Ministry of Economic Development of the Russian Federation
Ministry of Economic Development of the Russian Federation
State Duma Defends Rights of SME Tenants Belonging to the Affected Sectors
21 May 2020 13:58

At a plenary meeting of the State Duma on May 21, a draft law has been passed in the second reading which, among other things, establishes the rules for the early termination of property lease agreements for business. The draft law "On Amending Certain Legislative Acts of the Russian Federation with a View to Taking Urgent Measures to Ensure Sustainable Development of the Economy and Prevent the Consequences of the Spread of a New Coronavirus Infection" was prepared by the Ministry of Economic Development together with other agencies.

During the joint revision of the draft law, the State Duma took into account proposals to narrow the circle of tenants who have the right to unilateral termination of the lease agreement, selecting SMEs, as these business entities are the most affected by the spread of coronavirus infection. It also supported the idea to set a term of up to 1 year, during which tenants can demand that property owners reduce lease rates.

If the tenant and the landlord are unable to agree on a rent reduction or other amendments to the terms of the agreement within 14 days from the date of the request, the tenant will be entitled to withdraw from the lease no later than October 1, 2020. No penalties are applied to the tenant, but the security deposit, if provided for by the lease agreement and paid to the landlord, is not refundable to the tenant. Other damages caused by the tenant to the owner of the leased property and not related to unilateral termination are subject to compensation in accordance with civil law.

"We suggest that this applies to SMEs in the affected sectors," said Andrei Makarov, Chairman of the Duma's Committee on Budget and Taxes. "Tenants, i.e. SMEs belonging to the affected sectors, acquire the rights which we have spoken about." As he then stressed, "At the same time, 14 days are given to resolve this issue. The right to apply with such a [request] exists until October 1, but it does not mean that someone can try to abuse this right, extending it for all the time, either for 5 or 10 years. This right is granted for a period of up to 1 year."

According to Makarov, "this is a balanced decision." "We support this decision because it will equally dissatisfy both the owners of large [shopping] centers and the owners of large chains, but with it, we solve the problems of small business and the problems of citizens," he said.

Дата публикации: May 21, 2020
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