The Joys & Pains of Buying Land in Rural Russia
How much does it cost? What's the difference between residentially zoned land and agriculturally zoned land? Can you build a house on agricultural land?
Over the past several years in Russia, I have learned that buying land is not just an event — it is an adventure. Rich, beautiful, rural farmland can provide great opportunities and hope for the future. It can also provide unseen pitfalls, testing relationships to the breaking point and dashing cherished expectations to the ground.
To illustrate one aspect of the challenges involved, consider the following drama as it unfolds in the candlelit corner of a fine steakhouse:
Waiter: "I hope you enjoyed your steak dinner. Here is your bill."
Customer: "$50! This is outrageous! My steak barely weighed a pound!"
Waiter: "That's a normal price for a good steak. And you saw the price on the menu before you ordered it."
Customer: "But it's so expensive! Just yesterday I had dinner at the restaurant next door, and it only cost $10! Your restaurant is a rip-off. You are just price-gouging!"
Waiter: "The restaurant next door is Taco Bell. They basically served you a scoop of ground beef. Here, at our restaurant, we served you a high quality steak, perfectly seared and seasoned."
Customer: "So what? They're both beef!"
Ground-beef and tender steak don't cost the same, even though they are both "beef". An acre of land in one location and an acre of land in another location may not cost the same, even though they are both "land".
To extend the analogy even further, imagine if the unreasonable customer were to complain:
"Last year I purchased a whole cow to butcher, and I only paid $2 per pound. So it's highway robbery for you to charge me $50 for this little steak. I demand that you sell it to me for $2.50!"
Intuitively, we understand that it makes good sense to charge a lot less per pound for a whole cow, than we would charge for a fine steak at a restaurant. There are multiple obvious reasons for this:
It can cost hundreds or thousands of dollars to buy a whole cow. A lot of people can't afford to do that. So they just buy a steak and a few hamburgers now and then. They pay more per pound, but they consider it worth it, for the convenience of not having to invest large sums of money in a whole cow.
If you buy a whole cow, you have to go to the trouble of butchering it, before you can get the meat. This process is time consuming, difficult, and messy. A lot of people don't want to deal with all of that. So they just buy meat from time to time at the grocery store, or at restaurants. They are willing to pay a lot more per pound, for the convenience of not having to butcher an animal themselves.
If you butcher a whole cow, you have to store the meat in multiple large freezers. If you have way more meat than you can eat, then you have to spend time and energy, going to the trouble of selling a lot of the meat to other people. A lot of people don't want to deal with such difficulties. So they pay more per pound, for the convenience of not having to store and resell so much food.
If you butcher a whole cow, you get a lot of different cuts of meat. You not only get steaks. You also get ground beef. You also get the liver, heart, and kidneys. You also get a lot of skin and bones that you will throw away, because you don't have any use for them. It would be ridiculous to pretend that each cut of meat is equally valuable. Of course you are going to charge a lot more for a juicy steak, than you would charge for the liver. No reasonable person would expect otherwise.
Most people understand these basic prinicples. But unfortuntely, some people do not. If the whole cow costs $2.00 per pound, they think that restaurants should sell tender steaks for $2.50 per pound. Otherwise they accuse them of greed and price-gouging.
A few years ago, I spent several months trying to buy a small amount of farmland near my house. It was a very lengthy, time-consuming, frustrating process, which basically ended in failure. Thanks to the lack of cooperation from the local authorities, I couldn’t even figure out who owned any of the nearby farmland, much less figure out what they would be willing to sell it for. I also tried looking online, and asking some of the locals, but this approach also led to a dead-end. I found very little land for sale, and none of it was land that interested me.
Fast forward a year or so, and Tim Kirby & I were having a meeting with the Governor of the Yaroslavl Oblast, discussing possible locations for the future American Village to be built north of Moscow, near where I live. We had a number of calls and discussions, looking at various possibilities.
One day, they invited me to drive to the capitol building in Yaroslavl, for a face to face meeting with some high ranking government officials. After a careful search, they said they had located some land that they thought would be perfect for this project.
One man told me, in perfect English, “We do not think it is an accident that you live where you do.” Then they showed me a map of the land. The location was incredible! Much of it combines to form a large circle, with my current house located right in the middle of it. Indeed, it even includes the same plots of land which I previously had tried so hard to purchase, but had been unable to purchase, because I hadn’t even been able to locate the owner.
The land was just right, and the location was amazing, but there was a catch . . .
The landowner was a bank — a bank which was currently going through bankruptcy. They had a massive amount of land in this particular area — more than 700 hectares (2000 acres) — and they absolutely refused to subdivide. Either pay tens of millions of Rubles and purchase all the land, all at once, or else get none of it. All or nothing.
In other words, they weren’t willing to sell me a steak, or even some hamburger — they wanted me to buy the whole cow. And if I couldn’t figure out a way to do it, then I would have to go back to square one and find some other land to purchase.
I will spare you the details of all the lengthy drama that followed — finding an investor with sufficient funds to purchase the numerous plots of farmland, multiple trips to Yaroslavl, all the stacks of hundreds of pages of paperwork, the endless bureaucracy, and all of the subsequent effort and expense involving lawyers, surveyors, and everything else, not to mention the subsequent work of trying to find individual buyers for so many pieces of land. Suffice it to say, it is a lot of work. So if you want to move to Russia, find and purchase a large number of farm plots, and organize your own land project, then you are more than welcome to do so. I will not envy you.
