The Land Market: Living with Constraints

The pre-reform period was characterized by state monopoly of land and by land use that did not require any payment. The legal principles of land reform in Russia and the rest of the former Soviet Union were set in 1989 by the Basic Law on Land Legislation in the USSR and the Soviet Republics. This law established the right of the citizens to receive land in permanent or temporary use for agricultural production or for building a house. It introduced for the first time the notion of payment for land in the form of lease payments and land tax. The right of private ownership for land used in agricultural production was declared in the 1990 USSR Law of “On Land Reform” (passed on October 23, 1990). The Law “On Peasant Farms” (passed on December 27, 1990) legalized peasant farms as a form of free entrepreneurship and allowed the land used by collective and state farms (kolkhozes and sovkhozes) to be divided into land shares for distribution among their member-employees. The law also stipulated that the owners of land shares could leave the farm enterprises with a land plot equal in size to their land share with the purpose of establishing a peasant farm.