In this guide we will cover the main issues of foreign companies, which want to work in Kazakhstan in the field of construction ranging from the registering of business to the final acceptance and commissioning of the facility, taking into account the features of regulation of this process with the participation of foreign companies as the entities engaged in construction activities.
We plan to describe the general requirements to the construction, without taking into account the features of construction of specific projects and facilities, implemented for example, in the framework of the state procurement or in adverse conditions of the sea.
It takes a lot of time, costs, and passing through numerous bureaucratic procedures in order to build a facility in the Republic of Kazakhstan. We recommend you to plan properly your projects.
In the introduction section, we will pay a little more attention to the planning stage, since it uncovers the interweaving of various processes and stages of construction, which are outlined in detail.
Sharing the common driveways and utilities in the construction of a few buildings on the same plot of land is a quite clear synergy and cost saving. However, for some reason, the issues of shared use of the property by a few owners as a result of such cost saving are solved, as a rule, at the stage of selling of the constructed and commissioned facility.
It is important to determine in advance the order of parceling the land in the future. Some limitations can appear due to the neighboring of urban utilities network/facilities or water protection zones. The status of the land will determine the order of its sharing in the future, especially when it comes to the construction of a few office and trading facilities (as well as multifunction buildings) in close proximity to the public utilities network, which later, according to the investor’s plan, should be able to become the property of third parties (in whole or in part).
As early as at the planning stage, the investor should think about the goals it follows, so that to dispose the asset in the future in the most efficient way. For example:
- whether it will sell the facilities separately or not;
- whether all the facilities will have a single management company or not;
- whether it is necessary to think about the image of the project for decades ahead or no, etc.
With regard to the use of the common property, lack of the relationship regulation tool, which is organized in advance and signed by all the owners of the properties, can become a cause of protracted litigation and/or difficulties in the current management of the constructed facilities (for example, failure to raise money for the current/capital repairs of the common property - roads, common utilities, yards and other surrounding areas; failure to make effective use of the common property, and etc.).
Our company recommends you to do the following at the planning stage:
- To determine the time and procedure for parceling the land for the purpose of timely receipt of construction permits and completion of all necessary paperwork for the sale of the facility entirely or in parts;
- To make proposals beforehand, discuss and adopt management options jointly with the supposed management company, taking into account the features of the project and its supposed implementation;
- For the preparation and timely implementation under control of the process (plan) of transfer of the rights to the property, common property and other assets, including those under control of the management company;
- To clearly define what property and under what conditions to give to the municipality or leave in shared use, what property to give in own use together with the building (premise), and etc.;
- To solve the issue of the possible usage of an easement;
- To develop a package of documents necessary for the implementation of decisions adopted by the investor in terms of implementation, management and sharing both of the entire project and its parts (sale contract, easement agreement, the protocol on the establishment of a condominium, the Charter of the cooperative, the report on management of the condominium, and so on).
Therefore, we recommend you to attract local professionals with relevant experience and recommendations to cover these complicated and overregulated issues.
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1. Entities engaged in construction activities
Local construction companies usually work in the form of LLP (the same analog in Russia) or in the form of joint-stock company (JSC). You should take into account that the newly-created (just registered) companies cannot immediately proceed to the construction of technically complex buildings; due to the lack of experience they will not be able to obtain a relevant license.
1.1. Branch/representative office of a foreign company
A foreign company may operate in the Republic of Kazakhstan through its branch or have a representative office to protect its interests. Only this way they can engage in construction activities in Kazakhstan, using their previous experience in this field gained in other countries.
Due to changes in the legislation of the Republic of Kazakhstan foreign companies have the opportunity to get a license without the need to set up a branch here. To meet the formalities on obtaining the necessary permits for the construction activities it is sufficient for the company in some cases just to get a business identification number (BIN) and open an account at one of the local banks.
Grounds for getting BIN by foreign company are written in the Code of the RK “On taxes and other obligatory payments into the budget”. One of them is opening an account at one of the local banks. In order to get BIN foreign company should submit to the tax authority in the place of the bank's location a tax application for registration accounting and attach notarized copies of documents (charter documents, documents confirming the state and tax registration in the country of incorporation, minute of meeting of the board of directors). After that tax authority will issue a registration certificate, in which BIN is stated.
After getting a registration certificate foreign company should submit to the local bank the application for opening a current account. List of documents and terms for opening a current account differs depending on the bank.
The procedure for the setting up and registration of a branch of a foreign company (meaning any foreign company registered in the CIS or outside of the CIS) does not differ much from the registration of branches of local legal entities. The difference is the necessity to apostille the constituent documents of the company, as well as translation this documents into Kazakh and Russian languages. After registering with the tax authorities and upon receipt of the certificate of the state registration, further it is necessary to order the manufacturing of the company’s seal, to open a bank account, and to hire an accountant.
It is important to notice, that even if registered representative office does not have activity in Kazakhstan, it should file reports to tax authority and other bodies.
Branch director is appointed by the top manager of the holding company and acts under the general power of attorney. If the director is a foreign citizen, there is no need to obtain a relevant work permit for him/her.
If the company wishes to hire other foreign staff to work in the branch, it is required to obtain relevant work permits for them in accordance with the regulations on attracting foreign labor force.
Permit to attract foreign labor force is issued by four categories of employees: 1st category - managerial staff of the company; 2nd - specialists with higher and secondary vocational education; 3rd - skilled workers and workers hired for seasonal agricultural work. The employer shall comply with the ratio of local staffers and foreign staffers: for the 1st and 2nd categories, the ratio of local staff shall not be less than 70% of the total number of employees, and for the 3rd and 4th categories - not less than 90%.
It is not required with regard to some foreign employees to obtain work permits. List of such employees is approved by Annex #2 of the Resolution of the Government of the Republic of Kazakhstan of December 15, 2016, №802. Apart from the director of the branch or representative office of a foreign company, such foreign staffers include:
- Citizens of states parties to a Treaty on the Eurasian Economic Union of May 29, 2014;
- Chief executive officers of organizations that concluded with the Government of the Republic of Kazakhstan contracts on the amount of US$ 50 million and more;
- Chief executive officers of Kazakhstani companies, which invest in priority activities and which concluded contract with authorized body;
- Those on a business trip, for business purposes, the term of which does not exceed a total of one hundred and twenty calendar days in any one calendar year.
Also, list of employees with regard to which it is not required to obtain work permits established in the clause 2 of the article 32 of the Law of the Republic of Kazakhstan “On public employment”. This list differs from the list, which is established in the Resolution of the Government of the Republic of Kazakhstan of December 15, 2016, №802. For example, it is not required to obtain work permits for the following employees:
- working in the autonomous cluster fund of the special economic zone “Park of innovative technologies” in positions of heads and specialist with higher education;
- working in the autonomous educational organizations, their organizations, as well as in the “Nazarbayev Fund” in positions of heads and specialists with higher education.
1.2. Licenses and permits
To engage in construction activities or design in Kazakhstan, the foreign or local company shall obtain a relevant permit from the Kazakh state authorities. Such permit is the license. It should be necessarily obtained, if the type of activity the company is going to engage in, is specified in the applicable laws, regardless of whether the company is going to operate in Kazakhstan or implements any short-term project.
Laws on Permits and Notices of the Republic of Kazakhstan, which came into force on November 20, 2014, give a detailed list of licensed activities, including construction operations, design and survey. License and (or) annex to the license can be issued only in electronic form.
Below is the exhaustive list of activities in the construction sector, for which the license is needed:
- Surveying operations;
- Design development;
- Construction and assembling operations.
With this, each of the above-listed licensed activities is divided into many more items. For example, the licensed construction and assembling operations are divided into more than 30 items.
Licenses are issued by the authorized body in the field of architecture, construction and urban development. Documents for obtaining the license are submitted to public service centers (PSC) or through site elicense.kz.
Licenses, which are issued for the implementation of design and construction and assembling operations, are divided into three categories – first, second and third, depending on the level of works complexity.
Rules for the Assignment of construction and urban planning areas to the level of complexity earlier it was determined in accordance with the Management directive of certification system of RK 1.02-04-2013.
May 4, 2015 Management directive of certification system of RK 1.02-04-2013 became inoperative and instead of it were adopted Rules for determining the general classification of buildings to technical and (or) a technologically complex facility, approved by Order of the Minister of National Economy of the Republic of Kazakhstan dated February 28, 2015 № 165, which entered into force on May 2, 2015.
The new rules assign the procedure for classification of buildings to technical and (or) a technologically complex facilities and establish criteria for determining the complexity of the design facilities.
On ground of the reform of expert activities by transmitting to the competitive environment of the projects of expert activities, which will be discussed later in the article, there was a need to define the criteria for classifying buildings as a technical and (or) a technologically complicated projects. The new rules just defined a clear list of technical and (or) the technologically sophisticated facilities, complexes, engineering and transport communications.
