The draft law on simplification of land turnover procedures: what should foreign investor expect?

During the four plenary days, from March 16 to 19, 2021, the Verkhovna Rada considered amendments to the draft law № 2194 on the simplification of land turnover procedures. The deputies managed to consider more than a thousand amendments. The consideration will be continued after the resumption of the Parliament’s sessions  - more than two thousand amendments from the deputies are to be considered.

Why is so much attention paid to this project by people’s deputies and what can a foreign investor expect in case of its adoption?

 The draft Law “On Amendments to the Land Code of Ukraine and Other Legislative Acts Concerning the Improvement of the Management and Deregulation System in the Sphere of Land Relations” provides for:

Buying of land plots by foreign companies

The current Land Code of Ukraine severely limits the opportunities for foreign companies to acquire land plot in private ownership. Foreign legal entities may buy ownership of non-agricultural land plots outside the district only in the case of buying of real estate.

Such restrictions only block investment opportunities if the project, for example, is intended to construct on land plot outside the district. The Land Code puts foreign investors on an unequal footing compared to domestic companies, which in turn affects the development of competition in Ukrainian markets. Common practices of circumventing such legal requirements (for example, through the formation of intermediate companies) are not applied by foreign investors with a high level of "compliance". In turn, the obtaining of land plot with existing real estate for further modernization also does not always solve the problem, as it can be more expensive than the construction of the object "from scratch", and also requires more time for the investor (it is not easy to find a land plot with real estate that will meet the investor's requirements).

Bill № 2194 should remove the following restrictions, as well as:

to abolish the need for foreign legal entities to coordinate the purchase of land plots of state and municipal property with the Cabinet of Ministers of Ukraine;

to fully make equal foreign legal entities to legal entities of Ukraine concerning land relations, etc.

Removing bureaucratic barriers

Many projects of investors that has the aim to change the purpose of particularly valuable land are blocked due to the fact that such a procedure must be carried out by the Verkhovna Rada. As the adoption of such projects needs much time, the investment project may lose its "attractiveness" for the investor. The draft law is intended to eliminate this drawback of legislation by transferring the relevant powers to local self-governments.

In addition, the draft law 2194 is designed to eliminate other bureaucratic "obstacles" that often block investment projects, including:

to prohibit the institutes of state examination of land management documentation, documentation on land well-being, agrochemical certification of land plots;

to prohibit separate procedure for issuing special permits for the removal and transfer of land cover and a separate procedure for prior approval of materials of the location of the object to be placed on the land plot, etc.

Increased transparency

The draft law № 2194 also is intended to transfer a number of services in the sphere of land relations into electronic form. The State Fund for Land Management Documentation and Land Assessment will "earn" in digital format, and access to public information posted on the Fund's website will be available through free anonymous viewing, copying and printing.

Other innovations include entering information into the State Land Cadastre by electronic means, as well as certifying the compliance of land management documentation with regulatory and technical documents with a qualified electronic digital signature.

Thus, the adoption of the draft Law № 2194 will help increase "transparency" in the field of land turnover, simplify procedures related to the implementation of investment projects, as well as open new opportunities for investment in Ukraine's economy for foreign companies.


Reference source: Ukraine Invest


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