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January 2022 – On 15 November 2021, the President of Uzbekistan signed the law No.???-728 “[on] privatization of non-agricultural land plots”, which entered into force on 16 November 2021 (the “Law“) and which abolished the earlier adopted law No.???-552 dated 13 August 2019. The Law covers privatization of land plots (the “Land Plots“) that are not allocated for agricultural needs and not intended for these purposes.
In addition to vacant Land Plots, the Law stipulates that the following types of Land Plots can be privatized:
Privatization is subject to limitations established by general plans of respective areas and shall be carried out in accordance with documents and procedures on integrated development, planning of territories, and types of permitted uses for the Land Plots.
The Law provides for the list of Land Plots for which privatization is prohibited. Amid an increase in the number of PPP projects1 and developments of residential complexes2, the Law specifically mentions restrictions on privatization of Land Plots:
Citizens of Uzbekistan and legal entities incorporated in the country are entitled to privatize the Land Plots. At the same time, the following individuals and companies are restricted to participate in the privatization process:
In the event that any of the above persons obtains title rights to a Land Plot, such Land Plot will be subject to mandatory alienation. In cases of non-compliance with the established alienation procedures, the respective Land Plot will be transferred to state ownership, while the transferors will have a preemptive right to obtain leases over the Land Plot.
Land Plots can be privatized in one the following ways:
From the moment of state registration, a privatized Land Plot is considered to be private property. Owners of the Land Plots can own, use and dispose of the privatized Land Plots at their own discretion, including:
Allowing security over a Land Plot (that is not attached to a specific immovable building over it) is a significant recent change in the Uzbek legislation reflected both in the Law and the Land Code of Uzbekistan. This change might be of particular interest to lenders and sponsors participating in a limited recourse financing in Uzbekistan, as it expands the list of assets that may potentially be included into a security package.
The Law further provides for the following land owners' rights:
Seizure of a privatized Land Plot from its owner is allowed in the following cases:
On 10 January 2022, the Cabinet of Ministers of Uzbekistan issued changes to the regulation on the procedures for seizure of land and providing compensation to owners of real estate located on the seized land (the “Regulation“) that had been enacted by its Resolution ?911 dated 16 November 2019, aimed at providing further protection to private property rights. The amendments restrict implementation of an investment project on land a [co-]owner of which opposes the investment project. Previously, the Regulation provided for investors' rights to overcome via a court procedure such opposition of a land plot's [co-]owner.
Footnotes
1. From 2019 to 1 October 2021, the PPP Development Agency reportedly implemented 160 PPP projects for USD 2,4 billion (see https://pppda.uz/ru/biz-haqimizda).
2. The State Committee of the Republic of Uzbekistan on Statistics reports that in 2020 there were commissioned more residential buildings (including approximately 86,800 units of residential apartments) than all other types of facilities combined, such as industrial, agricultural, commercial, educational, healthcare and others (compare: 61,552 units of residential buildings on 12,767 thousand square meters vs. 9,001 units of all other types of facilities on 2,852.7 thousand square meters) (see the report of the State Committee of the Republic of Uzbekistan on Statistics “Construction in Uzbekistan” dated 15.09.2021).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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