Rules thereafter amended the list of buildings and structures that are attributable to the I, II and III levels of complexity, some facilities have been added in addition, some are excluded, but the overall situation remains the same:
- 1st category (high level of complexity) involves unique buildings, hazardous production facilities;
- 2nd category (medium level of complexity), where the involvement of a general contractor is possible, involves any construction operations that are not included in the 1st category; operations are possible in a seismic area;
- 3rd category (low level of complexity) does not allow the construction of permanent buildings and structures; this category involves erection of temporary buildings, seasonal or auxiliary facilities.
In the selection of a category, you should be aware that the newly created company (usually in the form of a limited liability company) can be issued a license only for the third category.
To apply for a license for the second and the first categories, the potential recipient of the license must have relevant experience in completed projects, not necessarily in Kazakhstan.
Even if the founder of a newly established company is a well-known design or construction company, which already has its own portfolio and a list of completed projects, its previous experience will not be recognized as adequate experience of the newly created company.
The only way for the founder (it does not matter whether it is resident or not) to use its previous experience (both in Kazakhstan and outside of Kazakhstan) for obtaining of the license is to set up a branch in Kazakhstan. This option is most suitable for foreign construction and design companies, which have decided to extend its activities to the Kazakhstan market.
The legislation provides a clear list of requirements for a particular category of license. Previously, these requirements were in the Resolution of the Government of RK №89 from February 5, 2013, These times the list of qualification requirements defined by Government of RK by the order of Acting Minister of National Economy of the Republic of Kazakhstan №136 from December 9, 2014.
The main difference between the new requirements and the old ones is that:
- There is no need for the admission of executives to work in areas of high seismic risk in the new requirements;
- There is no need to confirm the presence of the tools;
- Experience of the licensee must be permanent for a license category 1 and 2 for the design, construction and installation work (in the case of termination of the license, the experience is accounted as null);
- It is required to have on the staff one certified engineering employee, who has relevant certificate and who works in the company on a regular basis.
- for the licensee as a legal entity, the members (shareholders) of this legal entity is one or several resident legal entities of the Republic of Kazakhstan and one or several foreign legal entity, which the members (shareholders) is a legal resident of the Republic of Kazakhstan holds 40 or more shares in the shared capital and have the license of the first category to engage in project activities / construction and installation work on the Category 1 do not need to provide information confirming the experience of the licensee, of the previously completed work, projects, and information in the form of positive feedback from customers and / or exploit persons interested local executive bodies.
The most important qualification requirements of those specified in the list are:
- Requirements to the personnel,
- Production base,
- Equipment, vehicles and machines, devices, special mechanisms, etc;
- Work experience and completed projects (with the exception for the 3rd category).
On December 02, 2015 qualification requirements were amended. Now private persons can’t obtain license for construction and design.
One of the most important amendment in qualification requirements is certification of engineering employees. For obtaining of the license for construction and design regardless of category of the license, it is required to have on the staff no less than one certified engineering employee, who has relevant certificate for type of work, included in requested item of the licensed activity.
It is not allowed for engineering employees to combine work.
Certification is a procedure of confirming authority of engineering employees involved in construction and design.
Certification is carried out by certified attestation centers. Attestation center is a legal entity that is certified by authorized body. List of attestation centers you can find on the web site of the Ministry of National Economy of the Republic of Kazakhstan. Rules and procedure of certification is determined in the order of Minister of National Economy of the Republic of Kazakhstan №734 from November 26, 2015.
Documents required for certification:
- An identity document of an individual (the applicant);
- Notarized copy of diploma of higher education;
- Notarized copy of employment book or other documents, which confirm work experience;
- Notarized copies of foreign certificates, diploma or other documents, which confirm qualification for a certain specialization (if there are).
Processing period is 15 working days.
Certification is carried out by computer-based testing. Time for testing is 120 minutes. Test consists of 100 questions in accordance with the chosen specialization. Questions are approved by authorized body. Results of certification are approved by the order of attestation center. Information about certified engineering employees is published on the official web site of authorized body.
As previously noted, certification is carried out by certified attestation centers. The procedure of certification of non-governmental attestation centers is determined in the order of Minister of National Economy of the Republic of Kazakhstan №735 from November 26, 2015.
Documents required for certification:
- Certificate of incorporation;
- Information and documents in accordance with established requirements.
Requirements are determined in Annex #3 of the order of Minister of National Economy of the Republic of Kazakhstan №735 from November 26, 2015. Requirements are the following:
- Presence of teaching personnel, which are responsible for competency development;
- Presence of technical personnel, which are responsible for certification;
- Presence of administration and amenity facility on the right of ownership or on the other legal ground with total area no less than 100 square meters; facilities for testing and training should be no less than 45 square meters;
- Presence of equipment, vehicles and machines, devices, special mechanisms in quantity of no less than 10 places;
- Presence of software for certification;
- Presence of technical and methodological literature;
- Presence of testing questions approved by authorized body, approved internal rules and regulations for training and certification.
Term for issue of a certificate is 15 working days.
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1.3. Access to electronic services
At the moment, many services in the field of real estate are presented in electronic format on the website of the electronic government. The use of the given services allows saving time on administrative procedures at all stages of the registering and doing business in Kazakhstan in the field of construction and design.
In order to have access to electronic services, the company has to get a digital signature, which is issued by the National State Company State Technical Service within 2 business days. The application is filed directly to the Service Provider or through a public service center.
Recognition of foreign electronic signature shall be in accordance with international agreements ratified by the Republic of Kazakhstan. Such agreements were available only with the Customs Union members, now they are available with Eurasian Economic Union members, because on January 01, 2015 Agreement about Eurasian Economic Union is effective.
In the absence of the international agreement, a foreign company is issued a digital signature in accordance with the laws of the Republic of Kazakhstan. For this, it is necessary to file an application with the enclosure of a document containing the personal identification number (PIN) of a representative of the non-resident legal entity (for example, the certificate of registration), as well as the document containing the business identification number (BIN) of the legal entity. To get a BIN, the legal entity shall obtain a certificate of registration on the grounds set forth in the tax code of the Republic of Kazakhstan (eg. open a current account at a local bank).
2. Getting a land plot
2.1. Ways to get a land plot.
A person or legal entity can get a land plot in two ways:
- By buying it from the state. For this, it is necessary to obtain from the local executive bodies of the district (city) a decision on the relevant granting of appropriate rights to the land;
- By searching a plot of land in the secondary market for the rental or purchase it in private ownership.
Each of the options has its advantages and disadvantages. If the project owner wants to get land from the state, it should be ready for a long bureaucratic procedure, which consists of several stages; at each of them delays are possible. On the other hand, acquiring from the state, the project owner pays the cost of the land plot, which is moderate, comparing with the market prices.
In its turn, the purchase of land plot from an individual entails certain risks associated with the previous owners. It can be so that land might be pledged or be in the arrest, third parties may claim the land, or there might be any other encumbrance, which the seller has not disclosed. The advantage of buying the land plot in the secondary market is that the buyer is on a par with the seller at the conclusion of the contract – the parties are free in their actions and can negotiate a contract in a fairly short period of time.
If the project owner already has land, it needs to make sure that it has the right to perform construction on it.
It should be noted that the rights of foreigners to certain types of land are limited:
- Non-residents cannot have in ownership the land designated for agricultural production and afforestation;
- It is not allowed to provide land, located in the border zone and border strip of the Republic of Kazakhstan, in private ownership to non-residents;
- Non-residents and companies, in the authorized capital of which the ratio of non-residents is more than fifty percent, can dispose of the land plot designated for agricultural purpose only under the right of temporary use of land under lease for a period of up to twenty five years (previously this period was up to 10 years), due to amendments to the Land Code of the Republic of Kazakhstan by Law dated 29.12.2014 №269-V. President of the Republic of Kazakhstan has signed order dated May 06, 2016 and in accordance with this order there is a moratorium on granting for foreign citizens lands for agricultural purpose under the right of temporary use. Moratorium is effective till December 31, 2021.
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2.2. The procedure for granting a land plot by the state
To get a land plot for construction within the city boundaries from the state, the project owner will have to go through a procedure consisting of the following steps:
- Applying for the granting of the land plot;
- Deciding whether it is possible to satisfy the application (pre-selection of land plot);
- Findings of the commission on the granting of the land plot;
- Development and approval of land project;
- Making decision by the Regional/City Governor (Akim)/Governor’s office (Akimat), based on the Commission's decisions and the land project;
- Entering into a contract of sale or temporary/short-term/long-term land use for a fee/at no charge;
- Marking delimitations of the land plot on the ground;
- Preparation and issuance of the documents certifying the right to land.
