Property Times, along with market professionals, analyzed the main legislative initiatives that were adopted last year.
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The main legislative change in the real estate market in 2017, experts called the Law No. 1817-VIII "On Amendments to Certain Legislative Acts of Ukraine Concerning the Improvement of Urban Development Activities". The document abolished the existing categories of complexity of construction, replacing them with impact classes, also abolished the declarative principle of construction.
The law caused a lively discussion among market participants, as it radically changed the permitting system. The most acute issue was the mandatory examination of construction projects that previously belonged to the third category of complexity. "There were fears that the construction projects that began to be built before the changes took effect will not be put into operation, as their expertise was not carried out," comments Oleg Milchenko, senior associate at DLA Piper in Ukraine.
"In addition, it was expected that the law would be negatively influenced by middle-level developers who mainly worked with objects of the third category of complexity, especially their conscientious part, which did not practice understating the category," emphasizes Oleg Boychuk, a lawyer, partner of EPAC Ukraine.
On July 19, 2017, the State Architectural and Construction Inspectorate of Ukraine issued a letter explaining that objects of the third category of complexity could be put into operation after the abolition of the categories of complexity without mandatory examination of the design documentation. Examination is required only in the event that the project was amended during the construction.
"The timely and detailed explanation of the new provisions of the legislation on the regulation of urban development has allowed to avoid legal conflicts that would lead to delays in the delivery of facilities in operation, and in general had a positive effect on the construction industry," believes Oleg Milchenko.
To fully assess the impact of this law on the market in the long term, more time is needed. "In particular, in order to understand how much it helped to overcome the problem of understating the category of complexity and did not entail an increase in the cost of construction," explains Oleg Boychuk.
As part of the deregulation of the construction market in March 2017, electronic registration of declarations on the readiness of facilities for operation was introduced. This service applies only to objects of the class of consequences of CC1. Applicants can now submit an e-declaration at any time via the web portal of the State Construction Inspection or through the website of the Unified State Electronic Services Portal. "Online registration of the declaration will save time on the acceptance of completed construction projects and minimizes the risks of possible abuse while doing so," said Lina Nemchenko, partner, MIF Baker McKenzie.
Another simplification touched registration of the right to lease land for agricultural purposes - the Ministry of Justice launched a service for online registration of lease rights for them.
To do this, the applicant must submit an application and a scan-copy of the concluded lease contract through the personal cabinet on the website of the Ministry of Justice with the imposition of his own electronic digital signature.
"The innovation is aimed at improving the business environment and strengthening the protection of the rights of landowners and land users," commented Andrei Grebenkin, senior lawyer, MIF Baker McKenzie. "This will allow us to optimize the work of state registrars, especially taking into account the fact that the area of agricultural land in Ukraine is about 70% of the entire territory."
Cancellation of Technical Requirements from the Emergency Service
Since May 2017, the requirement to obtain technical conditions from the State Service of Ukraine for Emergency Situations for the design of construction sites has been canceled. "This allows us to optimize costs and time in the design, as well as contributes to the deregulation of economic activities in construction," - says Andrei Grebenkin.
On January 1, 2017, the Procedure for attracting, calculating the amount and using the funds for the participation of customers in the development of the infrastructure of the city of Kiev, approved by the decision of the Kyiv City Council of November 15, 2016 No. 411/1415, came into force. This was one of the most anticipated changes, since the previous version of the document had a lot of shortcomings.
The market reacted positively to a decrease in the size of the equity participation. "An additional effect of the new order was a significant increase in Ukraine's position in the Doing Business rating due to a reduction in construction costs. As you know, the rating is formed on the basis of actual practices and procedures in Kiev, - comments Oleg Boychuk. - The irony is that next year Ukraine has every chance to fall again in the rating if Kiev does not extend the preferential terms of the share participation, or the legislator does not dare to completely abolish it. " The bill on cancellation of equity participation is already in the parliament, and its adoption this year can be a welcome signal for all participants of the construction market and investors in general, the expert believes.
Procedure for granting land
In the spring of 2017, by Decision No. 241/2463 the Kyiv City Council approved a new procedure for acquiring rights to land from communal property lands in the city of Kiev.
"This is the most important procedural document for the capital, which largely determines the functioning of the most expensive land market in the country, and thus indirectly affects the processes of construction and investment in real estate," says Oleg Boychuk.
"The new procedure eliminated a number of bureaucratic obstacles to obtaining communal land in Kiev for rent, reduced the number of documents required from potential tenants and shortened the time for consideration of applications for land lease. Elimination of procedural obstacles and reduction of terms will have a positive effect on the construction activity in the capital, "comments Oleg Milchenko.
Rent of state property by foreign persons
In September 2017, the State Property Fund of Ukraine amended the list of documents that are submitted for the lease of state property.
"Earlier, the profile law allowed foreigners to participate in leasing state property, but formally such a tenant could not be admitted to the lease procedure because of the inability to file documents that only Ukrainian companies and individuals can receive. The changes made helped solve this old problem, "explains Oleg Milchenko. - Such changes are extremely important, as they expand the opportunities for foreign investors in Ukraine. And there are positive examples, in particular, in the sphere of port infrastructure. "
Certification of energy efficiency of buildings
In June 2017, the Verkhovna Rada of Ukraine adopted the Law of Ukraine "On Energy Efficiency of Buildings". According to the law, the availability of an energy efficiency certificate will be one of the conditions for putting the newly constructed building into operation.
Experts note that to implement all the requirements of the law, it is also necessary to prepare a base of by-laws. "We can assume that after the entry into force of all provisions of the adopted law, the cost of construction projects will increase, as it will be necessary to follow energy efficiency classes and pass mandatory certification," predicts Oleg Milchenko.
However, in the future, additional costs will have to be paid off by reducing operating costs and reducing energy consumption.
The validity of unregistered encumbrances
In 2017, he was also rich in judicial practice in the sphere of real property rights. "In early 2017, the Supreme Court of Ukraine in the ruling in case No. 6-2552 tc16 clarified that the encumbrance of the right to use and dispose of immovable property that is established by the court is mandatory for the owner of the property, regardless of whether such encumbrance is registered in the Real Property Rights Register property and their burdens, "- commented Oleg Milchenko.
According to the expert, this position of the court created a danger for investors in real estate in Ukraine, since it is impossible to reliably confirm the absence of encumbrances that were not registered in the order established by law.
In 2018, some changes in the legislative sphere are also expected. In particular, Law No. 6403 "On Amendments to the Law of Ukraine" On the Regulation of Urban Development Activities ", which will be a continuation of the decentralization of construction relations, can be passed.
"An important project for the housing market may be the draft law No. 7084" On Amendments to Certain Legislative Acts of Ukraine Concerning Unfinished Construction and Future Real Estate Objects, "adds Oleg Boychuk. "The law is designed to partially reduce the risks of investing in residential real estate, and also to improve some other issues, for example, identification of construction projects."
Earlier it was reported that in Ukraine they extended the state program of providing young people with housing.