There are additional considerations as well. In Russia, foreigners are allowed to own residential land, but it is not legal for them to own agricultural land. To get around this little detail, there is a common stragegy followed by many people all across Russia. First, you find a Russian citizen who you absolutely trust. Then you allow him to purchase the land in his name, using your funds. You write up a contract between the two of you, in which you “rent” the land from him, paying nothing every year except for the (very low) real-estate taxes. And you include a stipulation that he will sign the title over to you, once you become a Russian citizen.
Since most of the people moving here are foreigners, and are not yet Russian citizens, this is the strategy most people are having to follow. That means I usually can’t just sell a piece of land and be done with it. I have to write up a contract, “rent” the land to someone, pay taxes on it every year, collect those taxes from the buyer, and then years down the road, finally go through the process of legally transfering the title to the buyer. It is much more effort, and much more time consuming, than the standard one-time real-estate transactions most people are accustomed with.
People are welcome to buy any land that is available around here. They don’t have to buy from me. If they do buy from me, these are some of the benefits:
The location is awesome. This land is right around the new American Village we are building here. So if you want to live very close to other English speaking expats in Russia, this is a great place to be.
You can just pick the piece you want. You can buy the “steak”, and avoid the “liver”, so to speak. You don’t have to settle for a cumbersome piece of land that is far from the road, or miles away from the village, or drowning in water-zone restrictions. You can get a good piece of land, bypassing a lot of the less-than-desirable plots that were included in the original land deal as a whole.
If you just want to get a few acres, you can do it. You don’t have to buy a giant tract of land and subdivide.
You don’t have to hunt for a Russian citizen willing to give you a rent-to-own land agreement for the next several years, while you are waiting to acquire Russian citizenship. I am a Russian citizen, and if you buy any of my land, I am willing to help out in this way. (Or if you are a Russian citizen, you can just buy the land outright. You don’t need to rent anything.)
I’m sure that you will find the land prices here to be outrageous, overpriced, and completely unreasonable. 🤠 Whether you buy residential land from me, or from someone else, the going rate near Rostov Veliky is approximately $3500 USD per acre (around 300,000 Rubles) and up. If you purchase agricultural land, the cost is less than $1000 USD per acre. If you purchase agricultural land from someone else, you can find it even cheaper, but then you will probably have to deal with many of the headaches outlined above. You are, of course, perfectly welcome to do this. I want you to find a deal that makes you happy.
For those who are coming from America, Canada, or England — in your home country, where can you find land that is this affordable? In the state where you live, even if you went way out in the countryside, would you be able to find farmland there for eight or nine hundred dollars per acre? Or would it run into the thousands of dollars?
When new settlers come to Russia, asking to purchase some land, I am happy to show them land, to honestly tell them what they are getting, and to let them know what price I’m willing to sell the land for. They are free to buy my land, or not to buy my land. They are free to buy someone else’s land. They are free to find a giant tract of land at a rock-bottom price, to subdivide it, and to resell it at whatever price they deem suitable. They are free to do any of these things, with my blessing.
Yet, even after reading this article, there may be some people who don’t agree. They may presume that I have a moral obligation to sell land for the same price at which I bought it. If they get angry because I don’t meet their expectations, I won’t make them listen to Aaron Tippen’s touching little ballad, but I will encourage them to look for land elsewhere. 😊
If you want to buy a whole cow for $2 a pound, then feel free to do so. If you choose to go to a restaurant and order a 16-ounce steak for a higher price, then feel free to do it. But if you do the latter, don’t bother lecturing the waiter on the going price for ground beef. 🐮
Differences Between Residential Land and Agricultural Land
Residential Land:
Foreigners can own it
You can build any type of house on it (brick, log, wood frame, etc.)
Cheapest possible electricity, if located in a rural village
Annual taxes are higher for residential land than for agricultural land
Agricultural Land:
Only citizens can own it
Foreigners can rent it
You can build a nice barn on it. Theoretically, you could even include human living space in this “barn”, with bedrooms, bathrooms, etc.
If you register your tax status as a farmer, you can legally build a residential house on farmland. The house cannot have a concrete foundation, but would need to be on cement blocks (basically a pier-and-beam configuration). By law, the house can be no more than 500 square meters (5000 square feet) and can be no more than three stories tall.
Electricity is still affordable, but costs more per kilowatt hour on farmland, than on residential land in a rural village.
Annual taxes are much lower for agricultural land than for residential land.
Legally Rezoning Agricultural Land, Converting it to Residential Land
If you own agricultural land that directly borders the legal boundaries of a Russian village, it may be possible to rezone your land. Write a request to the local city administration, asking them to extend the borders of the village, to include your land within its oversight. Ask them to convert the land to residential land. If the city administration cooperates, the whole process can take 6-12 months. Once everything is successfully completed, you will have residentially zoned land that includes all of the associated rights and privileges.
Very simple to understand and fair trade for those that take this route. I liked the analogy.
The labourer is worthy of his reward. If you put effort into it, it's fair to be compensated otherwise one falls into using taking advantage of the land seller.