In the receipt of the land from the state, it is necessary to pay attention to the following:
- The purpose of the land use, specified in the relevant document, shall match the objective of the future project, according to the Classification by Designated Purpose (for example, for Almaty, it is necessary to refer to the Appendix to Resolution No.1/85 of the Akim of Almaty of February 13, 2013);
- Possibility to divide the land;
- Registered encumbrances to the land;
- Setting the fenced off area or sanitary protection zone of the land (is executed in the form of certificate of selection of the land with local executive bodies, according to the Land Code of the Republic of Kazakhstan);
The general plan of the inhabited locality. It is prohibited to grant a land for construction, if no detailed layout and/or design made on the basis of the general plan of the inhabited locality, have been provided.
Designation of a land plot.
Designation of a land plot was determined in accordance with classification code of designation, approved by the order of the Ministry of regional development of the Republic of Kazakhstan dated June 02, 2014 #158/ҢҚ. Now definition of “classification code of designation” is excluded from Land Code.
Designation of a land plot is determined in accordance with functional areas. For example, lands of inhabited localities are divided into the following functional areas: residential area, social area, commercial area and other.
Types of lands, which are included into functional area, are determined in article 107 of the Land Code.
Residential area includes lands of residential development, occupied by constructions, intended for construction of multifamily and multistorey houses, free-standing residential buildings with the personal land plots.
Social area includes lands of social and business development, intended for the allocation of governmental and non-commercial objects.
Commercial area includes lands of industrial property development, communal and storage objects, ensuring their operation, objects of engineering and transportation infrastructure, as well as for establishment of sanitary protection zone of these objects and other objects, which are connected with business.
Other area includes lands of transport, communication, engineering services, occupied and intended for the construction of railroad, highway, river, marine, air, pipeline transport, main highways of engineering infrastructure and communication; the specially protected natural areas of health-improving, recreation and historical-cultural significance; the forest fund; the lands of water reservoirs and water area, occupied by rivers, natural and artificial reservoirs and water areas, water conservation zones, water development and other facilities; the agricultural lands; the common use lands, occupied and intended for occupation by squares, streets, pedestrian ways, passageways, roads, embankments, parks, garden squares, forest-parks, boulevards, reservoirs, beaches, graveyards and other objects, intended for satisfaction of population’s needs (public water supply, heating pipes, pollution control facilities and other common engineering systems, as well as conservation zones of heat supply networks and common engineering systems); the reserved and other lands, which are not involved in town-planning activities, intended for the spatial development of the inhabited locality and for the development of personal subsidiary economy; the special purpose lands for the occupation of crematorium, animal burial site, waste landfills for the household garbage and other objects, the use of which is not possible without establishment of the special standards and rules; the lands granted for the needs of defence and national security, as well as for another regime of use.
2.2.1. Filing an application for getting the land plot.
To get the land plot, the applicant has to file an application to the local executive bodies at the location of the land plot. The term of consideration of an application is up to two months from the date of its receipt. The application shall contain:
- The purpose the land will be used for (in our case, for construction purpose);
- The alleged size of the plot of land (to be determined in accordance with the norms of land allocation as per the procedure established by the laws of the Republic of Kazakhstan for these types of activities, or in accordance with the architectural and urban planning and/or construction documents;
- Location (the approximate location of the land);
- Requested right to use the land (private ownership of land, the right of permanent use of the land, the right of temporary (long-term, short-term) use of the land for a fee, the right of temporary use of land at no charge);
- The availability or the lack of another plot of land (in case of the plots of land for a private farm in rural areas).
2.2.2. Preliminary selection of the land plot.
A necessary step in the procedure of getting the land for construction is preliminary selection of the land. After the land is selected, the relevant statement is issued by the structural subdivision of respective local executive bodies in the field of architecture and urban planning.
The statement on the selection of the land plot is issued with the annex showing the boundaries of each plot of land in accordance with possible options of their selection. The statement on the land plot selection shall be executed within ten business days, with the subsequent submission of the land plot selection statement to the commission for consideration and opinion.
2.2.3. The decision to grant the land plot
The decision to grant the land plot is issued by local executive bodies on the basis of the commission's opinion and land project.
The Commission is established by the local executive bodies of the region, the city of national status, the capital, district, the city of regional status. The commission is comprised of deputies (legislators) of the local representative bodies, the representatives of the authorized body of the region, the city of national status, the capital, district, the city of regional status, the structural subdivisions of relevant local executive bodies in the field of architecture and urban planning, the National Chamber of Entrepreneurs of Kazakhstan, as well as local governments (if any). If the commission has been established at the level of regions, the cities of national status, and/or the capital, then it shall also comprise representatives of relevant territorial subdivisions of the authorized bodies in the field of environmental protection, agriculture and forestry, use and protection of water resources, land management, as well as other persons at the discretion of the local executive body.
Endorsement of the committee is handed over to the applicant within five business days for preparation of the land project. The land project specifies the area of land plot granted its boundaries and location, the adjacent land owners and land users, as well as encumbrances and easements of the land granted.
A copy of the decision of the local executive body on granting the right to the land plot is handed over (sent) to the applicant within five business days since the decision.
2.2.4. Registration rights to the land plot.
Registration the right to the land plot is carried out as per the same procedure as the registration of construction facility. The rate of fee for land registration is 0.5 MCI that is at the current exchange rate is about US$3. The rate of fee for expedited registration of land for legal entities is 15 MCI that is equal to about US$ 109 at the current exchange rate.
Without registration of the land, it will be impossible in the future to register the construction facility. If the project owner has failed to make such registration, the law permits the simultaneous registration of the land and the constructed facility. If the right to land has emerged before the introduction of the system of state registration, the registration of the construction facility is allowed, subject to the simultaneous registration of the right to the land.
2.3. The procedure for granting land by the state for the construction within the city boundaries.
Due to the Amendments to the Land Code of the Republic of Kazakhstan, which came into force in 2015, there is a separate article defining the procedure for granting land plot for the construction of property within the boundaries of the city.
The procedure for obtaining of land plot has several stages:
- submission of an application;
- approval of the final act of choice land;
- signing of the contract of temporary land use;
- preparing of land-cadastral plan;
- the decision of the local executive body for the land plot;
- demarcation of land in-situ.
In addition to the above, the redemption of a land plot granted to the land in private ownership is permitted only after commissioning (finalization of property construction within the special procedure of building acceptance).
2.3.1. Filing the application.
To obtain a land for construction within the boundaries of the city applicant must apply to the local executive body for the locality of the land plot on the web portal of electronic government or the center of public service.
The application must contain:
- Address (location) of land plot;
- The area in hectares (sq.m.);
- Name of the construction of the planned facility, number of floors, and the approximate area of the building.
Application should have attached location plan of land plot in an electronic format.
2.3.2. Approval of the final act of choice of land plot.
The appropriate department of the Akimat (local execution state body) within 7 working days is preparing the act of choosing the land plot with its situational scheme and should send it for the approval to all relevant authorities. Approving authorities within 12 working days submit opinions on the usage possibility of the land. By the conclusion of a specialized state-owned enterprise, which is leading the state land cadastre shall be attached requested information on the land plot and estimate fees for land works (measuring, etc.) and cadastral works.
In the case of a positive conclusion, the appropriate Akimats department within 5 working days should prepare a final act of choosing the land plot, which should be send for approval to the applicant.
The applicant within 3 working days negotiates a final act of choosing of the land plot and pays amount of services for executed cadaster works.
2.3.3. The decision granting the land plot.
After signing by the applicant of the temporary land use contract and construction, upon getting the approved developed land-cadastral plan, it goes to the Akimat for its decision to grant the right to the land plot. Akimat takes a decision on granting the right to the land plot within 5 working days from the date of approval of land-cadastral plan. Cadastral plan is an integral part of the granting decision.
The applicant gets a copy of the granting decision of land plot to applicant on the web portal of e-government. A copy of the decision and the interim agreement's land use are sent to the authorized body for the registration of rights to land plot.
2.3.4. Land acquisition.
After commissioning (finalization of construction and signing the commissioning act by authorities) the land user has the right to buy land plot from the state by submitting an application to the local executive authority with the accompanying documents.
The following document are attached to the application:
- the document certifying the right to land plot, or a copy of a document certified by a notary;
- the copy of the taxpayer certificate;
- the certificate from the center of the real estate confirming the absence of encumbrances on the property, preventing the conclusion of transactions;
- the certificate of state registration (re-registration) of the legal entity.
The granting decision on the land property ownership shall be made within 15 working days from the date of submission of the application by the land user.
