Rental operating costs: is a currency equivalent available?

As known, in Belarus starting from September 23, 2022 and until January 1, 2024 the landlord’s right to determine the rent amount in currency equivalent in the contract was suspended due to the adoption of Law No. 197-Z “On Amending Laws on the Securities Market” (Law No. 197-Z). In this regard, for much of September landlords and tenants of shops, offices, warehouses and other leased facilities agreed on new sizes and terms for rent calculating.

At the same time, the Law expressly established a prohibition on calculating the rent in currency equivalent, but it did not regulate in any way the possibility of using the currency equivalent to calculate the operating costs associated with the lease. The Law No. 197-Z did not introduce a new definition of the term “rent”, therefore it should be guided by the terminology of the Civil Code of the Republic of Belarus (the Civil Code), when interpreting the norms of this Law. According to Article 585 of the Civil Code, the tenant is obliged to timely pay a fee for the use of property (the rent). Thus, the term "rent" used in the Civil Code and, accordingly, in the Law No. 197-Z, means payment for the use of property.

In accordance with paragraph 2 of Article 587 of the Civil Code the tenant is obliged to maintain the property in good condition, to carry out current repairs at his own cost and bear the expenses for the maintenance of property, unless otherwise provided by law or the lease agreement. Thus, the Civil Code distinguishes a separate definition of "expenses for the maintenance of property" and considers "rent" and "expenses for the maintenance of property" as independent definitions (terms). Similar approaches are contained in other legal acts (for example, in the Regulations on the procedure for determining the rent amount when renting capital structures (buildings, structures), isolated premises, parking spaces, their parts, approved by the Edict of the President of the Republic of Belarus dated on March 29, 2012 No. 150).

In addition, in accordance with Article 211 of the Civil Code the expenses for property maintenance is a burden associated with the possession and use of property. Considering paragraph 2 of Article 587 and Article 211 of the Civil Code, defrayment of expenses for property maintenance is not an essential condition for the lease of property, it can be retained by the owner or transferred to the tenant. Thus, “expenses for property maintenance” are related to the possession and use of property, and are not a mandatory payment for the tenant as opposed to a payment for the use of property (the rent).

Accordingly, it is logical to assume that the Law No. 197-Z established a prohibition on the currency equivalent only and exclusively for rent, and the expenses for property maintenance (operating costs) can still be calculated by the parties with reference to currency. However, it should be considered that, according to the information shared between landlords and tenants in recent months, business entities, that addressed certain issue to the authorized state bodies, have received conflicting answers (including the coverage of the calculation of operating costs by the prohibition on use of currency equivalent). In this case it seems correct that the legislator should give and publish appropriate reasonable explanations for all landlords and tenants in order to close the door on the issue of instruments allowed for calculating of operating costs.

If you need additional information and/or comments, we will be happy to advise you.

Please contact partner Ekaterina Zabello.