Oleksandr Polivodskyy tells about land rent indexation

A standard money value serves as a basis for the calculation of minimum rent payable for use of state-owned or community-owned land (land share).

The Ukrainian Ministry of Justice has presented the latest in a series of awareness-raising videos that is entitled 'Know your land-related rights' with support from the International Renaissance Foundation. Sofiya Law Firm partner Oleksandr Polivodskyy appeared as an expert contributor of the session dealing with land (land share) rent and pricing.

In particular, the lawyer has brought attention to the indexation of standard money value of land that involves the use of a certain factor increasing the price of a land plot (standard money value of land). Accordingly, this results in higher rent and, among other things, payments of the land tax.

'The purpose of indexation is to adjust rent where a land lease agreement was executed ten or fifteen years ago and, as a result of inflation, the original rent no longer corresponds to a current purchasing power,' Mr Polivodskyy explains. 'Accordingly, tenants are statutorily required to perform indexation of payments to adjust a contractual rent for inflation recorded after an agreement was executed.'

The Land Lease Act specifies that the parties negotiate the amount of rent, and the form and time of its payment, in a land lease agreement. 'The amount of rent may be revised with mutual consent of the parties. The parties may re-execute the agreement or enter into an amendment changing the price. However, there is a statutory minimum threshold for the amount of rent,' the expert pointed out. 'Land rent is charged subject to inflation index.'

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