Ukraine is one of the largest countries in Europe. It can meet the food needs of more than a billion people, because it is the first place in Europe in terms of agricultural area and third in the world in terms of black earth area. At the same time, it is a country with an extremely interesting recreational and tourist offer, often still underestimated, or at least not widely known. It should be expected that one of the effects of the ongoing war - including the scale of damage caused by it and the resulting rapid increase in demand for all kinds of new ventures - will be additional interest in the possibility of acquiring rights to real estate intended for all kinds of investments. Therefore, immediately after the end of the war, the purchase or long-term lease or rental of real estate in Ukraine may seem like a very attractive investment.
So can foreigners rent and buy real estate in Ukraine?
To answer this question, one should start with the fact that land in Ukraine has a different status in terms of market regulation: different rules govern agricultural real estate transactions and other rules govern other land.
Since 1991, Ukraine has had a general moratorium (ban) on the sale of agricultural land. Ownership could only be changed by inheritance; agricultural land transactions were prohibited. If in a given case the heir was a foreigner, according to the law he was obliged to resell the inherited agricultural land within a year.
In recent months, there has been a significant change in the legal status.
From July 1, 2022, natural persons who are citizens of Ukraine, in principle, may purchase agricultural land, however, certain significant restrictions on trading in it have been established. Until January 1, 2024, there will be an area restriction on the purchase of agricultural land by natural persons (no more than 100 hectares "in one hand").
As far as legal persons are concerned, from January 1, 2024, Ukrainian legal persons established and registered in accordance with the laws of Ukraine, the beneficiaries of which will be exclusively citizens of Ukraine or Ukrainian state or local government entities, will be able - with some significant exceptions - to purchase agricultural land . In this case, the maximum area limit that may belong to one entity (10,000 ha) will apply.
The issue of granting foreigners the right to purchase agricultural land will be resolved in a nationwide referendum.
However, regardless of its results, foreigners will not be able to buy agricultural land located closer than 50 km from the state border of Ukraine.
Legal persons whose actual beneficiaries cannot be determined or whose actual beneficiaries are registered in offshore zones will not be able to obtain permission to purchase agricultural land.
Another group for which the Ukrainian legislator has provided for an absolute ban are legal entities whose beneficiaries are citizens of the aggressor state and persons subject to sanctions. These entities will not be able to purchase agricultural real estate in Ukraine, even if a referendum is held and passed. This restriction will also apply to entities controlled by natural and legal persons registered in countries that are included by the International Anti-Money Laundering Group (FATF) in the list of countries that do not cooperate in combating laundering of the proceeds of crime.
The current regulations provide for the pre-emptive right of the lessee of agricultural land, who has the option of transferring his preferential right to purchase a plot to another person, but must notify the property owner in writing.
Considering the above circumstances, the agricultural land market is currently closed to foreigners, but there are no restrictions on the purchase of other categories of land for non-residents of Ukraine. There are also no restrictions on land lease.
Unlike in the case of agricultural real estate, there are no restrictions on the purchase of non-agricultural land (for development). Therefore, also foreigners may, in principle, be owners of land other than agricultural land, i.e. land potentially intended for various types of investments (construction, industry). We will return to this topic, as well as to the related issues of spatial planning and development, soon.
This entry contains general information about the legal issue discussed. It does not constitute legal advice or a solution to a specific case or legal problem. Due to the unique nature of each factual situation and the variability of the legal status, we recommend seeking legal advice from our law firm.