Reconstruction Digest, VOL. 1
CONTENTS
AGRICULTURAL LAND MARKET
- The second stage of Land Reform
REAL ESTATE TRANSACTIONS
- New legislation on merger clearance in Ukraine
CONSTRUCTION INDUSTRY AND RECOVERY OF UKRAINE UPDATES
- Recovery of the industrial and energy sectors
- Construction licensing
- Harmonisation of legislation with EU requirements
- Restoration of accommodation and related issues
- Other updates
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AGRICULTURAL LAND MARKET
On 1 January 2024, the second stage of land reform was launched, introducing the following key changes:
- Ukrainian legal entities now have the right to buy agricultural land
- The corporate structure of the legal entities permitted to purchase agricultural land is limited to Ukrainian individuals and/or the state and/or territorial municipalities; no "intermediary" legal entities are allowed in this structure
- The maximum consolidation limit for agricultural land "in one hand" increased from 100 ha to 10,000 ha per owner (applicable to both individuals and legal entities)
- The minimum purchase price for land must align with its normative monetary value
- Foreigners are currently prohibited from purchasing land until the matter is resolved via an all-Ukrainian referendum
- Tenants retain the preemptive right to purchase land
- The sale of state-owned and municipal land remains prohibited
Overall, the second stage of land market reform, enabling transactions by Ukrainian legal entities, represents a pivotal step forward in fostering growth within Ukraine's agricultural sector.
REAL ESTATE TRANSACTIONS
On 1 January 2024, the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on Improving Legislation in the Field of Protection of Economic Competition and Activities of the Antimonopoly Committee of Ukraine" came into force, expanding the definition of "single property complex" which is a benchmark for the merger clearance in Ukraine. Consequently, it real estate transactions will have to additionally be scrutinised in terms of acquisition clearance from the Antimonopoly Committee of Ukraine.
CONSTRUCTION INDUSTRY AND RECOVERY OF UKRAINE UPDATES
Recovery of the industrial and energy sectors
In February, the Verkhovna Rada adopted the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine to Attract Investment for the Rapid Rebuilding of Ukraine" (entering into force within three months from the date of its publication) which simplifies the procedure for establishing and changing the designated use of land plots for industrial or energy facilities (with certain exceptions like nuclear). Specifically, this procedure is feasible without the urban planning and land management documentation in the areas outside settlements where such documentation was not developed.
This simplification will remain valid for five years following the termination of martial law in Ukraine and can be carried our based on the following:
- the decision of the land plot owner through its submission to the State Land Cadastre
- no need for the development of land management documentation
- conclusion of the local urban planning and architecture authority of on the feasibility of building relevant facility on the land plot.
The law marks a significant step towards laying the basis for accelerated recovery of Ukraine's industrial and energy sectors.
Construction licensing
On 18 December 2023, the State Inspectorate of Architecture and Urban Development released a draft resolution of the Cabinet of Ministers of Ukraine "Some Issues of Licensing Construction of Facilities Classified as having Medium (CC2) and Significant (CC3) Consequences according to the Class of Consequences (Liability)".
The draft resolution aims to address several key aspects:
- Licensing conditions for conducting activities related to construction of projects with medium (CC2) and significant (CC3) impact
- Establishment of a list of activities requiring licensing for projects of medium (CC2) and significant (CC3) impact
- Introduction of a pilot project for digital submission, review, and approval of licensing decisions exclusively for construction projects of medium (CC2) and significant (CC3) impact
This draft resolution aims to solve the longstanding issue of issuing licenses to operate in the construction industry, which has persisted in the market for the past four years. The lack of clear licensing conditions has prevented market participants from obtaining new licenses. This draft resolution also makes non-residents eligible to obtain a license on their representative offices in Ukraine.
Harmonisation of legislation with EU requirements
The Order of the Ministry of Economy of Ukraine "On approval of the national classifier NK 018:2023 and cancellation of the national classifier DK 018-2000" approved a new national classifier of buildings and structures, which was developed to harmonise the norms with the Eurostat Classification of Types of Structures. The Order came into force on 1 January.
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Restoration of accommodation and other related issues
On 1 January 2024, amendments to the Law of Ukraine 2923-IX came into force, which expanded the forms of compensation for damage to real estate as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of the russian federation against Ukraine. Thus, compensation is now also available to those who have repaired damaged housing at their own expense.
The Cabinet of Ministers of Ukraine has amended the legislation to anable borrowers to request a suspension of payments on their monetary obligation from the bank if their collateral has been destroyed or damaged. Previously, citizens had to confirm the fact of property damage by obtaining an extract from the relevant state register. However, this process often faced delays. The amendments now specify that the confirmation of property damage is to be provided through inspection report and/or a technical inspection report.
Other updates
The Ministry for Communities, Territories and Infrastructure Development of Ukraine has launched a public discussion of the Concept for updating the architecture of planning documents. The main goal of the document is to update and harmonise the entire range of strategic planning documents related to the development of communities and regions. It also aims to introduce unified, clear approaches to their development - at the local, regional and national levels. The Geographic Information System for regional development (GIS) and the Digital Restoration Ecosystem for Accountable Management (DREAM), will form the digital basis of the updated regional development policy.
An updated information system for registering and visualising the fund of civil protection facilities was launched. The updated interactive system of accounting for civil protection facilities allows for prompt and high-quality work with statistical data and will ensure that the public is informed about the availability and accessibility of shelters. The system is now available in the Diia app. Its significance lies in safeguarding people's safety by providing quick access to information on the nearest defence structures.
Since the beginning of 2024, the State Agency for Infrastructure Reconstruction and Development has signed new agreements for the reconstruction of UAH 344.2 million in Kyiv and Kherson regions. The new agreements cover 25 reconstruction projects. These are residential multi-apartment and private houses, administrative buildings and infrastructure facilities damaged or destroyed as a result of russian aggression. The reconstruction will be carried out at the expense of the Fund for the Elimination of the Consequences of Armed Aggression of the russian federation.
The Ministry of Infrastructure of Ukraine has signed a Memorandum of Understanding with FIDIC, the international construction consultancy organisation. The Memorandum provides for cooperation in reforming the procurement system and implementing infrastructure projects in Ukraine, including those implemented jointly with international financial institutions (IFIs).
The Memorandum includes:
- Development of National Special Conditions for use with FIDIC contracts in Ukraine in accordance with the federation’s rules
- Improving the institutional capacity of Ukraine to implement joint infrastructure projects with IFIs
- Increasing the potential of the domestic market for professional engineering and project management services based on FIDIC principles in Ukraine
Projects under the Memorandum target emergency recovery programs across various sectors like infrastructure, energy, healthcare, education, and agriculture. This Memorandum serves as a positive encouragement to begin collaborative international projects involving international organizations, following familiar terms and established international standards and practices.
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Digest prepared by INTEGRITES Real Estate and Construction practice
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