3. Project documentation.
In the Republic of Kazakhstan, within the technical regulation rules now we are in process of gradual replacement from outdated building codes to Eurocodes - European technical standards for design and construction of buildings and structures. The process of implementation of Eurocodes is gradual and has been divided to three stages:
- 2010 – 2014, preparatory stage;
- 2015 – 2020, the coexistence of new and existing standards;
- 2021 – 2025, summarizing the experience of the application and adjustment of the new regulatory framework.
Due to our legislation regulations like Eurocodes are designated as SN RK EN, and entered into force on July 1, 2015, according the Order of the Chairman of the Committee for Construction, Municipal housing and Land Management of the Ministry of National Economy of the Republic of Kazakhstan dated December 29, 2014 №156- NК On approval of the new regulatory framework of the construction industry.
So far, there were developed more than 50 regulations like Eurocodes with national specific application rules and some 16 amendments to national applications Construction Rules and Regulations RK EN. Examples of the acting in Kazakhstan Eurocodes:
- Construction Rules and Regulations EN 1990: 2002 + A1: 2005/2011 Basics of structural design
- Construction Rules and Regulations EN 1991-1-3: 2003/2011 The effects on structures. Part 1-3. General actions. Snow loads
- Construction Rules and Regulations EN 1992-1-2: 2004/2011 Design of Concrete Structures. Part 1-2. General rules for determining fire resistance.
Basic rules for the development, coordination and approval of project documentation, its composition and the content were set out in Construction Rules and Regulations 1.02-03-2011, which became invalid due to the introduction of the new regulatory framework.
But in accordance with replies of Minister of National Economy of RK and Chairman of Committee for matters concerning construction, housing and utilities infrastructure and land management of the Ministry of National Economy of RK dated September 29, 2015 “Construction Rules and Regulations 1.02-03-2011 “Procedure of development, coordination, approval and contents of design documents for building” is effective in accordance with the order of the Committee for matters concerning construction, housing and utilities infrastructure and land management of the Ministry of National Economy of RK dated December 30, 2014 #172-НК “On amendments in orders dated December 29, 2011 #536 “On approval of technical documents in the field of architecture, urban planning and construction” and in order #540 “On approval technical document”.
Developed and approved project documentation is valid for three years from the date of its approval.
When this period expires, the documentation is considered outdated. In this case, it must be brought into conformity with the applicable government regulations and reapprove that is produced in the same manner in which it was approved, but in view of the changed technical regulations.
3.1. The procedure of preparation of project documentation.
Design can be made in several stages. Stages are defined in the design assignment. The first stage is the preparation of the project, which is developed on the basis of pre design documentation. The second stage is the preparation of working documentation. A two-stage design applies when it comes to construction of large facilities for civil purpose or industrial facilities, or the construction of critical facilities, affecting the state or public interests, and implemented with the participation of public investments.
Designing facilities with the term of construction of up to 24 months is carried out in one stage, without the development of working documentation. Projects of construction facilities built as per the model projects are also developed in one stage, when the previously developed individual project is executed; the same concerns the renovation of facilities.
The beginning of the design shall be the date of entry into force of the contract for the development of design estimates, signed between the customer and contractor (contractor, general designer). The contract for the development of design estimates includes the types and scope of work, terms of carrying out designer’s supervision when necessary (otherwise, it is indicated that there is no need for designer’s supervision). Thus the customer must give to the contractor the approved design assignment and other initial data valuable to the development of design estimates. With this, it is not permitted to subcontract the work on the design, which value is more than two-thirds of the total cost of the work.
At the stage of preparation of project documentation, those solutions which refer to the area of general planning and 3D solutions that have been adopted and approved by the general plan of the settlements, are outlined in detail. Project documentation shall contain solutions and indicators of the general plan (including zoning area).
If the prepared design documentation reasonably goes rightly beyond or differs from the government regulations including the general plan, it will be necessary to get written approvals from the authority which approved the government regulations (in case of the general plan it is the local rrepresentative bodies). Prior to submission for the approval, it will be necessary to obtain to approve any differences (deviations) from the mandatory requirements of state standards from the relevant authorities.
The design assignment/ source materials for the preparation of project documentation
The customer (or the project owner) draws up and approves the design assignment, which can also be prepared by the general designer, or other contractor. Design assignment is an integral part of the contract for the development of design estimates.
Together with the design assignment, the customer provides the contracting engineering company (the general designer) source materials/data for the development of project documentation, which include:
- The decision of the local executive bodies of districts (cities) on the granting of the relevant right to land, including regulations on the use of the territory within its borders and designated purpose;
- Data on engineering survey of the construction site (within the boundaries of the land and the routing of communications), including data on surveying, geological and hydrogeological surveys required for the design and construction;
- Technical conditions for connection to the public utilities and engineering networks, provided on request of local executive bodies by service providers in the field of public utilities and engineering networks in the area of the supposed construction;
- Architectural and planning assignment, issued by the local (city, district) body for architecture and urban planning, including land development conditions, and landscaping.
The contractor shall comply with requirements, which are determined in design assignment and other source materials for design and survey. The contractor is entitled to deviate from them only with consent of the customer.
3.2. Coordination of the project documentation
Developed in accordance with the design assignment, the architectural and planning assignment, and other source materials, the project documentation/ design estimates shall pass through coordination and approval in accordance with the requirements established by state regulations.
Project documentation shall include a record of the chief engineer or the chief architect of the project as to the compliance of the project documentation with the state regulations.
In some cases it is necessary to make additional coordination of project documentation with government agencies, such as the Committee for Construction and the Committee for Industrial Development and Industrial Safety. These cases are related to the construction of special purpose facilities, such as hazardous production facilities, if this is expressly provided by the legislation.
Additional coordination is also required for retraction of additional land (reduction in the land), in the change of transport or communication routes, in the deterioration of initially set architectural-aesthetic, engineering, fire-fighting, anti-explosion, and sanitary qualities of the environment.
3.3. The expert examination of the project documentation
The expert examination is one of the final stages of development of project documentation, preceding its approval. The goals of the expert examination are the analysis of documentation, the determining of effectiveness of investment, and the provision of design solutions for sustainable operation of the facilities after their commissioning.
The expert examination is carried out by expert organizations or experts certified in the relevant sections (parts) feasibility studies and design estimate documentations.
Rules for certification of expert organizations are determined in the order of the Ministry of National Economy of RK dated February 27, 2015 #151. For certification expert organizations provide the following documents:
- Certificate of incorporation;
- Information about experts of expert organization, notarized copies of their identity documents, diplomas and employment agreements;
- Information about production base on the right of ownership and on the other legal ground, information about equipment, vehicles and machines, devices, special mechanisms, information about a system of quality control of expert examination, information about normative and methodological literature.
Application and forms of information are determined in Annexes to the order, which is mentioned above. Certification of expert organizations should be confirmed every other year from the date of certification or confirmation.
The expert examination is performed within:
- 45 calendar days for the projects of construction of technical or a technologically complex facilities of I and II levels, potentially hazardous facilities;
- 30 working days for the project of construction of both technical and technologically complex facilities of II level, which are not potentially hazardous;
- 10 working days for the projects of construction of both technical and technologically simple facilities, which are not potentially hazardous.
It is possible to not perform the expert examination at the request of the customer, in some cases. For example, whilst designing technically simple structures (houses, temporary structures, household structures, and so on), the expert examination is optional.
Law of Kazakhstan On amendments and additions to some legislative acts of Kazakhstan on the radical improvement of the business environment in the Republic of Kazakhstan, which greatly changed the order of the expert examination was signed on December 29, 2014.
The term state expert examination was excluded. Instead, the following concepts were introduced and the types of the expert examinations:
- the projects expert examination (the integrated departmental expert examination of feasibility studies, design and construction documents), intended for the construction, carried out by the accredited expert organizations or experts with the appropriate certificate;
- the integrated departmental expert examination of construction projects (feasibility studies, design and construction documents), referred to the state monopoly;
- the integrated urban planning expert examination is a mandatory expert examination of urban development projects at various levels;
- the interstate expert examination of projects of common interest to two or more States parties to the relevant international instruments for the design and construction of urban planning or adjacent border areas.
In some cases, required to conduct a comprehensive expert examination of departmental classified as a state monopoly in the Republican State Company State Expert examination (formerly called simply - state expert examination).
Integrated departmental the expert examination carried out by the state expert organization is needed, in particular, in the construction of potentially hazardous and technically, and (or) a technologically complex facility (such as nuclear facilities, mainline railroads, subway, etc.).
Earlier construction of the facilities could be exercised in the form of the expert support. By the order of Chairman of Agency of the Republic of Kazakhstan on Affairs of construction and housing and communal services from July 23, 2012 № 356 "On approval of Rules of carrying out state examination of construction projects in the mode of expert support" the procedure of state expertise in the form of the expert support of incremental development of design-estimate documentation for construction of buildings and structures and their complexes was determined.
For each phase of construction was given a local expert opinion, according to which the construction was carried out.
