Commercial Property - Ukraine

The most expected amendment prolongs the moratorium on alienating agricultural land. The moratorium will remain in force until the enactment of the Law on the State Land Register and the Law on the Land Market. However, the amendment required that the relevant drafts of the laws be submitted to the Verkhovna Rada, the Ukrainian Parliament, by April 1 2008.

The most unexpected changes affect the alienation and leasing of plots of communal or state-owned land: the new provisions state that such land may be leased or alienated only by auction. Before the amendments were enacted, only land to be used for construction had to be alienated on competitive terms, while there was no requirement to lease land on such terms in any circumstances.

Parliament has redistributed the powers of the state authorities in the sector. All communal or state-owned land designated for agricultural use is under the authority of a specially authorized state body with responsibility for land and real estate affairs, whereas the State Property Fund is empowered to alienate plots of land in connection with the privatization of establishments located thereon - buildings and plots of land are considered separate legal objects in practice.

Under the new provisions, some plots of land may not be transferred from state to communal ownership, such as:

• land controlled by state enterprises;
• unfinished buildings or structures;
• combined construction sites; and
• business associations with state shares.

In addition to these changes, the Cabinet of Ministers has upheld the decision in Decree 48 of February 13 2008 to reorganize the State Agency of Land Resources, the existing authorized state body for land and real estate affairs. The new authorized body will be named the State Committee on Land Resources. The committee's activities will be directed and coordinated at Cabinet level through the Ministry of the Environment. This reorganization will lead to further legislative changes.