Land Ownership

To date, Ukraine does not allow full tradability of land. However, during the course of 1999 Ukraine has started small-scale privatization of enterprise land.

The first legal justification entitling enterprises to privatize their land-in-use was established by a Presidential Decree issued back in July 1995. However, the Land Code adopted in 1992 explicitly allows only for sale of farmland under very restrictive terms. This apparent conflict with the law made the Presidential Decree vulnerable to challenges. The situation changed again with the adoption of a new Constitution (June 1996) which includes a clause guaranteeing individuals and enterprises the right to own land in accordance with legislation. Coupled with the Presidential Decree, this provided enterprises with a sufficient legal basis for buying and selling their land.

Nevertheless, until 1998, practically no privatization of land took place. In 1998 the enterprise land privatization has and resulted in the sale of over 200 land slots valued at some US$2 million. As of late November 1999, the number of land sales has reached 1,385 raising UAH32 million (or less than US$9 mil). To date, the volume of land privatization has not yet resulted in the emergence of a significant secondary market for land.

The land privatization process has been boosted by the Presidential Decree “On Sale of Non-Agricultural Land Parcels For Entrepreneurial Activities” (January 18, 1999). Specifically, the Decree explicitly gives individuals and legal entities the right to purchase land underneath their enterprises (including unfinished construction sites). The Decree also envisages the option of market or expert valuation of land as well as an option of long-term installment payment that should facilitate land sales.

On February 4, 2000, the Ukrainian President issued a decree “On Development of Market for Non-Agricultural Land” stipulating that the transfer of non-agricultural land parcels to Ukrainian entities (foreigners are still excluded) is to be done via sale into full ownership. The Decree sets the target revenues from land sales at 1% of the consolidated state budget. It also encourages local administrations to rely on land sales as a source of financing. In addition, the Presidential Decree mandates the Cabinet to develop supporting legislation which would enable the inclusion of land value in the enterprises' books, thus allowing the use of the land as collateral for financing. To date, 10 million Ukrainian citizens and over 2,500 legal entities have secured land ownership title.