Since in Kazakhstan instead of the state examination was introduced comprehensive departmental examination, the abovementioned Rules began to violate the principle of "one window", which was introduced with the implementation of a comprehensive departmental examination.
Initially, conduct of a comprehensive departmental examination in the form of the expert support was suspended, and then the form of the expert support was excluded from the Law "On architectural, urban planning and construction activity" by the Law of RK dated 28.10.15, No. 366-V.
After making the above changes, there was adopted the order of the Minister of national economy of Kazakhstan from 02.12.2015 No. 751, under the which the Order of Chairman of Agency of Republic Kazakhstan on Affairs of construction and housing and communal services from July 23, 2012 № 356 "On approval of Rules of carrying out state examination of construction projects in the mode of expert support" was repealed.
Now the expert support cannot be applied.
Project documentation of facilities that have impact on the environment, is subject to mandatory Environmental Impact Assessment.
Environmental Impact Assessment of projects and sanitary and epidemiological expertise of projects are carried out on the principle of "one window" and are included in the comprehensive non-departmental expertise of projects, i.e. it is not necessary to pass Environmental Impact Assessment separately.
Pursuant to the requirements of the Law of RK of 12.29.2014, referred to above, an order was issued by the Minister of National Economy of Kazakhstan from April 1, 2015 № 299 On approval of a comprehensive departmental expert examination of feasibility and design estimates for construction of the new, and changes (reconstruction, expansion, technical re-equipment, modernization and overhaul) existing buildings and structures and their complexes, engineering and transport communications, regardless of funding source.
According to the amendments the expert examination of construction projects is carried out on the principle of one stop through a single electronic information system with all the required specialized expertise. Thereafter, changes were made to the powers of the state comprehensive departmental of expert examination. It is planned to hold a two-step transfer of authority for the expert examination of certain types of projects in the competitive environment.
Since January 2015, about 50% of expert works will be given to the competitive environment. These are projects that do not belong to the state monopoly, but rather projects technically and technologically simple construction projects.
From January 2016 the state monopoly will include comprehensive departmental expert examination of projects (feasibility studies, design and estimate documentation) for:
- construction of new industrial buildings and structures related to the potentially dangerous construction projects, as well as new technical and (or) the technologically complex facilities, complexes, engineering and transport communications, regardless of funding source;
- reconstruction, expansion, modernization, technical re-equipment and overhaul of existing potentially dangerous, as well as technical and (or) the technologically complex facilities financed from the budget and other forms of public investments.
By 2020 it is planned to transfer 90% of the expert works to market entities. This will be achieved by changing the criteria of inclusion of facilities to the technically and technologically simple.
From January 2020 the state monopoly will include only projects:
- regardless of the source of funding facilities of national and interstate (international) values, as well as unique facilities, which, because of the lack of regulatory and technical requirements necessary to develop special technical conditions - specific standards of design and construction;
- technically and technologically complex buildings financed from the budget or other public investments.
3.4. Approval of the project documentation
Approval of the project documentation shall be made through the decision of the customer with the indication of the main technical and economic performance indicators under approval.
The law provides for the procedure for approval of project documentation on projects whose construction is invested by the state. Detailed peculiarities of approval project documentation on projects whose construction is invested by the state are determined in the order of the Ministry of National Economy of RK dated April 02, 2015 #304.
4. Property construction
Basic requirements and standards on construction are contained in the Law On Architectural, Urban Planning and Construction Activities and the Construction Rules and Regulations (SNiP) of the Republic of Kazakhstan 1.03-00-2011 Construction Process, Organization of Construction of Plants, Buildings and Structures.
The construction process can be divided into several stages:
- getting a land plot;
- receipt of source materials for the preparation of project documentation;
- coordination of sketch (sketch plan);
- design and expert examination of projects;
- construction and installation works;
- acceptance facility into operation.
4.1. Notice of the beginning of construction
The customer (or project owner) shall make a notice to the State Architectural and Construction Supervision Body, not less than 10 (ten) business days prior to the beginning of construction, of the beginning of construction and assembling operations. PSC at the location of the construction site, receive the notice, which can be submitted in both electronic and paper form.
Form of notice of the beginning of construction is approved by the order of the Ministry of National Economy dated January 06, 2015 #4 “On approval of form of notices and rules for receipt notices by governmental bodies, and determination of governmental bodies, which receive notices”.
The notice is submitted to the Chief State Inspector on Construction, the inspector of the region or city of national status. The notice shall contain the name of the customer or project owner, the name and location of the proposed facility for construction, the construction start date, the date of commissioning, and the source of financing. The notice shall also include data, such as right to land, the approval of design estimates, the expert examination (if required), the data about the contractor’s company, the persons in charge of the customer and the contractor, data on designer’s and technical supervision.
The notice of the beginning of construction and assembling operations shall contain the attached copies of the endorsement on the expert examination (if it was carried out), as well as the statement of the selected land.
In the filing of the application, the applicant gets a ticket that the application is accepted for consideration, or a copy of the notice with a note on the reception, or a ticket in the electronic form. Upon receipt of such document, the applicant is entitled to start the work. In this case, the State Architectural and Construction Inspectorate (inspector) is entitled not later than five business days since the date of receipt of the notice to attend the construction site.
4.2. Requirements to the construction
During pre-construction activities sign board should be hung on the construction site. Sign board should include information about customers, contractors, project designer, designer’s and technical supervision, information about construction and installation works (including terms for beginning and completion of construction). This requirement does no reach the cases like individual housing construction.
During the whole period of construction (mothballing) and lifetime of the facility, the owner of the facility (customer, project owner, leasee, leasor) shall ensure the following:
- Quality of construction (compliance with the requirements established in the construction projects);
- Quality of construction materials (compliance with the technical standards of the Republic of Kazakhstan);
- Safety during the construction and operation of the facility, including carrying out of works and maintenance;
- Compliance with occupational safety and health (compliance with the fire safety requirements, prevention of exposure of workers to occupational hazards);
- Stability and reliability of operation;
- Compliance with environmental requirements (land reclamation, preventing loss of natural resources, prevention or cleanup of harmful emissions into the soil, water and atmosphere).
4.3. Architectural and construction control and supervision
The construction process is accompanied by architectural and construction control and supervision as per the list of activities of private businesses that are subject to state control and supervision.
Architectural control and supervision over the quality of construction of facilities is performed by the State Architectural and Construction Inspectorate.
The State Architectural and Construction Inspectorate checks the customer (the project owner) for the availability of documentation required for the carrying out of construction. The inspectorate also monitors the quality of building materials, compliance of construction and assembling operations with the project and state regulations, as well as it monitors the implementation by the contractor of its own control of the construction quality, and the designer’s and technical supervision.
Whilst carrying out its activities the State Architectural and Construction Inspectorate has the right to request information about the facilities proposed for construction and those under construction, as well as request project documentation and visit and inspect the construction sites.
Based on the results of the inspection, a relevant statement and record sheet of the facilities is made. If any deviations from the government regulations or project documentation have been revealed, the State Architectural and Construction Inspectorate issues an instruction with indication of the deadlines. Instructions can be the following:
- On prohibition of using construction materials, products, components and equipment non-complaint to national standards and technical specifications;
- On remedy violations by customer or contractor within the established time limit;
- On suspension of construction and installation works.
4.4. Designer’s supervision
Author of architectural work (authors of the project and/or the developers of project documentation) are vested with an exclusive property right to use the design and implement it, the right to perform or authorize to perform the reproduction, distribution and treatment of the project, as well as the right to delegate these rights to others.
Powers to exercise designer’s supervision may be delegated to an expert who has a certificate to deliver engineering services in the field of architecture, urban planning and construction, or to the customer for its selection on its own of a supplier of engineering services for conducting designer’s supervision that has the appropriate certificate.
In addition to these exclusive rights, the author of the architectural work has the right to exercise control both over the development of construction documents, as well as their implementation, including designer’s supervision over the progress of construction and the photography (film or video). These powers are not absolute and may be limited by the design assignment or by the contractual provisions on the development of the design estimate documentation.
Designer’s supervision is carried out under the contract on the development of the design estimate documentation. In the construction of facilities that are subject to the commissioning by the state acceptance commissions and acceptance commissions, it is necessary to make a contract for designer’s supervision. Designer’s supervision shall be implemented throughout the entire period of construction (renovation, restoration, expansion, technical re-equipping, modernization, capital repairs) of the facility or preservation of unfinished projects.
The contract for the designer’s supervision may include the following works, but not limited to:
- Compliance management over actual performance of construction and assembling operations for their conformity to the working documents, as well as the designer’s supervision of the progress of construction;
- Compliance management over executed documentation for its conformity due to the adopted standards of the Republic of Kazakhstan;
- Keeping during the construction and assembling operations of a designer’s supervision log and its submission to the customer upon completion of work under the designer’s supervision.
