In Ukraine, land belongs to citizens only within the limits allowed not by the law but the authorities, and the problem of ownership is inherited from the totalitarian times. By the way, the moratorium on selling land operates in Venezuela, Congo, Tajikistan, North Korea, and Cuba, in addition to our country…
Law and Practice
Neither the Verkhovna Rada nor the Constitutional Court has seen violations of Article 41 of the Constitution of Ukraine for many years. According to this Article, everyone has the right to own, use and dispose of their property. Moreover, the decision of the European Court of Human Rights (ECHR) from May 22, 2018, recognizes the prohibition of purchasing and selling agricultural land as a violation of citizens’ rights.
A difficult path of the domestic land market began during the first years of Independence when about seven million Ukrainians became owners of agricultural land after the destruction of collective and state farms. However, a moratorium was imposed on its sale in 2001, allegedly to protect the owners from venturers. Although 17 years have passed, the moratorium still operates, literally burying the hopes of almost half a million landowners who have not used the right to freely dispose of this land.
Nevertheless, anyone can purchase land for agricultural purposes, and lawyers can provide legal schemes. Meanwhile, irresponsible tenants deplete the soil, sowing them with sunflower and corn by rotation. Thus, the shadow market imitates some market mechanisms for land, but the lack of an owner only hurts this land. This kind of “shadow” is large but not homogeneous.
The Shadow of the Market
The country’s land market can be divided into black and gray parts. The first one concerns the illegal use of land that has no legal status. It commonly refers to state lands, lands of former collective property, field roads and uncalled units, which are processed without any contracts. Additionally, the land property whose owners have died is being processed; this property can’t be transferred to anybody, so farmers continue using it.
The gray zone of the land market contains transactions for land sales through judicial decisions and emphyteusis contracts. The absence of open bidding forces interested citizens to find an alternate way to formally circumvent the ban. However, in such circumstances, a seller can’t get a good price, and a buyer risks to lose land due to the inferiority of their transaction. What is the appropriate price?
The highest rents for land are in the traditionally agrarian and metropolitan regions – Cherkassy, Poltava and Kyiv districts. The average annual cost of renting a hectare is $84 for the Cherkassy region, and $80 and $62 for the Poltava and Kyiv regions, respectively.
If the land market started its functioning, the shares owners in the Cherkasy region could receive $1,670 per hectare, in Poltava – $ 1,600, and in Kyiv – $ 1,240. Still, in Polissya, a significant part of the land in the swampy area, and the demand for land near the zone of armed Donbass conflict is low, therefore, sellers could get $564 per hectare in the Volyn region, $613 in Zhytomyr, and $665 in Lugansk.
After the increase in the overall cost, the rent prices will rise. In addition, experts point out that land prices can be 2-5 times higher, as the rent prices are lowered on average fivefold due to the moratorium and local monopolies!
What Will Happen if Market Opens
In countries experiencing the land market opening, its value grew by an average of 15-25% during the first two-three years, and then the growth became slower. The process took place within the limits of general denationalization of property. The situation in Ukraine is different as the accumulated offer has been created during the years of the moratorium. We mean that in normal market conditions, there are up to 1.5-3% of the land in circulation each year due to the change of owners. In Ukraine, 7-11% of landowners are considering the possibility of selling it at the moment.
Due to this and the fact that land prices are substantially underestimated, the increase in value will be sharper than elsewhere before when the restriction disappears. Therefore, the land market is highly interested in speculators.
The growth will continue but powered by another source – investments that should go into the agricultural sector due to the opening of the land market. After this, Ukraine will need another 5-7 years to catch up with its neighbors under favorable conditions.
A Gap in the Moratorium
To circumvent the discriminatory law, many citizens use the emphyteusis to freely dispose of their land. This is an agreement on the acquisition of rights to use land which belongs to another person for agricultural purposes. It can be both timely and indefinite.
This refers to the right to use another’s land for agricultural purposes, which can be resold, pledged to the bank or inherited. For lands of the state and communal property, the period of emphyteusis can’t exceed 50 years. Additionally, the state and communal land under emphyteusis may not be alienated, included in the authorized capital of an enterprise or transferred to a bank.
Emphyteusis differs from rent by the fact that a contract does not specify time limits, but there is a possibility of sale and inheritance of the right to use the land. In fact, the owner can’t sell the land itself but can sell the right to manage and handle it.
According to the analyzed data on the inventory of all arable land in the cadastre within the World Bank project framework, only in 2016, new owners got 11,2 thousand pieces of agricultural land with the total area of 40 thousand hectares under emphyteusis schemes.
