Two months have passed since the start of the land market. What trends are more clearly defined and what issues still need to be solved? The UAC Deputy Chairman Denys Marchuk shared his opinion with the “Comments” edition.

The UAC Deputy Chairman notes that the land market started without excitement - during the first month a bit more than 2,900 contracts were executed, which was expected. After all, during the moratorium on sales, a powerful land lease market was formed. The owners of the shares know about the benefits of renting land: it is both cash from the tenant, and payments when they receive grain.

According to the Ministry of Agriculture, the amount of land which was sold tripled in August, but that was not the volume that indicates the excitement in the market, but rather about its consistent development and movement. On the contrary, first of all the land plots are being sold by those who need money, or by those who have previously agreed with the tenant to sell it, and now it is possible to sign an agreement (mostly emphyteusis - long-term land leases - agreements were made before).

This situation, according to Denys Marchuk, is also explained by the fact that currently the price of agricultural land is low:

"It ranges from USD 1,000 to 1,500 per hectare, depending on the region. The cost of a land plot cannot be lower than its nominative monetary valuation (NMV), which is determined by land management organizations, and is different in each region, because it depends on a list of factors - soil fertility, precipitation depth, etc. Then the price is dictated by the market. But, I repeat, currently in Ukraine the price of land is still too low and I would not advise owners to sell it".

The expert believes that the value of land may increase significantly from the beginning of 2024, when legal entities will be a part of the market. After all, now there are restrictions on the purchase of agricultural land – only those individuals who are citizens of Ukraine and can take no more than 100 hectares have the right to buy it. If the limit is exceeded, they are obliged to alienate the land. It is clear that companies that are allowed to buy up to 10 thousand hectares of land have much greater financial opportunities. Therefore, with their participation in the market, we should expect more attractive offers. In general, Denys Marchuk predicts a stable and slow development of the land market until 2024 with a simultaneous increase in the cost of rent.

However, shares owners also have to do their "hometask", so in a case of plots sale they could do this without any problems. First of all, many citizens still have certificates for the right to land shares of the old model, without the cadastral numbers of the land plots in them. This needs to be corrected - to assign a cadastral number, the plot should be reflected in the State Land Cadastre, and the right of its ownrrship - in the Register of rights to immovable property. Also, in Ukraine there are a lot of unclaimed land shares, when, for example, people who inherited land did not register ownership of it. If this is not done, they will lose their land and, accordingly, will not be able to sell it in the future," the UAC Deputy Chairman continued.

At the same time, Denys Marchuk notes that the transition period in the launch of the land market, (which the UAC insisted on) showed the problematic issues that need to be corrected.

Thus, with the start of the land market, it became clear that only a small part of notaries was able to draw up contracts of sale, as they had access to the StateGeoCadastre. This is important because it is the duty of notaries to check the amount of land owned by the person who wants to buy it, and this can only be done through the SGC. Now the problem is practically solved - all notaries can get access under the simplified procedure.

At the same time, the procedure of registration of the contract of sale takes a long term (for several hours) and is expensive. And wee still need to work this way.

Another problematic issue that needs to be solved, Denys Marchuk calls the valuation of land by the State Property Fund, as a result of which is higher than the normative-monetary valuation. Accordingly, taxes increase several times after such an assessment, and this is an additional factor that falls on the shoulders of the agricultural producer.

"It remains to resolve the issue of taxation of agreements on the transfer of preferential rights, which insists on the State Tax Service. The law on agricultural land transfer provides that the tenant of land has a preferential right to purchase it. However, he may transfer his right to another person in some cases known to us. During the transfer of such a right, a tax is required, which, in our opinion, is unacceptable: such transactions should not be taxed. Currently, all these problematic issues are being discussed within the Land Office, initiated by the Ministry of Agriculture. We hope that all of them will be resolved as soon as possible," the UAC Deputy Chairman summed up.

Wednesday, 1 September 2021

 

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