White Book of Reforms 2025. Chapter 10. Land Market

As a result, about 7 million rural residents received a total of 27 million hectares of agricultural land (so-called “pai” or land plots), accounting for 45% of the total land area of Ukraine. At the same time, almost anyone could get 0.06 hectares of land for subsistence farming, which provided many people a means to survive during the 1990s economic crisis. As of 2019, about 73% of Ukraine’s agricultural land was privately owned (31.1 million ha, of which 27.7 million were private land plots/pai). 10.5 million ha were in state or communal ownership.

In the late 1990s, landowners had the right to sell their land. However, in early 2001, the government imposed a moratorium on land sale until the adoption of the Land Code. Even though the Land Code was adopted in October of the same year, the moratorium stayed in effect until July 2021 (at the same time, other land except for pai could be traded). The moratorium was extended nine times because lawmakers failed to pass land market regulation. 

The moratorium was disadvantageous for land plot owners, as these were typically older people who could not work the land themselves. Landowners could neither take a loan (for example, to buy agricultural machines) using their land as collateral, nor sell their land plot (and, for example, start their own business), so they had to lease their land at a lower price. While the moratorium was in effect, about a million landowners passed away, so before introducing the land market, the parliament had to address the issue of their plots (they were transferred to municipal ownership).

As an implicit subsidy for agrarian producers, the moratorium not only reduced the efficiency of agriculture and contributed to land depletion but also led to the emergence of the shadow land market. However, populist politicians strongly opposed the land market for a long time and ultimately not only significantly increased the share of people who do not support the market (figure 10.2B) but also turned public opinion against the privatization of land (figure 10.2A). Later, they used survey results to justify extending the moratorium. However, when the question is framed differently (Figure 10.2C), the majority of Ukrainians actually support the land market.

After 2014, discussions became more specific — experts and politicians started debating the land market model. Specifically, they raised such questions as: Should there be a cap on the land owned by one person? Should foreigners be allowed to buy land? Should state land be sold first, followed by private land? VoxUkraine consistently advocated for a more liberal model. In the end, Parliament adopted a compromise model that bans foreigners from the land market and limits the amount of land one entity can own. At the same time, both state and private land sales were permitted simultaneously. Reforms implemented since 2014 established the land market infrastructure: rules for registration, identification of owners in case of disputed plots, mechanisms for leasing land or changing its ownership, etc. Next, we overview these reforms.

Reforms in 2014-2019

State GeoCadastre, State Agency of Water Resources, Land Monitoring and Registration

In 2015, the government dissolved the State Land Agency and transferred its functions to the State GeoCadastre (at different times, the State GeoCadastre was subordinate to different ministries, but this decision aligned with the broader strategy of consolidating all land management functions). The main task of the State GeoCadastre was to register all land plots, including their coordinates, owners, and encumbrances, which was a prerequisite for launching the land market. 

Next year, the government tasked the State GeoCadastre with detecting illegal transactions with land (e.g. illegal trade or raidership). If a violation was found, the State GeoCadastre would report it to law enforcement agencies. However, this did not entirely stop land raiding as we discuss below. 

In 2018, the government introduced a risk-based approach to state supervision of land management performed by the State GeoCadastre. Under this approach, business entities are categorized into three groups (high, medium, and low risk), and the frequency of scheduled inspections is determined based on their risk group. Shortly afterwards, the risk-based approach was implemented for oversight of topographic, geodetic, and cartographic activities by the State GeoCadastre.

In August 2019, the government changed the procedure for the management of State GeoCadastre and approved a new procedure for land monitoring. During the land monitoring, the State GeoCadastre or its regional offices detect changes in land fertility, pollution levels, landslides, etc. for timely prevention and mitigation of negative processes. The Ministry of Agrarian Policy implements monitoring of soils, a component of land monitoring. 

In 2017, the State Agency of Water Resources began registration of surface water objects to find out how many such objects are there in Ukraine. Next year, the government introduced a new water monitoring procedure, which would be implemented by the Ministry of Environmental Protection, the State Agency of Water Resources, the Ukrainian Geological Service, and the State Emergency Service. They will check a range of chemical factors of water, the presence and development of flora and fauna, evaluate risks to the existence and use of water objects, and suggest risk mitigation measures. 

Land raiding

Decentralization, specifically the delegation of powers from state registrars (a lengthy and costly process) to notaries, led to unexpected consequences — a surge in land raiding. Another key factor enabling land raiding was the existence of two separate registries for land ownership rights: the State GeoCadastre and the Real Estate Rights Register (RERR). Until 2013, land lease agreements were registered in the State GeoCadastre, but since 2013 they have been registered in RERR. However, “old” lease agreements were not transferred to the RERR, making double leasing of the same plots possible. 

To address the issue, the government introduced several changes to the registration process. Namely, it stated that property rights to land acquired before 2013 could be registered if relevant records exist in the State GeoCadastre. It also obliged registrars to verify the authenticity of a land plot cadastral number in the Cadastre during the registration of property rights. Anti-raiding task forces were established in the regions, which produced some results. 

