Moratorium on sale of agricultural land affects 96% of real estate resources in Ukraine. It was set in 2001 as a temporary measure but had been extended 10 times, the last time in 2018. The new government of President Volodymyr Zelensky intends to open the land market within a year.
Ukraine to allow sales of agricultural land
Ukraine is the largest country of the European continent by its geographical size (excluding the territory of Russia, which is intercontinental, covering both Europe and Asia), but land ownership is still in its infancy there. After the times of the Soviet Union when the all the land belonged to the state, the largest part of the country’s territorial resources is still not fully mapped. But it may soon change with the party of Ukrainian president promising to allow sales of agricultural real estate in just one year.
By its geographical size, Ukraine is the largest country that lies fully within the continent of Europe. It is larger than France, Spain, or Germany.
The government of Preseident Volodymyr Zelensky promises to deliver a fully operational real estate market within a year
Currently only a small portion of real estate resources of the country, located mainly in cities, is mapped and put in the registry.
To enable the sale of non-city properties, all the allotments have to be firstly properly researched and registered.
The leader of the party “Servant of the People” Dmitry Razumkov stated that the land market could start operating in just one year, Finance.ua reported.
The party copied the name of the famous TV series that propelled comedian Volodymyr Zelensky to fame as an on-screen surprisingly elected Ukrainian president. Unexpectedly to the political elites, Zelensky managed to repeat the screen plot in real life, securing the post of the President of Ukraine in April 2019.
It is his newly formed party (Zelensky was elected as a President without a support of a party as an independent candidate) that made a promise to organize, finally, the system of selling of the country’s territorial resources.
Right now Ukraine has an official moratorium on sales of land listed as “agricultural” as well as state owned. At the moment the owners cannot sell it, even if they wish.
“The land market should be open. The moratorium is extended year after year, because it is profitable. It is necessary that the owners of the land could use it. There will be a legislative base. Guys are now working on it. From one hand, it’s necessary to protect national interests, from the other hand, the ones of the owners,” Razumkov stated.
Razumkov pointed out that an audit of the country’s real estate is the first step to enable a proper market, including state-owned resources.
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Moratorium on sale of agricultural properties
The current legislation that prohibits sale of non-city real estate has been put in place as a temporary measure in January 2001 (Law N 2242-III). It was supposed to stay in place only until 2005, Segodnya explains.
Since then, the moratorium has been extended 10 times, the last time in 2018.
One of the reasons for such delays is precisely the need to do the inventory of all recourses. The cost to complete it has been estimated at 2.5 billion hryvnia (USD 94 million).
Since 2013 about 50 million real estate allotments had been measured and listed in the inventory. But it’s still largely incomplete.
96% of land is under the moratorium
About 96% of the land in Ukraine is affected by the moratorium, having been classified as agricultural.
- 10.5 million ha in the state and communal property;
- 1.5 million ha of non-agricultural land in state and communal property;
- 27.5 million ha privately owned by 6.92 million citizens (as country side homes, garden allotments);
- 1 million ha of agricultural land that is used for production by companies and 500 thousand ha that is used productively by private citizens.
Out of 41.6 million ha of all land in Ukraine, 30.8 million ha is privately owned.
Owners of the land cannot even use it to get a mortgage under the moratorium. They are also not allowed to sell it, change the purpose of its use, or include it as part of the capital of a company. The owners, however, are able to rent it, exchange to another property, or pass it as part of an inheritance.
By the end of 2015, 9,650 allotments had been owned by deceased people, according to the official statistics.
There is a lot of corruption around the moratorium, with some companies offering to “assist” in sale of such allotments using shady schemes and corrupt officials, according to Segodnya.
Removing the moratorium and creating an open and transparent real estate market in Ukraine is also a condition by IMF to extend the line of credit to the country.
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