- Overseeing the development of the construction project, implemented by the author(s) of the architectural and urban work; implementation of the construction project, carried out by its developers, including the author(s) or urban architectural works.
A designer’s supervision log is keep separately. It contains the instructions, identified deviations from the design estimates, violation of construction rules, regulations and specifications for the carrying out of construction and assembling operations, as well as instructions on elimination of revealed deviations and relevant time limits. After completion of construction person carrying out designer’s supervision issues to the customer conclusion of the work performed under the project.
According to the valid amendments dated April 01, 2015, the rights and obligations of designer's service directly set in the Law On architectural, urban planning and construction activities. These points were spelled out in contract for the designer’s supervision.
From April 01, 2015 persons carrying out designer’s supervision bear liability, established by the laws of the Republic of Kazakhstan for failure to perform their duties or for carrying out activity in contravention of the law of the Republic of Kazakhstan.
4.5. Technical supervision
Technical supervision is one of the forms of supervision over the construction. It is implemented either by the customer, or by an expert who has a relevant certificate to provide engineering services. The mark on the technical supervision, as well as data on the persons performing technical supervision, are entered in the log of the works.
Heretofore, technical supervision was compulsory only in the construction of facilities subject to acceptance in the operation of public acceptance and acceptance committee and the repair of roads. Now, due to the changes, which came into force on April 1, 2015, the technical supervision necessarily carried out at all construction sites with the exception of low-tech buildings.
Technical supervision is carried out at all stages of the project, from the start of the construction and assembling operations to the acceptance and putting of the facility into operation. Technical supervision perform the quality of work, terms of their performance, and the value of work.
That said technical supervision of the requirement to inform the State Architectural and Construction Supervision Authority in the case of violations of the norms and requirements established by the legislation of the Republic of Kazakhstan.
Terms of conducting technical supervision are not specifically regulated by the law. The state regulations provide for particular cases where technical supervision is mandatory, and the procedure for its conduct. For example, to conduct checkup tests for the reliability of a brickwork or masonry on the construction site, a representative of the technical supervision is selected by relevant instruction. Carrying out of works to embed floor slabs shall also be carried out under strict technical control with the mandatory execution of a statement of acceptance of the quality of work performed.
Technical supervision is important in the identification and the examination of the hidden works, the result of which will not be visible at the end of construction. Acceptance of such work is carried out by a representative of technical supervision with the preparation of the relevant statement of the examination of the hidden works.
If technical supervision is carried out by an expert, the terms of its conducting may be specified in the contract for engineering services. After signing the contract, the contracted company shall provide to the customer for approval an organizational structure, created by it for the technical and designer’s supervision and project management, as well as the candidacy of a project manager from the company.
After completion of construction person carrying out technical supervision issues to the customer conclusion about the quality of construction and installation work.
As with designer’s supervision, from April 01, 2015, the rights, obligations and liability of technical supervision directly set in the Law On architectural, urban planning and construction activities.
4.6. Rights and working peculiarities of engineer.
Complex of engineer’s services includes technical, designer’s supervisions and project management. Project management is added to the complex of services in accordance with amendments to the Law of RK “On Architectural, Urban Planning and Construction Activities in the Republic of Kazakhstan” of October 28, 2015.
Rules for the provision of engineer’s services is approved by the order of the Ministry of National Economy of February 03, 2015 #71. In this rules functions of engineer under technical, designer’s supervisions and under the project management are determined.
It should be emphasized that technical supervision in shared construction is carried out by engineering companies in the field of shared construction in accordance with the Law of the Republic of Kazakhstan dated April 7, 2016 " On Participation in Shared Construction of a Residential Building".
The main functions under technical supervision are:
- Control for the following a calendar plan of construction and for the putting facilities into operation within the scheduled time or within the time frame set in the construction contract;
- If there are inconsistencies in project documentation of if there is need to change design consideration, materials, products, components, equipment, engineer should make suggestions in order to resolve costumer’s questions;
- Quality control for construction and installation work, for used materials, products, components, and equipment, for their compliance with project documentation, technical specifications, technical regulations, results of engineering surveying; for presence and accuracy of documents (test certificates, certificates, test codes) and for documentary result of pre-installation inspection; to reveal defects and violations, to inform the customer and contractor;
- Participation in the acceptance of equipment after test and etc.
The main functions under designer’s supervision:
- Control for compliance of scope of work, work method and quality of work in construction of buildings, including equipment installation works with design consideration;
- Resolve of questions in construction documents, design estimate documentation change in accordance with the current public regulations;
- Control for compliance of certificates (test certificates) and other technical documentation on components, products, materials and equipment with governmental standards, technical specifications and project documentation and etc.
It is required for experts to be certified for designer’s, technical supervisions. Rules for certification of experts are approved by the order of the Ministry of National Economy of RK of November 27, 2014 #114.
Documents required for certification:
- An identity document of an individual (the applicant);
- Notarized copy of diploma of higher education;
- Notarized copy of employment book or other documents, which confirm work experience.
Processing period is 10 working days. After the documents review, it is made list of persons, who will take a test, with a schedule. Time for testing is 120 minutes. Test consists of 100 questions. Questions are approved by authorized body.
Project management is a service of initiating, planning, controlling for design, construction and putting into operation facilities in accordance with the contract with customer or investor for the purpose of achievement project’s goals under the budget and terms.
Functions of engineer under the project management are determined in the order of the Ministry of National Economy of RK of February 03, 2015 #71.
The general functions are:
- Provision of services under the contract with the customer;
- Inform the customer about problems with accomplishment of construction contract;
- Providing of recommendations and etc.
Functions under the development of design are:
- Checking of efficiency of project consideration;
- Providing of recommendations in order to improve technical specifications of facility and etc.
Functions under the construction and installation work are:
- Providing of completely compliance of construction and installation works with design estimate documentation;
- Control for designated use of funds in construction and installation works and etc.
Organizations, which provide services under the project management should be certified in authorized body. Qualification requirements are determined in the order of the Ministry of National Economy of RK of November 30, 2015 #749. Requirements are the following:
- Presence of no less than one certified expert in technical supervision in the following specialties:
- For the facilities of first level complexity – with regard to bearing and enclosing structures;
- For the facilities of first level complexity – with regard to engineering networks;
- For the facilities of first level complexity – with regard to technological equipment;
- Presence of no less than one certified expert in designer’s supervision in the following specialties:
- For the facilities of first level complexity – with regard to architecture;
- For the facilities of first level complexity – with regard to bearing and enclosing structures;
- Presence of no less than one certified expert in expert examination of urban planning, pre-design documentation and design documentation in the following specialties:
- Urban planning;
- Pre-design documentation;
- Constructional part;
- Engineering networks and systems (under types of engineering networks and systems);
- Technological part (depending on object’s designation);
- Special parts of projects;
- Presence of administration and amenity facility on the right of ownership or on the other legal ground;
- Presence of equipment, vehicles and machines, devices, special mechanisms particular working places with software.
According to the Law of the Republic of Kazakhstan "On Participation in Shared Construction of a Residential Building" (further the "Law"), participation in shared construction of a residential building can be made in three ways:
- By raising money of the participants of shared construction after erecting the frame of the residential building;
- Through the obtaining of a guarantee letter from the relevant Guarantee Fund,
- Through the participation in a relevant project of a second-tier bank.
These three ways are the only possible options to raise money from persons and legal entities to build residential building. Other ways of raising money are prohibited by law.
First way to participate in shared construction is raising money of the participants of shared construction after erecting the frame of the residential building.
Frame is a carrying system, which bears load and effects, provides resistibility, sustainability of residential building, and has bearing and enclosing structures.
To implement the activities on organization of shared construction of a residential building, after the erection of the frame of the residential building, the following requirements are set to the developer: for the past five years, including as a customer, the contractor (general contractor), to build and put into operation, in aggregate, in the Republic of Kazakhstan residential buildings (residential houses) with a total area of:
- not less than sixty thousand square meters in the construction in the cities of the national level, in the capital, and
- not less than thirty thousand square meters in the construction in other administrative and territorial units.
The total experience of the developer’s subsidiaries is also taken into account.
If developer complies with the requirements, he will register authorized company, which shall have:
- A plot of land used under the right of paid temporary land-use (lease), provided by the state, or under the right of ownership;
- Design and estimate documentation on the project of construction of the residential building (residential house) with the attachment of a positive opinion from the panel of experts of comprehensive departmental examination;
- Completed construction of the frame of the residential building (residential house), confirmed by the report of the engineering company;
- The contract with the engineering company.
If developer and authorized company comply with the requirements, they shall submit to the local executive body (Akimat) to obtain permit to raise money of the participants of shared construction. Only after obtaining such permit, authorized company can raise money of the participants of shared construction.