First of all, this is beneficial to owners of gardens, vineyards and other perennial plantations, because it gives a possibility to protect their right to own cultivated plants and not to lose the rent when that garden becomes a commodity. Emphyteusis is not interesting to big market players whose land bank consists of units.
However, in the case of emphyteusis, landowners who sell the right to use it long-term due to the restriction of competition do not receive fair value for their share. At the same time, buyers still don’t become owners of these territories when paying for the land.
There are certain risks of using emphyteusis for purchasing land. Firstly, people don’t specify the real sum of the transaction in order to avoid paying taxes. So, there is a risk that the seller will receive not the real amount of money but the sum specified in the contract. Secondly, the fiscal service can recognize the agreement of emphyteusis as an “apparent transaction”, which is invalid. The main risk for the buyer is that he doesn’t become an owner, but only formalizes the right to use the land in contractual relations.
Artificial restrictions on the right to own land increasingly slow down the agriculture development. This restriction of ownership applies to those people who are not engaged in agriculture and could spend the proceeds from the sale of land for their own needs, including business projects. It also applies to those who want to work effectively in this field. Due to the lack of rights to leased land, farmers are simply not interested in investing time, effort and money in what they do not actually own. For the same reasons, limiting the right of ownership to land prevents livestock from developing.
Read the news in our app!
Google Play: https://play.google.com/store/apps/details?id=ua.com.grodas.ldaily&hl=ru
App Store: https://itunes.apple.com/us/app/ldail/?p=89234y/id1354384907?l=uk&ls=1&mt=8
Credit Agricole has been ranked first in the social responsibility rating of the banking sector, created by Standard-Rating based on the 2022 half-year results. The rating agency commended the bank’s contribution to the economy of Ukraine. The bank has paid UAH 100 million in taxes in advance, while issuing UAH 1.2 billion in loans under […]
From October 1, drivers must turn on the dipped headlights of the car outside the city. This helps to additionally mark the vehicle in conditions of low visibility within the autumn-winter period. GlobalLogic reminds about the importance of compliance with traffic rules and tells about the developments of Ukrainian engineers that affect road safety. In […]
Intellias, a global software engineering and digital consulting company, has announced the completion of its acquisition of Digitally Inspired, a fast growing, UK based peer, focusing on the Retail and eCommerce industry. “I am delighted to welcome the Digitally Inspired team to Intellias. It is symbolic that Intellias’ twentieth anniversary coincided with signing an agreement […]
3×4, a Web3 fundraising platform for non-profits, has been launched in Ukraine to bring innovative crypto & NFT fundraising to the rising number of social impact causes. 3×4 helps non-profit organizations to fundraise utilizing NFTs in collaborations with artists and brands while providing donors utility, revenue and transparency. The idea of 3×4 was born in […]
In order to present existing opportunities and draw attention of the international business community, UkraineInvest organizes an international forum with the participation of leading business representatives and expert environment of Ukraine and the world. The need to rebuild Ukraine creates a variety of attractive investment projects aimed at contributing to shaping a new economy of […]
Проект, що його розробляє уряд, визначає введення 10% збору на купівлю іноземної валюти імпортерами. Деталі ініціативи Кабміну повідомив нардеп Ярослав Железняк, який є заступником голови податкового комітету Верховної Ради. “Тут варто зазначити, що обрана концепція не передбачає додаткових імпортних мит (що є складним при адмініструванні), а визначає запровадження 10% збору на валютообмінні операції із купівлі всіх […]
У Китаї суднобудівна компанія Hudong-Zhonghua Shipbuilding спустила на воду найбільший у світі контейнеровоз, який отримав назву Tessa. Про це повідомляє сайт компанії. Вказано, що судно будується на замовлення швейцарсько-італійської Mediterranean Shipping Company (MSC). Воно має ті ж габарити, що й нещодавно побудовані для компанії Evergreen контейнеровози Alot та Apex, але трохи більшої ємності. “Хоча основні розміри залишилися […]
Банк Англії підвищив базову процентну ставку максимальними темпами з 1995 року, на 50 базисних пунктів – до 1,75% із 1,25%. Про це повідомляється на сайті регулятора. Сама ставка зараз перебуває на максимальному рівні з грудня 2008 року, коли вона становила 2%. Банк Англії прийняв таке рішення на тлі високої інфляції, яка зараз становить 13%. Регулятор прогнозує, […]
Currently, there are no threats to Ukraine’s visa-free travel with the European Union. Required joint efforts of all political forces in Ukraine to continue the movement towards the EU. This was stated by the Minister of Foreign Affairs of Ukraine Dmytro Kuleba on the talk show “Freedom of Speech” on ICTV. According to him, there […]Next
