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Analysis Of Real Estate Market Adjustments. What Changes Are Anticipated?


Natalia Levchuk, lawyer at Ilyashev & Partners Law Firm
Source: Ukrainian News

In the end of 2016 – the beginning of 2017 a number of amendments were introduced into the laws of Ukraine that regulate the relations in real estate market.

The most important amendments relate to construction area and are implemented by the Law “On the Amendment of Certain Legal Acts of Ukraine on the Improvement of Urban Development” No. 1817-VIII of 17 January 2017. Instead of five categories of difficulty the law implements three classes of consequences. Due to the amendments the significant part of objects, which are currently constructed in accordance with declarative principle shall be referred to the middle class of consequences, for the construction of which the preliminary project expertise shall be required as well as the obtainment of permit for construction works. Such novelty is quite positive as it will provide for the protection of potential investors and reduce the number of abuses in construction area. In addition this law significantly increases the fines for the infringement of law requirements, construction regulations, standards, and rules in the course of construction.

In addition to the abovementioned law it is worth to mention the following legal adjustments.

• On 12 May 2017 the Law of Ukraine “On the Amendments to Certain Legal Acts of Ukraine concerning the Improvement of Construction Activities Conditions” was enacted. These amendments cancel the obligation to coordinate technical requirements regarding such matters as canalization, radio installation, telephone installation, production control, fire and technogenic safety, and implement the mandatory university degree for professional attestation of the providers of works (services) related to the creation of architecture objects. Simplification of the conditions for construction activities is carried out in the interests of developers; however, there is a risk that such simplification shall negatively impact the reliability and safety of constructed objects.

• Resolution of the Cabinet of Ministers of Ukraine of 10 March 2017 No. 238 introduces changes to the Licensing Procedure for Business Activities related to Construction of Architecture Objects. From now on the licenses for construction activities shall be termless. According to previously effective licensing procedure the licenses were issued for 5 years. Upon their termination the business entities were to obtain the new licenses. In such a way, they were supposed to confirm their compliance with licensing requirements every five years.

• Since 4 January 2017 the size of the maximum amount of cash settlements between the individuals under the sales contracts subject to notarization has been reduced, from UAH 150 000.00 to UAH 50 000.00. Generally speaking in real estate market such innovation will be insignificant, as the previously existing limit in the amount of one hundred and fifty thousand hryvnias in most cases did not also allow making cash settlements for purchased real estate.

• Kyiv City Council with its decision of 15 November 2017 No. 411/1415 significantly reduced the amount of share participation in the development of Kyiv infrastructure for 2017. Thus, in contrast to the previous rates in the amount of 10% of the estimated construction costs for non-residential and 4% – for residential real estate, in 2017 the amount of share participation shall equal to 2% of the estimated construction costs or of the indicative index approved by the Ministry of Regional Development.

• In addition to the aforementioned legislative adjustments, in 2017 certain state construction regulations were amended, namely: SCR В.1.1-7-2016 “Fire Safety of Construction Objects”, SCR А.3.1-5:2016 “Organization of Construction Operations”, SCR В.2.6-31:2016 “Thermal Building Insulation”, SCR А.2.2-14-2016 “Composition and Content of Scientific and Design Documentation for the Restoration of monuments of Architecture and Town-Planning”. According to the amendments introduced by SCR “Composition and Content of Scientific and Design Documentation for the Restoration of monuments of Architecture and Town-Planning” the number of permission documents shall decrease, and the procedure for the development of scientific and project documentation shall comply with the general design procedure. It is too early to make conclusions on how these amendments will affect the restoration of architectural monuments. On the one hand, such adjustments simplify the restoration and are oriented, first of all, on investors. On the other hand, the simplification of the coordination procedure may negatively affect the preservation of the architectural heritage.

Due to the introduced amendments of urban development legislation, the procedure for issuing urban planning conditions and restrictions is expected to be changed in the nearest future. In addition, the new enactments in urban development area will be introduced, and the existing ones will be amended.

In 2017 the work will continue on providing access to notaries to the data within various state and unified registers. Thus, according to the adjustments introduced by the Law “On the Amendments to Certain Legal Acts of Ukraine concerning the Improvement of the State Registration of Real Estate Title and Property Rights Protection” No. 1666-VIII of 06 October 2016 it is mandatory for the notary to use the data from the Unified State Demographic Register and the State Register of Civil Status Acts when caring out notary actions. Currently, the notaries have access to the State Register of Civil Status Acts, which allows them to check whether the parties that are willing to conclude a transaction have any marriage relationship, which, of course, is a positive moment, as, for instance, the Ukrainian citizen’s ID with contactless electronic carrier does not provide any information on the civil state. As for the access to the data of the Unified State Demographic Register, these norms are not enforced yet. However, during the year it will be necessary to monitor the situation as these changes take effect.

The process of transferring the functions of state architectural and construction control to the local levels has not been completed yet. If in Kiev, for example, the functions of state architectural and construction control have already been transferred to the relevant department, at district levels these functions are still performed by the relevant departments of the State Architectural and Construction Inspection.

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