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Temporary ban on currency pegging of rental rates comes into force


Today, September 23, 2022, a temporary ban on linking rates in lease agreements to foreign currencies comes into force in Belarus. Tenants and landlords have had 2 months to prepare for the changes, but no consensus has yet been found. The Pro Business editors have at their disposal several clarifications from government agencies on what it is still possible to “tie” the rental rate to, and to what it is not worth it. We are publishing these documents and the opinion of a lawyer on how it is better for business to act now.

There should not even be an indirect link to a foreign currency

Equivalents “based on the Belarusian ruble”

Back in August, the Ministry of Economy explained: “According to the ministry, when determining the amount of rent, it is possible to use any procedure for calculating the equivalents formed on the son of the Belarusian ruble, including the use of the principle of calculating the basic rental value provided for by Decree of the President of the Republic of Belarus dated March 29, 2012 No. 150 “On some issues of rent and gratuitous use of property”, with the exception of linking to foreign exchange rates, as well as the use of foreign exchange and currency-mediated coefficients (changes in exchange rates, cryptocurrency exchange rates)”.

SDR and operating costs

The Ministry of Economy also provided clarifications on “special drawing rights” and operating costs:

  • “Whereas the value of the ‘special drawing rights’ is calculated on the basis of the value of five foreign currencies, the use of the ‘special drawing rights’ will be an indirect (indirect) use of the foreign currency equivalent“.
  • “We believe that operating costs in the lease agreement form the amount of the rent (they are its components) and, accordingly, their calculations must be carried out in compliance with the same requirements as for rent“.

The Belarusian Parliament spoke about the same about “special drawing rights”.

Precious metals – no, CPI – maybe

Another response from the Ministry of Economy touched upon the possibility of using the gold price and inflation indicators as an equivalent:

“For the formation of settlement and selling prices for precious metals, prices in US dollars are used, the use of the equivalent of the accounting price for 1 g of gold when determining the amount of rent will be an indirect (indirect) use of the equivalent in foreign currency.

Indirect linkage to foreign exchange rates, including the use of currency and currency-mediated coefficients, equivalents (changes in exchange rates, cryptocurrency exchange rates, the price of gold, oil, etc.), may lead to an unjustified change (increase) in the amount of rent.

Changing the amount of rent within the terms established by the contract or legislation, for example, can occur when the values ​​of the elements that form its value change due to inflationwhich is characterized by indices determined by state statistics bodies and other state bodies”.

It turns out that the CPI can become a more or less real replacement for the currency equivalent in the rental rates. One of the large retail chains offered its tenants a link to the consumer price index. But it is not known whether such agreements were signed.

Recall that all these answers are only the opinion of individual government agencies, and not the official interpretation of legislative norms.

“There is still no clarity”: a lawyer’s opinion on what to do for tenants and landlords


Alexander Antonov
Head of infrastructure projects REVERA law group

— I have to confirm that there has not been a significant increase in clarity over the past 2 months. The original recommendation to fix the rate in Belarusian rubles until the end of 2022 and decide the fate of the rate for 2023 in December is still one of the main ones that we can give.

According to subjective feelings, today, in no more than half of the lease agreements, the parties have found a mutually beneficial solution until the end of the restriction (until the end of 2023).

These solutions are:

  • Fixing in the contract the rates in Belarusian rubles with the preservation of gentlemen’s agreements on the possibility of their revision by agreement of the parties in case of changes in exchange rates.
  • Early payment of rent until the end of 2023 with a discount from the owner (10-30%). To my own surprise, this is not uncommon.
  • Translation of the contract into Belarusian rubles with indexation to the CPI or the percentage change in the base value / base rental value.
  • Translation of the contract into Belarusian rubles at the “higher” rate.
  • Translation of the contract into Belarusian rubles with the right of the lessor to raise the rate unilaterally by no more than a certain percentage and the corresponding right of the lessee to refuse to fulfill the contract in the event of such an increase.
  • Switching to a percentage of revenue in those commercial real estate lease agreements where such a percentage has not yet been. The minimum fix in any case is set.
  • Transition to the method of calculating “government lease”.

Expectedly, many owners and tenants of “unfavorable” lease agreements are trying to take advantage of the situation to terminate or revise unfavorable conditions for themselves. The first lawsuits are already being filed. Just today, our client (the landlord) filed a lawsuit to force a change in the terms of the lease. The client asks the court to fix the rate in Belarusian rubles, converted from euros at the exchange rate on the last day of the “legal” use of the currency equivalent (September 22, 2022). No guidance has been published on how courts should handle such cases.

In theory, these methods can be:

  • transition to the method of calculating “government lease”;
  • translation of the contract into Belarusian rubles at the last known or average annual rate;
  • use of the actual prevailing average annual rate under the contract in Belarusian rubles;
  • use of rates for similar objects;
  • other ways.

For our part, we will continue to keep our finger on the pulse and, when developing a new practice, we will definitely share it with the readers of Pro Business.

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My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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