The law regarding the sale of land in Ukraine has been issued. Who can buy, for how much, when, what concern does this reform raise? These are the main topics of discussion in the country this fall.
AS BLACK AS CHERNOZEM
This fall in Ukraine, everyone is actively discussing the opening of the agricultural land market. We already wrote about such a possible development of events after the election of the new president in May in our article “Land in Ukraine: to sell or not to sell“. First of all it is to keep in mind that 96% of the agricultural area in Ukraine has been restricted for sale since January 2001 when a moratorium was imposed. During this time, 6.9 million owners of land shares couldn’t freely dispose of their property.
During our many trips to Ukraine, we have repeatedly heard complaints from residents that there is no one in their families to deal and manage the land. Furthermore owned plots are usually difficult to rent when the owner lives in the city and can’t control the field work. In this context, a vast proportion of civilians were waiting for a time where it would be possible to sell.
Their words are confirmed by a study conducted by the Ministry of Economic Development, Trade and Agriculture of Ukraine according to which 60% of the heads of village councils favor the opening of the land market. At the same time, 40% do not support reform. As usual, any changes are perceived with hostility since people are afraid of innovation. Consuetudo altera natura est, Cicero said, meaning the habit is a second human nature.
However, there are other reasons: people are afraid that the land market will not be transparent. Indeed, it is very difficult to create clear conditions for sellers and buyers, while until then such a relationship was completely absent. The other focal point is the money issue; the Ukrainian population does not always have the means not only to buy land but also to start cultivating it, providing it with equipment and everything necessary. But, perhaps, what worries and frightens the most detractors but also sympathizers of the reform, is that foreigners could also buy the land. Indeed, foreigners and notably citizens of the European Union tend to have lower interest rates when contracting loans, giving them a competitive advantage compared to Ukrainian citizens. Nevertheless, the devil is not so black as he is painted.
Back in May, we could not guess that the new president would start the process of writing the future law and discussing this reform so quickly. The former comedian did not even think of joking, when he dissolved the parliament. Immediately after the early elections, Zelensky ordered the team to start working on the text of the new land law, using the mono-majority in parliament. The law was published on the website of the Rada, Ukrainian parliament, on October 7th .
There are the 5 main provisions of the law:
Let’s start with the most important. The ban on the alienation of agricultural land of all forms of ownership will be lifted on October 1, 2020.
The second vital point concerns land acquisition rights. So who can buy land? The law turned out to be quite liberal. The citizens of Ukraine, territorial communities, the state and Ukrainian legal entities will be able to acquire the right of ownership. The foreign citizens and stateless persons will not be able to buy land, but will have the right to inherit it. However, they will be obliged to sell it within a year.
Land will only be sold through electronic auctions where a minimum starting selling price will be set.
In addition, a restriction will be established on the purchased land area. So, one owner and persons connected with him cannot possess more than 15% of the agricultural land of the region and 0.5% of the agricultural land of Ukraine.
It is logical that the tenant will have the priority right to purchase land. The authorities also promise to develop an affordable bank credit and deferred payment system. The project also includes the introduction of a new sanction “ban on the acquisition of land.”
In conclusion, what does the opening of the land market in Ukraine mean? Ukraine occupies a leading position in the world in terms of fertile soil and agricultural exports, but it is far from its full realization of its potential. With the land reform, we can expect even greater development of agriculture and the country’s economy.
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