, the apartment market for the mass and business segments remained stable. There was no decrease in development activity in the apartment segment, however, in the second quarter, a sharp decline in demand should be expected.

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What are the risks of buying an apartment now? However, there are still many dark spots in the classification. “In the entire history of the market in Moscow since 2013, about five million square meters of apartments have been sold and are currently being sold. Of this volume, only two million square meters were sold under the DDU (the rest were sold under preliminary sales and purchase agreements, co-investment agreements, purchase of a future item and other schemes). Thus, 50-60 percent of the apartments remained in the gray zone. It’s unclear what will happen to them,” Korkka notes.

It will be extremely difficult to work out the legal mechanism for transferring from one status to another apartments that have already received a construction permit, and people who invested money in shared construction were expecting to receive commercial real estate. However, after its conversion to residential property, owners can count on an increase in the value of the property. Also, experts say, we should count on a revision of the tax base in connection with the upcoming changes.

However, completely abandoning the apartment is also not the best solution. This is exactly the format that is possible in old buildings for reconstruction, which obviously do not correspond to modern planning solutions. Refusal of apartments will lead to the fact that such objects will only have to be demolished and not modernized, since they do not fit into current standards, says Kiryukhina.

If a ban on the construction of apartments is introduced, many sites where economically viable projects of apartment complexes could be implemented will become less attractive to many investors. As Bavykin says, these plots can only be used for the construction of technology parks, shopping centers or other non-residential real estate projects that have longer payback periods compared to apartments.

Photo: Yuri Martyanov / Kommersant

In an ideal case, apartment owners will receive all the privileges of apartment owners, and developers will receive clear requirements and state support, which will allow them to deliver objects on time and provide them with the necessary infrastructure. In the case of a negative scenario, according to Korkki, buyers most likely will not lose their property rights. There will be not so much excesses as there will be banal confusion and a lack of understanding of what to do when regulations and instructions begin to contradict each other. Problems are also possible in registration actions during transfer (Rosreestr), when concluding new contracts for the provision of utility services (resource supply companies) and when trying to use the nearest social infrastructure.

In the primary real estate market of Moscow, both in 2019 and 2020, apartments in the overall structure of transactions account for an average of 8 percent. This share varies in the range of 7-10 percent and remains stable. At the same time, the share of apartments from the supply of the entire “primary” is about 24 percent - approximately 7.4 thousand lots, Kiryukhin cites data.

Why do developers build apartments?

In our database of new buildings in Moscow, apartments make up 23% of the total number of properties in the capital. Developers prefer to build apartment complexes not only because of growing demand among buyers.

Among other reasons, there may also be a shortage of sites where housing cannot be built, but apartments can be built. Changing the permitted type of use of a site requires time and resources, and sometimes is completely impossible, so developers buy industrial and other similar sites and build apartment complexes there. In addition, during the construction of non-residential buildings, SNiP standards for sound insulation, fire safety, insolation, etc. are less stringent.

The draft law on guest houses has been published. Is there a chance to change anything?

The project is posted on the portal for discussion of draft regulatory legal acts

Document: Draft Federal Law “On amendments to certain legislative acts in order to introduce regulation of the activities of guest houses”

As the developers indicate, the draft Federal Law was developed in order to legalize the activities of accommodation facilities located in individual residential buildings, in which temporary accommodation of citizens is carried out and other related services are provided, to create transparent rules for the operation of this type of activity, as well as to ensure the rights of consumers using the services of such accommodation facilities .

The project introduces three key concepts: “guest house” and “guest house services”, “classification of guest houses”.

• “ guest house is an accommodation facility located in a residential building (part of a residential building), meeting the requirements approved by the Government of the Russian Federation, in which guest house services are provided;”;
• “ guest house services - a set of services to provide temporary accommodation for individuals and other services provided for by the Rules for the provision of guest house services in the Russian Federation, approved by the Decree of the Government of the Russian Federation, which are provided by individuals applying the special tax regime “Professional Income Tax” in accordance with Federal Law No. 422-FZ of November 27, 2021 “On conducting an experiment to establish a special tax regime “Professional Income Tax”, individual entrepreneurs and legal entities;
• “ classification of guest houses - assignment of guest houses to certain categories established by the regulations on the classification of guest houses, approved by a decree of the Government of the Russian Federation, based on an assessment of the compliance of the assessment of guest houses and the guest house services provided in them with the requirements established by this regulation.”;

The list of by-laws will have to include Decrees of the Government of the Russian Federation, which will approve: requirements for guest houses, rules for the provision of guest house services and regulations on the classification of guest houses.

