Land Market Law. What do you need to know?

Land Market Law. What do you need to know?

30.03.2020 the Parliament of Ukraine (Verkhovna Rada) has adopted in the second reading the Draft Law No. 2178-10 concerning the opening of the agricultural land market.

The Draft Law provides for the gradual introduction of the following amendments:

(A) the moratorium on alienation of agricultural land will be lifted from 01.07.2021,

(B) it will be possible by 01.01.2024 to freely alienate agricultural land in favor of an individual – citizen of Ukraine, not more than 100 hectares per owner,

(B) from 01.01.2024:
– the limit on the size of land in the hands of one owner increases to 10’000 hectares,
– the land can be acquired by legal entities registered in Ukraine and having ultimate beneficial owners – citizens of Ukraine,

(D) prior to 01.01.2030, the normative monetary evaluation of the land to be sold will be mandatory and determine the minimum price for the possible sale thereof.

The Draft Law also stipulates that:

(A) foreign nationals, as well as foreign companies and companies whose ultimate beneficial owners are foreign nationals, will be able to acquire agricultural land only if such a legal provision is approved in the аll-Ukrainian referendum (currently it is practically impossible to hold a referendum due to lack of a relevant legislation1).

(B) еven with the abovementioned referendum approval:
– the citizens and legal entities of the aggressor state, as well as organizations associated with offshore zones, will not be able to acquire any agricultural land in Ukraine,
– foreign nationals, as well as foreign companies and companies whose ultimate beneficial owners are foreign nationals will not be able to purchase land in a 50 km zone near the state border,

(C) banks will be able to own agricultural land as part of a foreclosure lien with compulsory alienation of a land at auction within two years from the date of acquisition,

(D) the communal and state-owned agricultural land will not be alienable,

(E) the settlements for the land acquisition are possible only in a non-cash form,

(E) tenants will have the priority right to purchase the respective land plots.

Currently, the Draft Law is expected to be signed by the President of Ukraine, which is presently postponed due to the submission of draft resolutions by the MPs on the cancelation of the corresponding voting results.

If you have any questions about opening a land market in Ukraine and how it may affect your business, please contact:
– Managing Partner of SDM Partners Law Firm Dmytro Syrota d.syrota@sdm-partners.com
– Junior Lawyer of SDM Partners Law Firm Andrii Poleshko a.poleshko@sdm-partners.com

Note:
(1) The Law of Ukraine “On the all-Ukrainian Referendum” was declared unconstitutional in accordance with the decision of the Constitutional Court of Ukraine No. 4-r / 2018 of 04/27/2018. Currently, similar legislation has not been adopted. Thus, now there is no legislative mechanism for the all-Ukrainian referendum to be held.