Land relations: How 2022 ended and what to expect in 2023
Ukraine's tactics and strategy in this area need to change due to the war
Over the past twenty-plus years, the regulation of land relations in Ukraine can be compared to a roller coaster ride. Innovation, stagnation, stability, reforms, turbo mode – it is an incomplete list of features that have characterised them.
It would seem that we should have got used to such jumps by now. However, while the Land Constitution of 2021 has revolutionised regulation at the strategic level, today we are witnessing only tactical actions by lawmakers. We are talking about military legislation in the field of land.
Tetiana Onyshchenko, Counsel of Land and Agrarian Law Practice at TOTUM LF, has told Mind how the state has kept defence throughout 2022 and what are the prospects for 2023 in this area.
Year of full-scale invasion – temporary ban on land privatisation and other restrictions
It is worth noting the lightning-fast actions of all public registers and database administrators. Recognizing the strategic importance of geospatial data, and information about subjects and objects of both businesses and individuals, they banned access to the relevant information to protect it from enemy hacker attacks.
These were urgent and necessary actions in the first days and even hours of the enemy's invasion. However, the situation changed over time. The authorities could assess it with a cool head, predict the risks, and develop protection mechanisms.
Priority areas of defence were identified. In particular, ensuring food security under martial law. As a result, ad hoc procedures for registration of lease relations concerning arable land, automatic annual prolongation of agricultural contracts, and a temporary ban on land privatisation were introduced. However, in the spring, the registers were partially unblocked. Not completely. And not for everyone. However, certain real estate transactions have already begun to be concluded.
Regarding land, we expected the State Land Cadastre to resume operations by early June. Thus, by Order No. 141, the StateGeoCadastre allowed individual cadastral registrars to carry out the relevant actions. In addition to the subject composition, the restrictions also applied to the territorial principle: access was granted exclusively to the territory controlled by Ukraine. The public cadastral map as the main map of land use still remains under wraps today. However, even such easing authorised land transactions.
However, it was not so easy with the allocation of land plots. After all, land surveyors had to be checked by the Security Service of Ukraine to avoid being labelled as saboteurs. However, we managed to cope with this as well. Everyone understood the reasons for such caution.
The war continued. The war took away homes and businesses. It destroyed families. The enemy blocked any opportunity for Ukrainians to survive.
Thus, with the support of the international community, grain corridors were organised. To do this, MPs voted to simplify the procedure for allocating land plots for river and sea trading without holding auctions.
Similarly, businesses that could not continue operating under fire and in mined fields could choose a relocation spot of their choice without holding land auctions.
For citizens who were forced to flee the occupation, local authorities began to organise temporary modular towns in relatively safe areas. Territorial communities determined their location. For this purpose, local governments became subjects of the right of permanent use of the relevant land.
It is worth mentioning that from the very first days, the government announced assistance with tax liabilities, but not all of them were implemented that year. In particular, the issue of paying land tax and rent hung in the air.
Read also: Within the reach: How land transactions go during martial law
2023 is the year of Victory, but the land tax is still on the table
Such a motto sounds in the minds of Ukrainians every day. At least, it is definitely the most popular wish of everyone.
Concerning the legal framework for regulating land relations, it seems that lawmakers are also focused on such optimistic forecasts.
Thus, as of today, most of the land restrictions related to defence have been lifted. Despite the continuation of active hostilities in certain regions of our country (where all the original military bans remain in force), life in most areas is returning to the "before".
In the first days of the full-scale invasion, the authorities tried to keep businesses afloat as much as possible. Thus, it has been established that land plots of entities located within the territories where hostilities are/were taking place are exempt from paying for land. It is worth noting that it refers to users of public forms of ownership of land and private owners.
On the one hand, we can be relieved. Many entrepreneurs were forced to stop working for the safety of their employees. The announced benefits allowed them to resolve the dilemma of whether to pay land taxes or keep their workforce.
However, as it turned out, it was not that simple. After all, the mere fact of living in shelters under the sound of sirens and rockets could not legally be regarded as hostilities and be the basis for exemption from tax liabilities. The list of relevant territories had to be approved by the Cabinet of Ministers. However, as of today, we have a list approved at the end of February 2023 by the Ministry of Reintegration. Although it was prepared in compliance with the CabMin resolution, the tax authorities do not recognize such a document as a basis for exemption from land taxes.
It is worth noting that these have not been the first efforts of the Government. Back in the summer, the Ministry of Defence was actively involved. As we can see, however, that attempt did not reach the final point.
So today, we have a distorted list of territories where we can avoid paying for land. De facto, it exists. However, de jure, it does not comply with the procedure for its approval. Therefore, businesses are confused and ask logical questions.
It seems that this position of the authorities is expected. After all, at the first stage of the full-scale invasion, everyone was filled with fear, uncertainty, and an understanding of the need to preserve the business. It was for these reasons that such generous gifts from the authorities were accepted. However, when the situation was brought under control, potential risks were calculated, and the realisation came that it was too generous a gift for Ukrainians.
It is clear that Kyiv, along with a number of other territories, is part of the hostilities zone. However, there is now a tendency to delay the procedure for the Cabinet of Ministers to adopt a regulatory basis for exempting land users from payment, as it will leave local budgets with a bottomless hole.
And the improvement of the security situation in most areas will allow lawmakers to take the step of changing the original preferential version. For example, to limit the period of exemption from payment only to the first "hot" months of 2022. The constitutionality of this issue is better left out.
The issue of taxes has always been difficult. I would say it is a conflict issue, but let's move on to another topic that is no less painful.
The land ownership issue also needs to be resolved
Today, the possibility of "uncontrolled" deprivation of property ownership of citizens and businesses for the construction of critical infrastructure facilities is being actively discussed. Draft Law No. 8225 is being worked on in the backrooms of the Verkhovna Rada, but common sense does not allow us to assume that it will be adopted. At least in its original version.
Thus, mechanisms will definitely be developed to resettle the population affected by the armed aggression of the russian federation. Options for a simplified procedure of land privatisation for such citizens will be worked out, rehabilitation centres will be located, etc. Restoration of critical infrastructure also requires a lot of resources, including land. However, we should not forget about the constitutional principles of property. Of course, the mere fact that such a law is in effect does not automatically mean that private land ownership is eliminated. These are exceptional cases.
At the same time, the state appears to be trying to find alternative ways to resolve the land issue.
Monitoring of the land cadastre shows that not all land is used rationally. For example, if the current practice of "booking" land plots by registering them in the SLC without formalising rights to them is limited, a lot of lands could be released for public needs.
Consequently, we should not expect the land market reform to be completed in 2023. The sale of municipal and state agricultural land will definitely not be a priority. As for the acquisition of rights to such land by foreigners, the direct ban on holding a referendum during martial law postpones the resolution of this issue until "after the victory."
Similarly, the completion of decentralisation of land relations: filling the geospatial database, simplifying the procedure for changing the designated purpose of land, and transferring the powers of registrars to private land surveyors will be possible from a security perspective only in peacetime.
Ukraine is a warrior. And the world sees it. It is worth noting that many foreign investors, if not now, then in the future, consider our land as a valuable asset. So ensuring a favourable climate is also far from being the last priority.
The war will not last forever. It is definitely worth remembering. And all the returned territories will need to be restored, rebuilt, and settled. All this will require a tremendous amount of work by lawmakers. And to ensure that MPs' votes are not rushed, a strategy should be developed now.
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