Updating the Methodological Approaches to Calculating Rental for Land Plots of State and Municipal Property in Urban Districts

Abstract

The article proposes an economic rationale for the new approach to the formation of methods for calculating rental for land plots of state and municipal property in urban districts of Volgograd region. The authors propose to link the calculation of the value of the base rate of land rental within the city boundaries with indicators of the yield of federal loan bonds. The paper gives the substantiation of this approach from the point of view of the classical economic theory of absolute and differential rent, advanced regional practices in the Russian Federation, and advanced foreign practices. The article determines the advantage of leasing land versus owning it in modern conditions. It shows the reasonability of transition to the market assessment of urban land compared with the cadastral assessment, which does not correspond to the current situation in modern conditions and is often significantly higher than the real value of the land plot. This complicates the rational use of the land plot, contributes to reducing entrepreneurial activity and deterioration of the investment climate in the municipality and the region as a whole. In this regard, the authors propose to use the market value of the land plot as the basis for calculating rental rates. In addition to the base rate, it is proposed to introduce adjusting factors, which reflect the nature of the site and the type of economic activity of the main tenant into the main formula. The paper gives recommendations to regional executive authorities, as well as municipal authorities to optimize rental relations within urban districts, and increase the efficiency of rational use of land plots. The proposed methodological approach and its economic justification are universal and can be used in municipal formations in other regions of the Russian Federation.

Fuzzy Model for Determining the Risk Premium to the Rental Rate When Renting Technological Equipment

“…In this article, the authors propose to use the current value of the object and the market rate of return on capital to obtain the amount of rent for an asset that is offered for rent. To calculate the rent in the historically formed real estate rental market, it is standard to use a formula that is based on taking the market value of the land plot, multiply it by the minimum yield coefficient corresponding to the yield of Federal Loan Bonds with a maturity of 30 years, then multiply that result by the adjustment coefficient [19]. However, the presented sources do not take into account the characteristics of the tenant and the risks of negative events, relying only on the expected income, which is not suitable for technological equipment used in production.…”

“…In the example "Age", it is scaled with numbers from 0 to 140 (max age). We defined some intervals on this scale and named them names such as "child" (0-18), "young" (16)(17)(18)(19)(20)(21)(22)(23)(24)(25), "adult" (25-65) and "elderly" (60-140).…”