23.04.2020
For almost 30 years, Ukraine has had a moratorium on the sale of agricultural land. How the Law “On Amending Certain Legislative Acts of Ukraine Concerning the Turnover of Agricultural Land” will change the situation, the expert says.
Certain signs of a moratorium on the acquisition of property rights and the alienation of agricultural land were laid down in the first edition of the Land Code. Later, by the decision of the Verkhovna Rada, the specified concept of the prohibition of alienation and change of the purpose of agricultural land, which is of particular importance for the development of agriculture in general and the creation of private farms, was fixed at the legislative level. The prerequisites for the introduction of free land circulation should be the delimitation and inventory of lands with different legal status, an inventory and allocation in kind of land plots of state, communal and private property, completion of privatization and the creation of an appropriate land cadastre, creation of conditions for the preservation and reproduction of fertile and valuable soils and things like that.
Unfortunately, the process dragged on for decades. With the updating of civil legislation, a paradoxical situation arose, when land norms were long outdated and contradicted civil ones, and gaps in regulation became the key to the emergence and functioning of gray and black land markets, where there is no accurate and correct data even on the area of land for various purposes and with different legal titles . Instead of fulfilling the prerequisites and creating a real land market, the state skillfully used the prohibition mechanism, prolonging the moratorium for years and decades.
It is no secret that, if necessary, land was sold before. For this, various schemes were used to circumvent the moratorium or to change the purpose of the land. Or mechanisms were used that did not formally alienate the land, but in fact provided the conditional buyer with all the powers to equip, use and own it. Therefore, the moratorium mainly limited the owners of land: did not allow free use of their property and created a situation where those interested in acquiring land could impose their will and non-market price on potential sellers.
Moreover, the presence of such a rudiment of a system as “share” significantly affects not only land relations, but also other areas, because the uncertainty of borders and other parameters makes any operations with such lands shadow because of the impossibility of registering rights, including inheritance, brings back to life “the scheme of Mr. Chichikov,” described in Gogol’s brilliant work, “Dead Souls.”
Alexander Burtovoy, partner of Antika Law Firm, comments on the innovations: “From July 1, 2021, the moratorium on the sale of agricultural land is canceled. Within three years, until January 1, 2024, only individuals can sell and buy land. Obviously, this will protect against the possibility of concentrating significant land reserves in the hands of several industrial groups or transnational corporations that will enter Ukraine. Because for investors, our country, where a fifth of all the black earths of the world is concentrated, is a promising source of investment. ” There will also be a restriction on the maximum amount of land that one person can acquire. From July 1, 2021 to January 1, 2024 they will sell no more than 100 hectares in one hand, and from 2024 this limit will amount to 10 thousand hectares in one hand.
It is prohibited to acquire ownership of agricultural land:
• to foreign citizens – on state or communal property lands, agricultural land plots located closer than 50 km from the state border of Ukraine;
• legal entities whose participants (shareholders, members) or ultimate beneficiaries are citizens of a state recognized by Ukraine as an aggressor state or an occupying state;
• legal entities that were or are related to terrorist organizations;
• legal entities owned by foreign states or offshore companies or beneficiaries that cannot be established;
• legal entities from countries that do not cooperate in the field of combating the laundering of proceeds from crime;
• individuals and legal entities under sanctions.
According to the expert, all these restrictions are positive. But until now, the question remains how effective will be the measures of protection against mass redemption of land from the villagers. “Another important issue: the sale price of the land. The bill provided for the establishment of a minimum value of the land during the first year from the date when the sale of agricultural land begins. But so that various loopholes adhere to this norm and do not seek out, the legislator still has to ensure normative regulation of this issue. In addition, it would be advisable that he also touch on the improvement of land legislation in general, since the existing problems are quite significant, ”said Alexander Burtovoy. He notes that the solution requires a number of pressing issues:
• receiving and changing the purpose of land;
• control by state bodies regarding the use of land in accordance with their intended purpose;
• observance of crop rotation and preservation of land fertility, which is insufficiently regulated in Ukraine;
• filling in the land cadastre, accounting for shares, emphyteusis (long-term use of a land plot with the right to harvest).
“I would like to believe that by July 1, 2021, both the Cabinet of Ministers and the relevant ministries will be able to develop and discuss with all interested parties draft regulatory acts that should regulate this area, update the sales procedure, the procedure for maintaining and amending the cadastres, the accounting procedure for the amount of land sites that are concentrated in the hands of one person, ”summarizes Alexander Burtovoy.