Within the reach: How land transactions go during martial law
And how much hectares cost in a country at war
During the 11 months of the full-scale invasion, from February 24, 2022, to January 16, 2023, 43,200 transactions with agricultural land plots were carried out in Ukraine. The total area of land sold and leased exceeds 80,000 ha.
According to the Ministry of Agrarian Policy, the largest number of land transactions was recorded in Khmelnytsky, Poltava, Vinnytsia, Kirovograd and Dnipro oblasts. Kharkiv, Dnipropetrovsk, Poltava, Kirovograd and Kherson oblasts lead the way in terms of the area of land plots transacted.
The average sale price of 1 ha of land in Ukraine is UAH 41,000. More than 5,500 notaries in Ukraine today have access to the State Land Cadastre, which is necessary for land transactions.
Mind has analysed how the land market in Ukraine functions under martial law and what plots (not only agricultural) are up for sale.
What are the restrictions on the land market in wartime? During March and April, the functioning of the land market was blocked – the State Land Cadastre and the State Register of Real Estate Rights were shut down. Since land transactions require notarization, the inability to access the registries makes it impossible to carry out any legal actions with this asset.
In May 2022, the State Register of Real Estate Rights resumed its operation, and in June, the State Land Cadastre did. This made it possible to fully conclude land sale and lease transactions.
However, some restrictions still remained. They related to the lease of state-owned and municipally owned agricultural land. Transferring these lands for use was prohibited by the provisions of Law No. 2145-IX that came into force on April 7.
In October 2022, the Verkhovna Rada passed Draft Law No. 7636, lifting restrictions on bidding for the sale of lease rights to agricultural land in state and municipal ownership. Now it is Law No. 2698-IX, and it came into force on November 19, 2022.
What land transactions are possible? Officially, all restrictions on transactions in the land market, including agricultural land, were cancelled in early November 2022. Thus, as of today, it is possible:
- to buy, sell and lease privately owned agricultural and non-agricultural land;
- to lease agricultural land owned by the state and municipalities;
- to purchase non-agricultural land plots that are in state or municipal ownership (including during privatisation).
Recall that the sale of state- and municipally-owned agricultural land in Ukraine is prohibited in principle in accordance with the requirements of Law No. 552-IX.
How can land transactions be conducted? Any transactions with state and municipal land, whether sale or lease, are possible only through the online auction system placed on the ProZorro platform.
But there is an exception. According to the Land Code, state-owned and municipally- owned land can be taken for use (leased) bypassing ProZorro:
- when relocating enterprises and placing production facilities on such land;
- during the construction of seaport terminals and other facilities critical to the economy;
- when laying transmission lines and constructing gas pipelines.
Private owners have the right to choose any agreement format. They can use the same land auctions on ProZorro, place ads for the sale or lease of land plots on any online classifieds platform (OLX, dom.ria, etc.), or contact each other directly.
How do transactions with state land work? The owner of the land plot (e.g., a village or town council) places a lot in the ProZorro.Sale system for an auction for the sale of the leasehold right.
The lot must contain detailed information about the land plot: from its area and cadastral number to the landlord's contact details, lease term, starting price and auction date.
Both individuals (including entrepreneurs) and legal entities can participate in the auction. Each bidder pays a guarantee fee of 30% of the starting price. If the auction is successful, all participants receive this deposit back. For the winner, it is credited against the land rent.
The auction is held in the English format, i.e. by raising the price. The bidder who offers the best conditions wins the auction.
The parties – the organiser and the winner – sign the auction protocol. After that, the lessee enters into an agreement with the lessor, which must be notarized.
How do transactions with privately owned land work? The seller and the buyer agree to buy and sell a land plot. Let's say it's an agricultural plot.
In addition to a passport and taxpayer ID number, the seller is required to provide documents of land ownership (certificate of ownership, certificate of inheritance), a report on the expert monetary evaluation of the land plot, an extract from the register of property rights, and an extract from the land cadastre.
The buyer must provide his passport, taxpayer number and a notarized consent to the transaction from his or her spouse (if the buyer is legally married).
Besides, each of the parties must have an open bank account to conclude the sale and purchase agreement. The fact is that payment for land is made only in non-cash form and only if the buyer confirms the source of the funds with which he or she buys the land plot.
When all the necessary documents are in hand, the seller and the buyer go to a notary. The notary checks the clean title to the transaction (whether there are seizures and other encumbrances on the land plot) and does state registration of the sale and purchase agreement.
What land is available for sale? If we are guided by the lots available in the system, the following types of land are prevalent among the put up objects:
- agricultural land plots;
- land plots for non-residential development;
- land plots for the construction of residential facilities;
- land plots that are part of property complexes;
- land plots owned by bankrupt banks and sold in connection with their liquidation;
- land plots that are under arrest and sold as part of enforcement proceedings.
The cost of one hectare of agricultural land is UAH 60,000-100,000 or more, the price of a ha for non-residential development (for manufacturing or logistics facilities) reaches UAH 1-1.2 million, and the cost of seized land, depending on the intended use, ranges from UAH 100,000 to UAH 1 million per ha.
As of January 25, 2023, 866 land lots were placed in the ProZorro.Sale system, for which bids were announced, but auctions have not yet been held.
Approximately 72% of the lots belong to agricultural land. The remaining lots include non-agricultural land intended mainly for residential or non-residential development.
In addition, in the total number of land lots, about 66% of land plots are for sale, and the remaining lots are related to the sale of lease rights.
In terms of price offers, about 30% of lots have a starting price of up to UAH 50,000, 12% of lots have a starting price in the range of UAH 50,000 to UAH 100,000, 35% of lots have a price in the range of UAH 100,000-500,000, and 20% of lots have a starting price of more than UAH 500,000.
If we analyse the auctions that have already occurred, the sold lots were distributed by price as follows: from UAH 0 to UAH 50,000 – 47% of lots, from UAH 50,000 to UAH 100,000 – 15% of lots, from UAH 100,000 to UAH 500,000 – 23% of lots, and over UAH 500,000 – 15% of lots.
If we look beyond ProZorro, the price range is even greater. For residential land, sellers are asking from UAH 200,000–250,000 per ha, for agricultural land – from UAH 50,000-60,000 per ha, for business plots – up to UAH 4-4.5 million per ha.
The following trend can be traced: land is more expensive not only around large cities or in areas of intensive agricultural production, but also at a distance from the war zone. Relatively speaking, while a 15-hectare plot for private residential development in Kharkiv Oblast costs about UAH 150,000–180,000, the price of similar land in Lviv Oblast can be 3–6 times higher.
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