In early 2019, Parliament passed a law to protect landowners from raiding. The law stipulated that state registration of a land plot would be canceled if a court deemed it illegal or if the applicant failed to register their ownership rights in the State GeoCadastre within one year. Additionally, the law introduced automatic data exchange between the State GeoCadastre and the Real Estate Rights Register (RERR) and required the Ministry of Justice to digitize and upload paper-based records into the RERR. Mandatory registration of land transaction prices was also introduced, an important step toward creating a transparent agricultural land market. 

Despite some successes (e.g., in 2024, the Anti-Raiding Office returned 3,500 hectares of land to farmers), the problem remains. 

Sale, transfer, and lease of land

In March 2015, Parliament simplified the procedure for the free transfer of state or municipal land to citizens. This law was necessary because State Land Agency officials often delayed the process for years, nudging citizens to pay bribes. 

In 2016, Parliament reduced the list of exceptions that allowed certain entities (educational institutions, state enterprises, markets, and individuals whose land was expropriated for public needs) to receive state or municipal land without auctions. This exception had sometimes been exploited by dishonest actors — they would receive land for free or cheaply and then lease it to agricultural enterprises. 

In the same year (2016), Parliament defined the legal status of land plots whose owners had passed away. These plots were transferred to the ownership of the respective communities. The law also required the publication of court cases related to declaring an inheritance as escheated. Lawsuits for such declarations could be filed by (1) local authorities, (2) creditors of the deceased, and (3) users of neighboring plots in the case of agricultural land. 

Since January 1, 2019, Parliament introduced a mechanism for transferring collective ownership (former kolkhoz) land to municipal ownership ensuring tenant rights protection. The law addressed several issues for which there was no legal clarity. Thus, field roads within a land massif must be leased to the largest tenant but other users must retain access to them; a land user controlling 75% of a massif may “reassign” other tenants from one plot within the massif to another; sublease terms must not be worse than those of the original lease agreement.

Improving land quality

One of the consequences of the absence of a land market was that land users (primarily tenants) were not interested in making long-term investments in land plots, such as installing irrigation systems or fertilizing the soil. They also had little incentive to grow perennial crops, such as fruit orchards, berries, etc., because the owner could terminate the lease agreement, and the tenant would not reap the profit from their investments.

The government attempted to address these issues as much as possible without the land market. In 2016, it set a minimum lease term of 10 years for agricultural land plots with irrigation systems (the standard minimum lease term was 7 years). In 2017, the government required lease agreements to document soil quality characteristics and mandated that tenants compensate landowners if the soil quality deteriorated during the lease period. 

Reforms in 2019-2024

In the 2019 White Book of Reforms, we provided the following recommendations for land market development: 

• Opening the land market (done). 
• Addressing issues with the State GeoCadastre, namely:

1. Providing open access to land plot information while ensuring personal data protection (a public cadastral map and national geospatial data infrastructure exist, but access to them is restricted under martial law); 
2. Transferring state-owned land that is not managed by state-owned enterprises to municipal ownership since “no-one’s” land is a potential source of corruption (done); 
3. Privatizing state institutions and enterprises involved in land monitoring (or outsourcing these services to private companies); transferring the functions of land monitoring accreditation, land valuation, and land auctions from the State GeoCadastre to professional associations (not done); 
4. Allowing local governments to initiate land inventory (currently, owners avoid this to minimize tax obligations); transferring land plots with unknown owners to local government management (done); 
5. Allowing certified geodetic engineers (in addition to cadastral registrars) to input data into the Cadastre (an experimental program is ongoing until 2026). 

• Ending free land privatization, as land is a limited resource, and free privatization encourages corruption (not done, but under martial law, free privatization is only available to owners of buildings located on the plot); 
• Making land market value rather than normative value the land tax base (not done).

The most important change introduced by the new government and parliament was the adoption of the land market law in 2020, which Ukraine had been waiting for 20 years. The law introduced certain restrictions — land plots up to 100 hectares could only be acquired by Ukrainian citizens (and starting January 1, 2024, legal entities owned by Ukrainian citizens are able to purchase up to 10,000 hectares of land). The sale of state and communal land is prohibited. The issue of allowing foreigners to buy land in Ukraine will be decided at a referendum.

Since the land market launch was planned for July 2021, the government and Parliament spent 2020 adopting regulations necessary for its operation. 

The most important of these was the law establishing a unified geospatial data system in line with the EU INSPIRE directive. This system allows users to access data on natural resources and objects located within specific land plots. It is managed by the State GeoCadastre. However, since the full-scale invasion began, access to the system has been restricted.

