On July 10, 2020, amendments to certain legislative acts on improving the business climate became effective in Kazakhstan. Generally, these amendments may be viewed as positive since they are substantially focused on facilitating the conduct of business.
The positive effect of new amendments is achieved, firstly, by clarifying and formalizing de jure certain provisions contained earlier in subordinate acts. Secondly, some time periods for rendering public services to grant rights to a land plot have been reduced. Thirdly, the requirements regarding the preparation and expert examination of design and estimate documents for some low-tech facilities have been abolished. Fourthly, certain restrictions on the access to public information concerning the rights to, and encumbrances over, immovable property have been removed.
Please find below the principal amendments mentioned hereinabove, which attract the most interest.
1. Amendments to the Land Code.
- In the case of a change of the zoning designation of a land plot, small or medium-sized businesses are provided with the opportunity to pay by installments the cadastral (estimated) value of the land plot. The period of payment by installments may be up to 10 years, at the discretion of the local executive body.
- With regard to lands that are intended to be used for the construction of facilities within the boundaries of a settlement, the minimum permissible period for granting the right of paid temporary land use to land users (lessees) is set at three years.
- The periods for certain procedures when handling documents for granting the right to a land plot designated other than for the purpose of construction of facilities have been reduced. For instance, the total period for handling an application for the right to a land plot (except for those provided for the needs of defense and national security) has been reduced from two months down to 15 business days.
The provisions detailing the procedure for granting lands for the construction of a facility within the boundaries of a locality without applying the bidding procedure (tenders, auctions) have been revised.
Drafting an architectural and planning assignment and technical specifications for connecting to utilities and topography has been directly included as one of the stages within the procedure for granting a land plot for the construction of facilities within the boundaries of localities.
The division of the local executive body authorized in the area of architecture and urban planning is entrusted with the duty of preparing, in addition to a land allocation certificate with its layout scheme, also an architectural and planning assignment, a questionnaire for obtaining technical specifications, topography, and furnishing the same to all state bodies, natural monopolies and “State Corporation Government for Citizens” NJSC for approval.
Previously, the above provisions were contained in other legislative and subordinate acts regulating the design and construction processes, but were absent from the Land Code.
When submitting an application for changing the designation of a land plot granted for construction purposes and located within the boundaries of a locality, the preparation of a land cadastral plan is no longer required.
The fact there is an encumbrance in relation to a land plot (in the form of an injunction) does not restrict the rights of an owner or land user to alienate the land plot or the right of land use, and such an encumbrance is passed to a new rights holder. In such a case, upon the expiration of the injunction period, a claim for the compulsory seizure of a land plot should be brought against such a new rights holder.
Such an encumbrance is imposed in cases when owners or land users do not use a land plot as per its designation or do not develop the land plot, or use it in breach of the law. Such an encumbrance is imposed by the land inspectorate before the initiation of the procedure for the compulsory seizure of the land plot by filing a claim with the court. For this reason, prior to the introduction of the amendments, the imposition of such an encumbrance meant in fact a significant loss in the commercial value of the land plot.
Now, if a developer, due to the negative consequences caused by the COVID-19 pandemic, or for other commercial reasons, is unable to complete the construction, then even if there is an injunction of the authorized body regarding such a land plot, the developer may sell the land plot. Of course, the buyer will be obliged to ensure completion of the construction of a facility within the originally set timeframe.
2. Amendments to the Law on Architectural, Urban Planning and Construction Activities.
With effect from December 31, 2020, a state bank of construction projects shall be created, which will include feasibility studies, model designs (developed by the authorized body for repeated use) and design and estimate documentation. The state expert organization (Gosexpertiza) will be responsible for the formation and maintenance of the state bank of construction projects, and this activity will be qualified as a state monopoly.
We assume that Gosexpertiza will provide the above ready-made documentation to third parties; however, it is not clear from the amendments whether such documentation will be available for a certain fee to all interested parties, including private developers, or only to certain stakeholders (for example, governmental agencies, entities of the quasi-public sector, or those who implement construction projects involving budgetary investments)
A list of facilities that are allowed to be built without design documentation, based on schematic designs agreed with the local executive bodies, has been adjusted and substantially supplemented. Even if a developer elects to develop design documentation for such facilities, it will not be subject to mandatory expert examination, since the facilities are classified as low-tech ones.
For example, it includes the construction of mobile complexes of container, block or modular design, or one-story buildings for trade, catering or consumer services erected from prefabricated structures. The list also includes the construction of power supply lines with the pre-set capacity of up to 200 kW for business entities.
3. Amendments to the Law on the State Registration of Rights to Immovable Property.
- Third parties are vested with the right to obtain, upon request, information from the legal cadastre on the registered encumbrance of rights for a specific immovable property, without the consent of an owner of such property. This amendment allows potential buyers to independently obtain information about the availability and nature of encumbrances without the need to apply to an owner. Insofar as no form for providing such information existed earlier, it is expected that the authorized body will approve a separate certificate form and the related procedures.
- Third parties may, again without the consent of a property owner, obtain information from the legal cadastre about the registered rights (encumbrances) of legal entities and the registered encumbrances on immovable property, including legal claims. This change is not a novelty in essence. In the past, the possibility of obtaining such information by third parties was introduced for a short time at the subordinate level towards immovable property of both individuals and legal entities. Therefore, this principle is now being introduced at the legislative level in respect of the rights to, and encumbrances (e.g., attachment, pledge, limitation on disposal, etc.) over, immovable property of legal entities, and only in respect of encumbrances over immovable property of individuals. In other words, there will be no chance to obtain information from the legal cadastre disclosing all registered rights to immovable property of a certain individual, which proceeds from the principle of confidentiality of individuals' personal data.
- With effect from this July, it is possible to revise erroneous information on immovable property in the information system “State Database “Register of Immovable Property”. The period of provision of this service is one business day. The service is available both through the electronic government website (egov.kz) with an electronic digital signature (in the section “Immovable Property”), and by applying personally to the structural unit of “State Corporation “Government for Citizens” NJSC.
We would be happy to provide more detailed information upon your request, and will keep you informed about further developments in this area.
- Law of the Republic of Kazakhstan dated 29 June 2020 “On Amendments to Certain Legislative Acts of the Republic of Kazakhstan Concerning Improvement of the Business Climate”.↩
- Land Code of the Republic of Kazakhstan dated 20 June 2003 (the “Land Code”).↩
- Article 49.1 of the Land Code.↩
- Law of the Republic of Kazakhstan dated 29 June 2001 “On Architectural, Urban Planning and Construction in the Republic of Kazakhstan”.↩
- Law of the Republic of Kazakhstan dated 26 July 2007 “On the State Registration of Rights to Real Property”.↩