Despite the war, the land market continues its operations and prepares for the second stage of land reform. The market is currently active: the buying, selling, and leasing of land plots is ongoing, generating revenue for both the state budget and landowners.
In 2024, the second stage of land reform is scheduled to be carried out, which involves the introduction of legal entities to the market and an increase in the maximum amount of land that can be purchased – up to 10 thousand hectares.
Land market: before the invasion and after
The land market in Ukraine was launched on July 1, 2021. In almost eight months of its existence before the full-scale invasion on February 24, 2022, 0.421% of the total area of agricultural land was brought into circulation: 72,276 sales transactions were registered covering an area of 174,466 hectares.
According to official data from the Ministry of Agrarian Policy and Food of Ukraine, during the last year of the market’s operation (from July 2021 to July 2022), 88 thousand purchase and sale agreements for land were concluded in Ukraine, with a total value exceeding 7 billion hryvnias. The most active region of this process was Kharkiv Oblast, where 10.4 thousand agreements were registered for an area of 37.1 hectares.
After February 24, 2022, activity in the land market in areas that are or have been in the zone of combat operations significantly decreased, except for the registration of inheritance certificates. As of the end of May, about 500,000 transactions have been registered in Ukraine, with the majority being the registration of inheritance certificates (67%), buying and selling (27%), and the rest being transactions related to gifts and maintenance.
The change in the structure and price dynamics of the agricultural land market occurred after the large-scale invasion. As of today, the average median price of sold plots is 50,203 hryvnias, which means that half of the plots are more expensive, and half are cheaper. Among them, plots designated for personal farming cost an average of 30 thousand hryvnias, while plots for commercial agriculture exceed 104 thousand hryvnias.
During the full-scale invasion, the prices for land plots in the equivalent of hryvnias remained practically at the pre-war level. However, considering inflation and devaluation, the actual average price of purchasing a land plot has decreased since February 24, 2022. In many cases, the price of a plot remains at the level of the normative valuation established by legislation as the lower limit when concluding transactions.
Should we start the second stage of land reform?
From January 1, 2024, the next stage of land reform will begin: the market will be opened to legal entities, and the size of plots that can be purchased “by one hand” will be increased (up to 10,000 hectares). Even before the reform began, the issue of sales to legal entities caused great public resonance. In conditions where huge holdings make up a significant part of the Ukrainian agrarian sector, opponents of land reform expressed logical concerns: farmers and small agricultural producers will not be able to compete with large companies at auctions and will ultimately be left with nothing or will simply disappear.
The issue of access to the market for entrepreneurs has once again arisen in the context of active invasions. In the current conditions, this becomes particularly important – is it reasonable to start this stage during martial law, when most state registries, including the Public Cadastral Map of the State Geocadastre, remain closed to public access, or is it better to wait for Ukraine’s victory?
It was planned that in the first two and a half years of the market’s existence, land plots could be purchased by all individuals without any restrictions, and later only large buyers would be able to actively operate in the market. However, due to the war in 2022, the market underwent significant changes, and its activity decreased considerably. It is now difficult to predict what the fate of this market will be. Perhaps it will take a turn and open up for transactions by large players.
Plans for the implementation of land reform were drawn up without taking into account the severe economic crisis and invasion. In addition, according to statistics, almost 25% of agricultural land in Ukraine may soon become unfit for activity and turn into “illiquid” due to military actions.
There is an opinion that opening the market to legal entities will not significantly change the current situation, as companies will still be “tied” to a certain circle of individuals. However, it is predicted that increasing the land ownership limit for one citizen of Ukraine to the level of 10,000 hectares (instead of the current 100 hectares) will have a greater impact.
What is currently known about the land reform
Legislators are proposing to postpone the second phase of land reform, which provides legal entities with the right to purchase agricultural land.
A group of 12 people’s deputies from the “Servant of the People” and “For the Future” factions registered a draft law №9341 in the Verkhovna Rada of Ukraine on May 29, 2023.
It is proposed that permission for the above-mentioned action be granted no earlier than two years after the termination or cancellation of martial law in Ukraine, in accordance with the authors’ legislative initiative.
The note to the document states that the decision taken is aimed at preventing the deterioration of the situation of landowners designated for agricultural purposes, as well as avoiding abuses in conducting any transactions with land.
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