The draft Federal Law provides for amendments to the Federal Law of July 18, 2006 No. 109-FZ “On migration registration of foreign citizens and stateless persons in the Russian Federation,” which means that all representatives of the hotel business who are classified for compliance with the requirements guest houses will have to comply with immigration legislation. And they will have another “headache” - the problem of transferring information about guests to the territorial migration authorities of the Russian Ministry of Internal Affairs. It has been discussed for several years, but has not moved forward. For owners of guest houses who did not know about this, a series of materials on this topic has been published below.

At the same time, sanctions for the slightest violation of the migration registration procedure for hoteliers, and now also for owners of guest houses, amount to several hundred thousand rubles (up to 500,000, Code of Administrative Offenses of the Russian Federation, Article 18.9.). Under fear of these sanctions, hoteliers sometimes (especially in the regions) refuse to accommodate foreign tourists altogether, and this all happens against the backdrop of the ongoing strategy for the development of tourism in the Russian Federation, one of the goals of which is to increase the tourist flow, improve comfort, and remove some restrictions, such as some barriers.

Source: website of the Association “Tourism Safety”, 04/14/2021

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Summary

The history of the development of the apartment market in Russia goes back about 20 years. During this time, from luxury real estate only for the richest, they have turned into a popular housing format, which allows you to save money on purchase when compared with apartments. But the apartments also have a number of differences from ordinary apartments.

• The apartments are classified as non-residential real estate, so permanent registration cannot be issued for them - only temporary registration for up to five years with further extension.
• When purchasing apartments, you will not be able to receive a 13% tax deduction, which is available to owners of ordinary apartments.
• Condos typically have higher taxes and utility rates than condos. For example, the property tax rate for an ordinary apartment is 0.1-0.3%, while apartment buyers will have to pay from 0.5% to 1.5%. Also, apartment owners do not have access to benefits when paying for housing and communal services.
• Since the construction of apartments usually does not take into account the construction of social infrastructure, their residents often experience a lack of schools, kindergartens and clinics within walking distance.

Considering the peculiarities of the legal status of the apartments, they can be considered as a good investment option for rental purposes. At the same time, for family buyers who are planning or already have children, and also want to obtain a residence permit in the capital, this housing format may not be the most successful.

Changes in legislation planned for 2021 should solve the main problem of apartments and make them equal to ordinary apartments. However, these same innovations can lead to a global transformation of the market, experts do not rule out - including in terms of prices. Meanwhile, today apartments still remain a cheaper alternative to regular apartments.

Should you consider buying apartments in Sochi?

Apartments in Sochi are a completely separate segment. It cannot be compared with other Russian cities - Moscow, St. Petersburg. As a rule, they are considered not as primary housing, but as an object for a profitable investment or vacation on the seashore.

Apartment complexes in Sochi are located in the best areas of the resort and in the coastal part, so many people give preference to personal comfort rather than the status of the property they are purchasing.

Many apartment complexes provide a high-quality level of internal service, which makes your stay as pleasant and comfortable as possible. Having your own concierge service allows you to ignore all everyday worries and enjoy your vacation to the fullest.

Of course, apartments in Sochi are also worth considering because of the active rise in prices and the ability to profitably rent out such real estate on a year-round basis. Some apart-hotels provide owners with a trust management service, which means that the owner does not have to independently search for tenants and other matters related to the rental. All that remains is to receive a stable income.

Summarizing all of the above, we draw conclusions: buying apartments in Sochi is a very profitable and profitable business.
Therefore, if you also want to join the ranks of owners of truly comfortable and promising housing, then contact the specialists of Vincent Real Estate! Back to Contents