The era when one could 'save up' for a state apartment or commercial space simply by renting it and doing cosmetic repairs is coming to an end. The Government of Ukraine is radically changing the rules of the game in the sphere of privatization, closing one of the most transparent, yet loss-making schemes for the budget. Now, the only way to acquire former state property will be through honest online auctions.
How 'cheap' state property sales came to a halt
For a long time, a scheme existed that was beneficial only to certain players. An entrepreneur would rent an object, invest funds in its modernization or repair, and receive the right of preferential purchase. As a result, the object would pass into private hands without competition and often at a price far from market value. Prime Minister Yulia Sviridenko stated directly: buying state or communal property 'for pennies' through rent will no longer be possible.
According to the new rules, all rented objects into which funds have been invested will be sold exclusively through the 'Prozorro.Sales' system. This guarantees that the price is formed by the market, not by agreements.
The numbers speak for themselves
Why did the state decide to take such measures? The answer lies in the statistics. According to estimates by Transparency International Ukraine, when purchasing without auctions, the budget lost an average of 45% of potential revenue. At the same time, online auctions held between 2021 and 2024 brought more than 3 billion hryvnias into the treasury. This is more than twice the results of all non-competitive transactions for the same period.
Protection of bona fide investors
The authorities emphasize that the reform is not aimed at deceiving honest businessmen. If a tenant has really invested money in inseparable improvements to the object, these investments will be taken into account. The state undertakes to compensate the investments or credit their value in the final settlement for the purchase. Thus, the system is intended to protect those who really developed the object, but at the same time deprive those of the opportunity to buy up state property at a reduced price 'for their own'.
Real estate market context
Changes in legislation come against the backdrop of a difficult situation in the real estate market. While prices in Kyiv and Lviv reach record levels, housing in frontline areas remains significantly cheaper. Tightening privatization rules should not only replenish the budget but also level the playing field for all market participants, eliminating corruption risks in the transfer of assets.
