If the new draft is adopted, obtaining information from the Unified State Register of Real Estate (EGRN) will, on average, cost 1.14 times as much. In addition, the minimum number of digital extracts will rise, from 100 to 50,000. And the cost of access to that information rises 28 times for viewing it and 242 times for producing an extract with an electronic digital signature.
Since April 2019 a draft order of the Ministry of Economic Development of Russia, "On Setting the Amounts of the Fees for the Provision of Information Contained in the EGRN", has been under public discussion. It is that draft which provides for the changes listed above.
According to representatives of the Ministry of Economic Development, the main aim of the changes is to prevent the operation of intermediary firms that sell information from the EGRN to third parties. That takes place even though the activity is a state service and falls within the competence of Rosreestr.
By the laws of economics, demand creates supply, and buying in bulk is always cheaper. Has the balance been kept in this particular case?
Let us check by an example. For clarity, we make our own economic assessment of this draft, calculate the minimum tariff, and look at the drawing up of an electronic document containing EGRN information, certified by a qualified electronic signature of the authority that registers rights.
What the draft would mean in practice
Under the new draft, an extract for a legal entity will cost 21.8 million roubles where information is requested over the course of a year, but for no more than 50,000 properties. We recall that 50,000 is the minimum possible number of requests.
On that arithmetic, one extract will cost 435 roubles, but only if the maximum number of requests is used, namely at least 50,000. A legal entity would therefore have to order around 202 extracts each working day, which considerably exceeds the average number of such requests among most companies working in cadastral activity.
What this comes to in reality. Take an organisation that on average orders around 30 extracts each working day. At that number, the cost of one extract under the new draft will be 2935 roubles. The cost of an individual extract obtained through the services of Rosreestr will be 700/820 roubles.
As a result, in the real economy the cost of an electronic extract will be more than 3.5 times higher than obtaining a paper document through an individual request. This is where the basic law of economics breaks down.
If all the tariffs are taken together, the overall picture shows that the price of EGRN information will rise both for paper documents and for electronic extracts. In the case of a paper document the fee rises on average to 1.14 times its previous level, while for electronic extracts the list of tariffs is reduced from 5 to 2, but the minimum number of extracts rises to 50,000 instead of 100, the charge for viewing EGRN information rises 28 times, and the charge for producing an extract with an electronic digital signature rises 242 times.
Drawbacks of the new rules
A situation of this kind will have adverse consequences, because there is no financial and economic justification for the tariffs proposed for the use of EGRN information. The main ones are as follows:
- adoption of the draft will raise the cost of formalising real estate for various participants in the market (cadastral engineers, estate agents, notaries, valuers and others), which will increase the costs of right-holders of real estate and, as a consequence, lead them to refuse to register real estate. That will bring a fall in the activity of bringing real estate into the tax system;
- the method of providing EGRN information by means of an electronic request will become unavailable to a wide range of professional participants in the real-estate market; more than 90% of the participants in the market in question will be unable to afford a cost of from 1 million to 21 million roubles a year and 50,000 requests a year;
- the draft does not take into account the budgets of state bodies, out of which the fee, in an amount of from 375,000 roubles to 10.8 million roubles a year, would be paid for this category of users of the EGRN.
One can already see the low level of client service on the Rosreestr portal, which shows itself in periodic outages, technical faults, delays in obtaining information, and often in the absence of any possibility of requesting EGRN information by electronic access. If the price rises, there may be a mass refusal to use this resource.
Organisations will return to the traditional request for individual extracts, which will lead to a further increase in the load on the system, and the system will need additional production capacity to produce them. That, in turn, will bring failures in operation and longer periods for the provision of information. Compliance with the requirements of the Road Map for improving the investment climate, in the part on reducing the time taken to carry out cadastral works, will be put at risk.
To conclude this economic assessment of the draft, a significant increase in the price of a service must always have a justification, such as an increase in the volume or the speed of providing the service, the development of a technical-support service, and so on. In the case of EGRN extracts we see neither a qualitative nor an economic justification, which calls into question the existence of this draft.
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