Second way to participate in shared construction is obtaining of a guarantee letter from the relevant Guarantee Fund.
In order to reduce risks and to protect rights of participants in shared constriction, National Holding Company “Bayterek” has founded Guarantee Fund. The main activity of Fund is giving guarantee letter on completion of residential building. In other words, Fund guarantees, that citizens, who participate in shared construction, will receive their houses.
Guarantee Fund has power to require from participants of shared construction comply with qualification requirements in financial sustainability and with regard to experience. If developer complies with the requirements, he will register authorized company, which shall have:
- A plot of land used under the right of paid temporary land-use (lease), provided by the state, or under the right of ownership;
- Design and estimate documentation on the project of construction of the residential building (residential house) with the attachment of a positive opinion from the panel of experts of comprehensive departmental examination;
- Money, which is planned to spend and (or) unfinished building, which is confirmed by acceptance acts in the amount of at least 10 percent of project cost if a company has a plot of land under the right of ownership or in the amount of at least 15 percent of project cost if a company has a plot of land under the right of paid temporary land-use (lease), provided by the state;
- Money for fee for the documents consideration, for guarantee deposit under the guarantee agreement;
- Construction contract.
If developer and authorized company comply with requirements, Guarantee Fund will check and conclude a guarantee agreement.
After conclusion of guarantee agreement, there is no need to obtain permit to raise money of the participants of shared construction.
There is peculiarity if developer build residential building by obtaining of a guarantee letter from the relevant Guarantee Fund. Developer shall provide to Guarantee Fund annual financial reporting, which is confirmed by auditors’ report. Authorized company shall provide financial reporting every three months.
Third way to participate in shared construction is participation in a relevant project of a second-tier bank.
For shared construction by participating in a relevant project of a second-tier bank, the developer is required to have experience in implementation of construction projects of residential buildings (residential houses), including that as a customer, the contractor (the general contractor), to be not less than three years in aggregate, with a total area of:
- not less than eighteen thousand square meters in the construction of these in the cities of the national level, in the capital, and
- not less than nine thousand square meters in the construction in other administrative and territorial units.
Developer registers authorized company, which shall have:
- A plot of land used under the right of paid temporary land-use (lease), provided by the state, or under the right of ownership;
- Design and estimate documentation on the project of constriction of the residential building (residential house) with the attachment of a positive opinion from the panel of experts of comprehensive departmental examination.
If developer and authorized company comply with requirements, they shall submit to a second-tier bank for financing of construction. After that bank will conclude contract with engineering organization. Then developer and authorized company shall submit to Akimat to obtain permit to raise money of the participants of shared construction.
On July 29, 2016 the Minister of National Economy of the Republic of Kazakhstan issued Order No. 352 approving the Rules for the Issuance of a Permit to Raise Money of Potential Participants of Shared Construction.
Obtaining a permit to raise money of potential shared construction participants is not required only in case of obtaining the guarantee letter from the relevant Guarantee Fund. In all other cases, the developer and the authorized company are obliged to obtain the relevant permit from the local executive body.
The permit to raise money of potential shared construction participants is issued by the local executive body for the entire period of construction of the residential building before putting it into operation.
To obtain the permit to raise money of potential shared construction participants, the developer and the authorized company shall submit to the local executive body (Akimat) the following documents:
- The application of the established form (the form of the application is approved by Appendix 1 to the Rules);
- The copies of the documents confirming the compliance with the requirements set in the Law for the developer and the authorized company.
Requirements to the developer and the authorized company on each of the three above-mentioned ways of implementing activities on organization of shared construction are different and are written in clause 5.1 of this legal guide.
The term of consideration of the documents by the Akimat is 10 days from the date of their submission. Upon consideration of the documents, the Akimat issues a permit to raise money of potential shared construction participants or a reasonable refusal to do that.
Persons, who raise money of potential shared construction participants, with violation of the legislation of the Republic of Kazakhstan, bear responsibility, established by the laws of the Republic of Kazakhstan, particular administrative responsibility (article 320 of the Conde of RK “On administrative Infractions”.
Three clauses of this article are dedicated to certain violations in shared construction:
- Violation of requirements of the legislative act of the Republic of Kazakhstan on shared construction by developer, authorized company, to the information content, as well as procedure for its distribution or distribution of inaccurate, incomplete or misleading information by developer, authorized company. For such violation there is
a fine on legal entities in amount of three hundred monthly calculation indices;
- Non-representation of details and reporting provided by the Laws of the Republic of Kazakhstan by developer, authorized company to the local executive body of oblast, city of republican significance, the capital or representation of inaccurate details and reporting by them, and inaccurate report about results of construction process by engineering organization. For such violation there is a fine on legal entities in amount of three hundred monthly calculation indices;
- Actions (omission) provided by parts one and two above committed repeatedly second time by developer, authorized company repeatedly second time within a year after imposition of administrative sanction, shall entail suspension of permit to raise money of potential shared construction up to three months.
6. Completion of construction
6.1. Acceptance of the facility in operation.
Almost any built (renovated) facility in Kazakhstan is subject to acceptance into operation. Cases, when facility can be accepted into operation by the customer, without contractor, designer’s and technical supervisions are identified below in clause 6.2. Without this procedure, the facility cannot be registered as completed, and cannot be included in the relevant databases as a real estate. Prior to that, the facility is considered as a set of building materials.
Acceptance of a facility involves its the expert examination, which is carried out in order to determine the suitability of the facility for operation, to reveal and record any faults. Acceptance of the facility is ended by signing a statement of acceptance.
Acceptance of a facility gives rise to certain rights and obligations of the customer, thus, in the acceptance of the facility, it is important to notify the contractor of any shortcomings the facility has. Shortcomings are subsequently specified in the statement of acceptance of the facility. If the shortcomings are irremediable and prevent the use of the constructed facility for the designated purpose, the customer is entitled to refuse to accept the result of the work.
Construction contracts usually provide guarantee periods, during which the customer can make a claim to the contractor with respect to the shortcomings, including hidden ones. The law provides a guaranty period of 10 years, however, the contract can provide for a different term.
On January 1st, 2016 the order of facility acceptance is changed, legislator has abrogated state acceptance commission, acceptance and working commissions. Acceptance of the facility will be made only by the customer, contractor (general contractor), the technical supervision and supervision.
Under the changes, new documents introduced, which are required for the facility acceptance:
- Declaration of compliance, which is issued to the customer upon completion of the construction by contractor;
- Conclusion about the quality of construction and installation works, which should be issued to the customer by technical supervision;
- Conclusion of the work performed under the project, which should be issued to the customer the supervision.
Form of declaration, conclusions is approved by the order of the Ministry for investments and development of RK dated April 24, 2017 #235 “On approval of form of conclusion about the quality of construction and installation works, conclusion of the work performed under the project”.
Form of declaration of compliance is approved by the order of the Ministry for investments and development of RK dated April 24, 2017 #234 “On approval of declaration of compliance”.
Acceptance of the contractor by the customer with the technical and architectural supervision.
The Contractor shall notify the customer of readiness facility to the operation, and after receiving notification from the contractor the customer requests a declaration of compliance, the conclusion the quality of construction and installation work from technical supervision, the conclusion of the work performed under the project at supervision.
Within three business days the contractor and the persons carrying out the technical and construction design supervision provided the abovementioned documents, based on which the customer is obliged to check the executive technical documentation for presence and completeness, to examine and take facility into operation under the relevant act.
6.2. Acceptance of a facility by the customer.
The legislation provides certain cases where a facility is accepted by the customer. Such acceptance is related to the technically simple construction and installation works, such as:
- reconstruction (replanning, re-equipment) of premises (separate parts) of existing buildings, not relating to the changes of bearing and cladding structures, engineering systems and facility, as well as change of functional purpose of premises;
- temporary constructions, including welfare spaces for seasonable works and distant-pasture cattle rearing;
- household additional buildings in the territories of individual garden plots, as well as on plots of garden and truck societies (associations), beautification features on the building surrounding grounds or garden (suburban) plots;
- mobile complexes of container and modular construction, as well as single story buildings (constructions) for trade enterprises, public catering and domestic services, raised from temporary structures and not requiring coordination with sanitary and epidemiological services;
- open parking area with the amount of cars not more than fifty units, as well as garages with footlockers no more than two cars;
- construction of free-standing residential buildings, as well as other constructions, intended for the personal use of citizens;
- small architectural forms and boundaries of territories;
- open sports areas, pavements, paving around buildings (constructions).
However, even such facilities cannot be accepted by the customer, if in the construction and operation of these facilities the rights of other citizens are violated, and there is a collision of state and public interests. Such facilities are also not subject to the acceptance by the customer, if their construction is funded by the state, or if they are located in earthquake-prone areas.