BUSINESS TALKS, START-UP ALLEY AT #SUBF19 MAY 23 2019, KYIV TIME: 14:30-16:30 VENUE: PARKOVY CONGRESS AND EXHIBITION CENTER, KYIV, PARKOVA DOROGA 16A MODERATOR: BOHDAN SENCHUK, President of Swedish Business Association in Ukraine TOPICS FOR DISCUSSION: 1. ITC business partnership between Sweden and Ukraine; 2. Business climate in Ukraine: pros and cons to start, develop and […]Next
Recently, government program “Affordable Loans at 5-7-9%” has been significantly amended allowing small and medium businesses to get even more opportunities to obtain loans at the rate of 0% p.a. or a reduced rate of 3% p.a. For this purpose, Credit Agricole and the Entrepreneurship Development Fund signed new agreements. What has changed for customers […]Next
In 2020, the state gas company Ukrgazvydobuvannya reduced its net profit by 3.8 times, or 14.1 billion hryvnias to 4.95 billion hryvnias compared to 2019, according to the company’s website. “Although last year due to the situation on the gas market, economic crisis and pandemic, our capital investments decreased almost one and a half times […]Next
The vaccine, developed by biotechnology company Moderna, is effective in 94.5% of cases. This result was shown by the intermediate results of the third phase of clinical trials, the company said. On this news, Moderna shares went up. In the pre-market, the company’s quoting rose by more than 18%, rising above $ 105 per share. […]Next
Shares of AT&T fell 5.8% on Tuesday, showing the largest one-day decline since June 11, 2020, when shares fell 6.1%. Shares of AT&T rose first on Monday, then fell in the second half of the trading session. The initial growth was due to positive assessments of the future merger agreement between AT&T WarnerMedia and Discovery […]Next
The State Property Fund of Ukraine has put the Vinnytsia diamond processing plant Crystal up for privatization auction for almost 90 million hryvnias. This is stated in the message of the Foundation. It is noted that the plant not only cuts and grinds precious stones, but also makes jewelry. They produce more than five thousand […]Next
On September 14-18, the National Bank sold $ 71 million in currency on the interbank foreign exchange market. At the same time, the National Bank did not buy foreign currency in its international reserves during the reporting week. Therefore, the National Bank for the first time in the late July sold the currency on the […]Next
The National Bank of Ukraine plans to sell PrivatBank. Its privatization, the NBU believes, may be of interest to the most prestigious international investors, as the Ukrainian banking sector has potential. The head of the NBU Kirill Shevchenko in an interview with GlobalCapital stated this. “Our banking sector has significant potential for international investors. We […]Next
In September 2020, the Italian company Lamborghini sold 738 cars worldwide. This is a new record for the company, according to its website. At the same time, in the third quarter of 2020, 2,083 Lamborghini cars were sold worldwide. In the spring of this year Lamborghini was forced to close all its plants for two […]Next
The European Bank for Reconstruction and Development (EBRD) expects the means amount reduction which has invested in the Ukrainian economy. According to “European truth” newspaper, Sergey Guriev,the chief economist of the EBRD, told about it in his interview. He explained:”Really, our volume of investment this year will have been less than previous as we don’t […]Next
The owner and president of DCH Oleksandr Yaroslavsky is ready to attract $ 1 billion in investments in the restoration of the Kharkiv Aviation Production Enterprise. This statement is published on the official website of the DCH. “The DCH Group is ready to take responsibility for the resumption of domestic aircraft construction and raise $ […]Next
Last week, from November 16 to 22, more than 4 million people in the world became infected with the new type of coronavirus, which is a record number since the beginning of the pandemic. This was announced on Tuesday, November 24, the press service of the World Health Organization. According to the WHO, in these […]Next
Chinese Internet company Alibaba and electronics manufacturer Xiaomi will be included in stock exchange index Hang Seng Index from September 7, said the operator’s Hang Seng Indexes. Earlier, the operator announced the results of the review of indexes for the quarter ended June 30. Along with Alibaba and Xiaomi, the index will also include WuXi […]Next
The Co-owner of the EasyPay Group companies has invested $ 150,000 in the startup Agri Eye, which develops innovative solutions for the agricultural sector. Startuppers will send received funds for the scaling of the team, the perfection of the technology and testing of the technology hypotheses that lie at the basis of the product. Under […]Next
The deputies of the Verkhovna Rada of Ukraine (VRU) supported in the second reading a bill amending the law on the abolition of mandatory state registration of foreign investments. For document №2763 on Tuesday, May 31 voted 259 MPs with the required minimum of 226 votes. This bill will help to create the conditions to […]Next