Law on land market in Ukraine comes into force

Law on land market in Ukraine comes into force

The agricultural land market launched as part of the land reform carried out by the government, begins to function on July 1. At the first stage of the reform, only citizens of Ukraine will be able to buy and sell land plots, one individual will be able to have no more than 100 hectares at their disposal.

The right to acquire agricultural land on January 1, 2024 will be received by legal entities created in accordance with the legislation of Ukraine, while the ultimate beneficiary of one or several legal entities will be able to consolidate through them in aggregate no more than 10,000 hectares.

Currently, the law prohibits the purchase of land by foreigners, the issue of its sale to persons without Ukrainian citizenship and foreigners can be resolved only at a national referendum.

Also, the purchase of land is prohibited for members of terrorist organizations and representatives of the aggressor country. According to Deputy Minister of Agrarian Policy and Food Taras Vysotsky, the state will suppress their attempts to buy land through dummy citizens of Ukraine with the help of the Security Service of Ukraine (SBU) and the State Service for Geodesy, Cartography and Cadastre (StateGeocadastre). In case of fixing the fact of land fraud by representatives of terrorist organizations and the aggressor country, the state intends to seize the land plots purchased by them.

According to Prime Minister Denys Shmyhal, due to the opening of the land market in Ukraine, the value of land plots will at least double over the next three-five years.

Details of transactions for the sale and purchase of agricultural land are subject to negotiations between its participants, while the law prohibits the sale of land until 2030 for less than its normative monetary value. This indicator is used to determine the amount of land tax, rent for land plots of state and communal property, the amount of state duty on exchange, inheritance and donation of land plots. In 2018, the Verkhovna Rada extended the period until 2023 during which there will be no indexation of the normative monetary value of agricultural land in order to save farmers’ funds.

On June 16, the Cabinet of Ministers adopted a resolution according to which notaries to conclude land transactions will establish the identity of the individual who buys the land plot or the final beneficiary of the legal entity who is the buyer, check for the sanctions imposed on the buyer, and whether it belongs to the financing of terrorism. They are also authorized to establish the total area of ​​land plots owned by the buyer to prevent exceeding the limits established by the state.

The owner of a land plot for its sale must have a cadastral number of the plot, register ownership of it, and also have an extract from the State Register of Property Rights in paper or electronic form. At the same time, in order to register the ownership right, this person will need a copy and original of the passport and identification number, an extract from the State Land Cadastre, a receipt for payment of the administrative fee and documents confirming the right to the plot (state act on land ownership, contracts of sale, donation, exchange, court decision or certificate of inheritance).

Participants in the transaction for the purchase of a land plot will need to pay 5% tax on personal income and 1.5% military duty, taxes and fees will be calculated on the value of the plot specified in the sale and purchase agreement, which cannot be lower than its normative monetary value, calculated authorized body.

The preferential right to purchase a land plot for agricultural purposes belongs to tenants of this plot, as well as persons holding a special permit for the extraction of minerals of national importance, if these subsoil are located on the specified land plot.

Privately owned land plots can be alienated only under contracts of purchase and sale, donation, life support, inheritance contract, exchange, by making the buyer in the authorized capital, or as a result of collection in court.

According to the amendments to the Land Code introduced by the draft law No. 2195, the organizers of the sale and lease of land plots are obliged to conduct tenders in the electronic trading system, which makes impossible any illegal contacts between its organizers and participants, allows the public to control the course of electronic auctions online, and also increases the size guarantee fees for bidders.

Land tenders will be held in accordance with an agreement between the organizer of tenders and the operator of the electronic trading platform. The organizer, making a decision on their holding, will indicate the starting price of the lot, the term and other conditions for the use of the land plot, as well as the person authorized by him to conclude the relevant agreement.

The opening of the land market does not provide for the abolition of the free privatization of land plots in state and municipal ownership. Free transfer of land plots to citizens is possible for farming – in the amount of a share (share) established by law. For running a personal peasant farm, it cannot exceed 2.0 hectares; for gardening – no more than 0.12 hectares; as a private plot in villages – no more than 0.25 hectares, in settlements – no more than 0.15 hectares, in cities – no more than 0.10 hectares; for individual suburban construction – no more than 0.10 hectares; for the construction of individual garages – no more than 0.01 hectares. Free transfer of land plots to the ownership of citizens is allowed once for each type of use.

According to Minister of Agrarian Policy Roman Leshchenko, out of 60.4 million hectares of the total area of ​​Ukraine, 41.3 million hectares are cultivated, of which 33.1 million hectares are occupied by arable land, 5.3 million – by pastures, 2.3 million – by hayfields, 0.85 million hectares – for perennial plantings. At the same time, the state transferred 1.7 million hectares of agricultural land to the united territorial communities in 2018-2019, 2.3 million hectares in 2020-2021, while there are 0.75 million hectares of state-owned land on the act of permanent use on the balance sheet of the state.

(C)INTERFAX UKRAINE 2021

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