In 2020, the parliament adopted a law on forest inventory, under which data about Ukrainian forests were to be entered into the State GeoCadastre (the inventory procedure is specified, but it will be carried out two years after the martial law is lifted). At the same time, the Cabinet of Ministers approved the rules for the maintenance and preservation of tree belts: landowners, tenants, and users of land plots must preserve tree belts and cannot cut them down without permission. That same year, the lease of water objects together with land plots was allowed (tenants are obliged to maintain water objects and hydraulic structures in proper condition) and simultaneous transfer of property rights to the land plot and real estate located on that land was approved (excluding apartments in multi-apartment buildings and state and municipal land).

In June 2020, the government launched an experiment introducing the principle of extraterritoriality for state land registration. This means that any state cadastral registrar, randomly assigned by the State GeoCadastre system, can register land plots. Later, this system became permanent. 

Right before the launching of the land market, in June 2021, Parliament passed a law requiring that the sale and lease of state and municipal land be conducted through electronic auctions of Prozorro.Sales. 

Today, land market data is publicly available according to the public land relations monitoring procedure, which the government approved in 2023. The system provides data on the number of plots sold, their prices, etc. This data shows that in spring 2022, the land market stopped due to the closure of registries. In the summer of 2022, transactions resumed, particularly in regions farther from the front line, and in 2024, land prices were rising. Thus, despite the war, land remains an attractive asset.

One of Ukraine’s significant problems was the shadow use of state-owned lands. Some state-owned enterprises leased these lands at minimal prices sharing the profits with tenants, or even transferred lands to private ownership. For example, the Ukrainian Academy of Agrarian Sciences was involved in such practices.

To address this issue, in 2024, the government pooled state lands that had not been transferred to municipal ownership, including those owned by state enterprises, and educational and scientific institutions, into the “Land Bank.” This platform allows renting land plots for 14 or 25 years through Prozorro.Sales. The “Land Bank” is managed by the “Agrarian Investment Fund,” a newly established state-owned enterprise. The government plans to transform this SOE into a joint-stock company or LLC with 100% state ownership to introduce proper corporate governance there.

Melioration

Since the irrigated land area had shrunk to a quarter of its 1990 level, in 2022, Parliament passed a law permitting the establishment of water user organizations to facilitate the irrigation of agricultural land (under the law, the irrigation infrastructure was transferred from the State Water Agency to the management of the State Fisheries Agency). This allows farmers to share the costs of irrigation system construction and benefit from economies of scale. However, Ukrainian farmers have already started experimenting with drought-resistant crops that are not typical for Ukraine, such as cotton. 

In January 2024, the government approved a new regulation on the use of water fund lands. Under this regulation, one can construct hydraulic and fortification structures, carry out dredging and riverbed clearing, lay communications infrastructure, and extract minerals, except for sand, pebbles, and gravel, from the beds of small and mountain rivers. All other economic activities are prohibited to preserve the natural state of water objects.

Land management during the full-scale invasion

On February 24, 2022, Ukraine closed several registries, including the State GeoCadastre, to protect sensitive data. In May 2022, the GeoCadastre resumed limited operations. Land lease auctions were suspended until November 2022, when Parliament reinstated the pre-war land lease procedures and introduced several changes to land relations. It allowed permanent land users to purchase their plots with installment payments, permitted the free privatization of land plots where private buildings and structures are located, and allowed the construction of biomethane production facilities on agricultural land (given the availability of raw materials on farms). It also enabled certified engineers to input data into the cartographic-geodetic fund (part of the national geospatial data infrastructure) online, currently as a pilot project. 

Landowners were required to formalize ownership rights to their land plots by January 1, 2025 (otherwise, the plots would be transferred to municipal ownership). However, at the end of 2024, this deadline was extended until 2028. The parliament also obliged district and oblast administrations to transfer lands located in their respective districts and oblasts to the municipal ownership of local communities (a previous law on such transfers was adopted in 2018 – see Chapter 2).

What Next?

Agriculture is one of the most heavily regulated sectors of the European economy. On the one hand, strict regulations dictate which fertilizers and plant protection products may be used. On the other hand, European farmers receive substantial subsidies, often for leaving land uncultivated, as the EU limits production to prevent price falls. The EU spends tens of billions of euros annually on these subsidies. Therefore, the EU may want to revise its Common Agricultural Policy, although such changes would be difficult, given how effectively European farmers lobby for their interests.

European integration will pose a major challenge for Ukrainian farmers. The Ukraine Facility plan provides just a few conditions for the agricultural sector (the most complicated would be the deployment of an automated land monitoring system). However, adopting EU standards for land quality and farming products could be challenging for producers, and securing access to EU markets will be a challenge for the government.

Yet, today the most pressing challenge for farmers is Russia’s aggression, particularly the landmine contamination of agricultural fields. The government has recently approved a demining strategy, for implementation of which Ukraine will receive EUR 150 million by 2028 within the Ukraine Facility framework. Although this funding is clearly insufficient, Ukraine’s drone manufacturers may help develop efficient solutions for landmine clearance.