6.3. Registering a constructed facility.
The basis for the registration of the property in a state body is approved by an acceptance into operation act (commissioning act), registered in the departments of the appropriate local executive bodies.
After signing a statement of acceptance of the facility into operation, it is necessary within 6 months to apply for property right registration of rights to the facility. In case of violation of term, a fine will be charged in the amount of 20 MCI that is equal to about US$ 145 at the current exchange rate.
The property right registration of a construction facility is made within 3 business days since the receipt of the application. The fee for state registration of rights to the constructed facility for legal entities is from 0.5 MCI to 20 MCI, depending on the type of the constructed facility as per the rates established by Article 553 of the Tax Code of the Republic of Kazakhstan that at the current exchange rate is about US$ 3 to US$ 145.
With this, an expedited procedure for registration of real estate transactions is provided in Kazakhstan. In this case, the registration is made on the next day following the date of submission of the application. The registration fee for expedited state registration is 15 MCI to 45 MCI, depending on the type of the property, which at the current exchange rate is approximately US$ 109 to US$ 327.
6.3.1. Documents required for registration of the building (property).
Documents are filed to the PSC at the location of the constructed facility. The registering body is territorial bodies of Justice.
Documents required for registration of rights to constructed facility:
- An identity document of an individual (the applicant) or the constituent documents of the company (authorized representative of the applicant);
- Application for state registration of a standard form;
- Documents confirming the rights, and other documents confirming, the registered facility. In case of the registration rights on land the document identifying the land should be provided. Documents confirming the rights, and other documents confirming, the registered facility include agreement of sale and purchase, acceptance act of a facility and etc. Acceptance act of a facility is a subject to register in State Architectural and Construction Supervision Authority, but State Architectural and Construction Supervision Authority does not review the content and compliance of this act with the laws. State Architectural and Construction Supervision Authority just registers this act.
- A document confirming payment of a fee for the state registration of rights to immovable property;
- Constituent documents, minutes of meetings (extracts from them) of the founders (participants, board of directors, board of shareholders) as to the acquisition or alienation of real estate, in cases provided for by the laws of the Republic of Kazakhstan or the constituent documents;
- Foreign companies produce legalized extract from the trade register or other legalized document, certifying that the foreign company is a legal entity registered under the laws of the foreign country, with a notarized translation into the state (Kazakh) and Russian languages;
- Prior written consent of the antimonopoly body, if the application for registration contains data that the aggregate book value of assets acquired or sold exceeds the amount set by the antimonopoly laws.
A record of the state registration of rights (title encumbrance) to the real estate is entered by the registering authority in the information system of the legal cadastre.
6.3.2. Technical inspection of a constructed facility.
Earlier a mandatory provision for the state registration of a commissioned constructed facility was undergoing state technical inspection, but there were adopted amendments to the Law of RK “On State Registration of Rights to Immovable Property” from February 27, 2017, under which the state technical inspection on newly created immovable property is not required.
Identification and technical information about buildings, constructions and (or) their components on newly created real estate are added by the State Corporation into information system of the legal cadastre on the basis of the act of acceptance of object into operation which is subject to accounting in structural divisions of the relevant local executive bodies. These changes in practice during 2017 were not observed and the technical inspection of the construction object was carried out, because the cadastral number of the property is assigned after the result of such inspection.
The bodies that implement technical inspection of buildings and structures are the subdivisions of the National State-Run Budgetary Company Center for Real Estate of the regions and the cities of Almaty and Astana. Subsequent inspections are carried out in cases of changes in the of identity characteristics of the facility due to works on its renovation, alterations or re-equipping.
Based on the results of the inspection, the constructed facility is assigned a cadastral number, and is issued a technical passport. To be issued the technical passport, the following documents shall be provided:
- A written application;
- Document confirming the right to the real property;
- Technical passport (if any);
- Certificate for the land;
- Document proving the payment of a fee for the issuance of technical passport.
To get a technical passport, the applicant should apply to a relevant subdivision of the National State-Run Budgetary Company Center for Real Estate or to the local PSC. We should note that in Almaty, starting from April 5, 2014, a person should apply for a technical passport only to the relevant PSC. The term of issue of technical passport is up to 20 business days, depending on the complexity of the facility. The procedure for expedited issue of technical passport takes up to 10 business days. Whilst submitting the documents, the applicant first pays the basic cost of the service, and later pays the rest of the sum, depending on the type and the actual area of the facility, following the results of the technical inspection.
In the carrying out of technical inspection, the facility is assigned a cadastre number. If this building is in an inhabited locality, its cadastral number will be the cadastral number of the land and the address number of the building.
When submitting documents for the manufacture of technical passport, the applicant shall make sure that the data on the facility is contained in the Address Registry, otherwise the assigning of the number is required. This procedure is free of charge and takes 7 business days.
7. Applied law:
- The Land Code of the Republic of Kazakhstan №442-II of June 20, 2003;
- The Code of the Republic of Kazakhstan On Taxes and other mandatory payments to the budget №120-VI dated December 25, 2017;
- The Code of the Republic of Kazakhstan On Taxes and Other Mandatory Payments to the Budget №99-IV of December 10, 2008;
- The Code of the Republic of Kazakhstan “On Administrative Infractions“ dated 5 July 2014 No. 235-V;
- The Law of the Republic of Kazakhstan "On Participation is Shared Construction of a Residential Building" dated April 07, 2016 #486-V;
- The Law of the Republic of Kazakhstan №310-III On State Registration of Rights to Immovable Property of July 26, 2007;
- The Law of the Republic of Kazakhstan №242 On Architectural, Urban Planning and Construction Activities in the Republic of Kazakhstan of July 16, 2001;
- The Law of the Republic of Kazakhstan №202-V ZRK On Permits and Notices of May 16, 2014;
- The Law of the Republic of Kazakhstan №149-II On Employment dated April 06, 2016 #482-V;
- The Law of the Republic of Kazakhstan №370-II On Electronic Document and Digital Signature of January 7, 2003;
- The Law of the Republic of Kazakhstan № 269-V of December 29, 2014 On amendments and additions to some legislative acts of Kazakhstan on the radical improvement of the business environment in the Republic of Kazakhstan;
- Resolution of the Government of the Republic of Kazakhstan №428 On Approval of the Fee for State Registration of Rights to Immovable Property in an Expedited Manner of March 30, 2009;
- Resolution of the Government of the Republic of Kazakhstan of December 15, 2016, №802 On Approval of Rules Establishing Quotas for the Attraction of Foreign Labor Force in the Republic of Kazakhstan, Rules and Conditions for Issuing Permits to a Foreign Employer for Employment and to Employers to Hire Foreign Labor;
- Resolution of the Government of the Republic of Kazakhstan №1328 On Certain Issues of Implementation of the Law of the Republic of Kazakhstan On Architectural, Urban Planning and Construction Activities in the Republic of Kazakhstan, dated October 15, 2001 (as amended on 29.06.2012);
- Order of the Minister of National Economy of the Republic of Kazakhstan dated July 29, 2016 №352 Rules for the Issuance of a Permit to Raise Money of Potential Participants of Shared Construction;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated November 30, 2015 №750;
- Order of the Minister of Energy of the Republic of Kazakhstan dated February 16, 2015 №100 On approval of Rules of the state environmental review;
- Order of the Minister of Justice of the Republic of Kazakhstan №156 On approval of the Rules of Carrying out State Technical Inspection of Immovable Property and the Rules of Assigning Cadastral Number to Primary and Secondary Real Estate Facilities of May 6, 2013;
- Order of the Minister of Justice of the Republic of Kazakhstan №57 On Approval of the Instruction on the Primary and Subsequent State Technical Inspection of Real Estate of February 13, 2014;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated April 1, 2015 №299 On approval of Rules of the complex departmental the expert examination of feasibility and design estimates for construction of the new, as well as changes (reconstruction, expansion, technical re-equipment, modernization and overhaul repair) of existing buildings and structures and their complexes, engineering and transport communications, regardless of funding sources (as amended on 04.30.2015, the);
- Order of the Minister of National Economy of the Republic of Kazakhstan dated November 27, 2014 №114;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated February 03, 2015 №71;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated November 30, 2015 №749;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated November 23, 2015 №709;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated February 27, 2015 №151;
- Order of the Minister of National Economy of the Republic of Kazakhstan dated November 26, 2015 №735;
- Construction Rules and Regulations 1.02-03-2011 The order of development, coordination, approval and composition of the project documentation for construction (as amended on 12.05.2014);
- Construction Rules and Regulations 1.03-00-2011 The order of development, coordination, approval and composition of the project documentation for construction (as amended on 01.07.2013).
This legal guide was developed by Artyushenko & Partners lawyer in the end of January 2018.