Ukraine's Land Market Bill Adopted: Key Provisions
On the night of March 31, 2020, the Verkhovna Rada of Ukraine (Parliament) adopted the Draft Law No. 2178-10 "On Amendments to Certain Legislative Acts of Ukraine Regarding the Turnover of Agricultural Land" in the second reading.
The relevant decision was supported by 259 MPs. 24 voted against it, 3 abstained and 29 did not vote.
Law comes into force on July 1, 2021.
The bill on the land market was initiated by the Chairman of the Committee on Agrarian and Land Policy Mykola Solskiy and a group of MPs from the deputy faction Sluga Narodu.
"We have walked a great, pleasant and valuable path together. We know that the land market does exist. And despite the challenges, we prove that we are able to move forward," said Mykola Solskiy before the voting.
Key provisions of the Law
1. The right of ownership to agricultural land may be obtained by:
- citizens of Ukraine;
- legal entities of Ukraine created and registered under the legislation of Ukraine, the participants of which are only citizens of Ukraine and/or state and/or territorial communities;
Note: The right to purchase land upon the opening of the market is given to Ukrainians, and in two years — since 2024 — to legal entities.
2. Municipal and state lands are not allowed for sale. State lands will be transferred to communities and they will only be able to rent them out, but not sell them. The same will apply to those lands remaining in the possession of the state.
3. Limit size of land ownership for individuals is up to 100 ha, for legal entities (since 2024) — 10 thou. ha.
Note: The total area of agricultural land plots owned by a citizen of Ukraine cannot exceed 10 thou. ha. The total area of agricultural land plots owned by a legal entity (except banks) cannot exceed the total area of agricultural land plots, which may be in the ownership of all its participants (members, stockholders), but not more than 10 thou. ha. Herewith, if a citizen owns the right of ownership for a share in the authorized (composite) capital, in the share fund of a legal entity or for only certain shares, units, for the purposes of the present article, it is considered that such a citizen, except for the land plots owned by him on the right of ownership, also owns the right of ownership for the land plots of agricultural purpose with a total area equal to the area of land plots of agricultural purpose in the ownership of a legal entity, a member (member, shareholder) of which he is.
4. Banks may obtain the ownership right to land plots in the order of recourse to them as the subject of a pledge. Such land plots shall be sold by banks at auctions within 2 years from the date of acquiring the ownership right.
5. Legal entities, the founders or ultimate beneficiaries of which are persons who are not citizens of Ukraine, may acquire ownership of agricultural land from the day it is approved by the referendum.
6. Excluded from property rights to land plots (even if the admission of foreigners is approved at a referendum) are the following groups:
- legal entities the participants or beneficiaries of which are foreigners cannot buy the lands of state and municipal property, as well as the lands allocated to unit-holders, and which are located closer than 50 km to the state border of Ukraine (except for the state sea border);
- legal entities the participants or ultimate beneficiaries of which are Russian Federation citizens;
- persons who were or belong to terrorist organizations;
- legal entities the participants or beneficiaries of which are foreign states;
- legal entities the ultimate beneficiary of which cannot be identified;
- legal entities with beneficiaries registered in offshore zones;
- sanctioned natural and legal entities;
- legal entities registered in countries listed as non-cooperating in the fight against the laundering of proceeds of crime.
7. Payments for land plots are made in non-cash form.
8. It will not be allowed to acquire ownership rights under repayable contracts in the absence of documents confirming the sources of origin of funds or other assets involved in the transaction.
9. Purchase and sale of a land plot shall be carried out in compliance with the preferential right. The preferential right to purchase a land plot may be transferred by the subject to another person, on which such subject shall notify the owner of the land plot in writing.
10. Citizens who own the right of permanent use, the right of lifelong inherited possession of land plots of state and municipal property intended for farming, as well as lessees of land plots which acquired the right to lease land by means of reissuing the right of permanent use with respect to the aforesaid land plots until 2010, have the right to buy such land plots into ownership with payment in instalments up to ten years at a price equal to the normative monetary value (NMV). In case of purchase of land plots with instalment payment, the ownership right shall pass to the buyer after the first payment.
11. Until January 1, 2030, the suggested price of agricultural land plots distributed in localities to owners of land shares (units) cannot be less than their NMV.