Rising prices for a square meter of land in Kyiv is forcing developers to resort to new and new ways to reduce the cost of the final product – square meters of living space. The risk of not building another concrete monster is blocked by construction companies with the opportunity to get a plot of land for nothing.
According to the Legal Entities Unified State Register, Individual Entrepreneurs and Public Associations, the main activity of the Agricultural Limited Liability Company Agrokombinat Khotivsky (hereinafter – Agrokombinat) is the cultivation of grain crops. Due to this, in December 2018 Agrokombinat easily leases a plot of especially valuable land plots within the capitals, where high-rise construction is prohibited, an area of 16 hectares near the Folk Architecture National Museum and Construction of Ukraine (“Pirogovo”) (then – Pirogovo Museum)/
However, under the “burden of external circumstances” of the same month, “farmers” suddenly adjust their plans and instead of plowing and plantin receive from the Urban Planning Department and Architecture of the executive body of the Kyiv City Council (Kyiv City State Administration) residential complex with social and public facilities.
The first stage is completed. Then the developer is faced with a difficult choice:
1) to transfer a ready-made plot of agricultural land to another company “turnkey”;
2) find an investor and implement the project yourself with the greatest profit for yourself.
Taking the these last options as a guide, Agrokombinat spent another year in search of a project investor. And so, apparently, when all the financial issues have already been resolved, farmers began to cut down forests and carry out preparatory work.
In January 2020, more than 100 trees were felled and the soil was significantly damaged on a plot of land that, according to the Kyiv Urban Planning Cadastre, is the object of a damaged soil.
However, at the time, the new developer’s plans were hampered by environmental activists, who actually blocked further development of the site. And soon the prosecutor’s office became very interested in the fate of Agrokombinat, which decided to become a developer.
The second stage of construction is optional, but at the same time the most risky for the developer. Today, about a third of construction in Kyiv is stopped at this stage, as obtaining all the necessary permits is either very long (and time is money) or simply impossible, especially if you plan to build where it is a priori prohibited. It is also necessary to take into account the economic situation in the country – according to the National Bank, business, and in particular construction, do not expect economic growth and development for the next 12 months.
Here in the second stage the whole essence of any land machinations, including the described scheme is put. Building is first and foremost a business, and like any business, it carries certain risks. Another thing is that some developers are not ready to take them on.
However, back to the economy. Stopping construction is a colossal expense that must be covered by profits. At same time, for a positive balance, this profit must be even greater than the specified costs.
Here it is difficult to have two options for action:
1) intensive – to introduce significant funds and time in the development of one project, which will fully meet the requirements of the law;
2) extensive – to start the agreement with several “fast” but illegal projects from the representative that at least one of them will be completed.
Unfortunately, the second option is more popular in the capital today. Returning to it, it should be noted that the payback of the erected residential complex should be several times higher than all the costs incurred for it. However, if you transfer these costs directly to the buyer – the sale offer will be uncompetitive, the apartment will cost three times more. So you need to reduce the cost of one of the components of its construction or even reduce to zero.
Land for free
Building materials and the work of specialists have a constant cost, but the land on which construction is carried out, as it turns out in this country – no. Few developers in the capital today don’t buy land for construction! Remember such a constitutional right of citizens as the right not land? So, it applies to all citizens, including developers!
The mechanism, however, is a little different here – in accordance with Art. 120 Ukraine Land code, to the person who has acquired the property rights to the building, the property right also passes to the site on which such building is located. That is, the only thing a developer needs to get a plot “thank you” is to build something on leased land! At the same time, the loss of land means the complete loss of the project.
Agrokombinat’s land machinations
As you have already understood: the only chance to keep the lands of the territorial community from open “squandering”, in this case – is to terminate questionable leases.
Consequentially, the city authorities should have dealt with this. But, since the latter is always “in the same boat” with the developers, the prosecutor’s office is forced to perform this function.
Thus, the Kyiv Prosecutor’s Office in the interests of Kyiv territorial community in March last year to the Kyiv Commercial Court (than – the Commercial Court) filed a lawsuit to cancel the lease of the Agrocombinat on land related to particularly valuable land and construction on which directly prohibited by law.
“However, when the case was in danger, Agrokombinat resorted to cunning,” said Mykhailo Pohrebysky, head of the Ecozagin NGO. – “Initially, a letter was sent to the Ministry of Justice of Ukraine, in which they renounce the right to lease these particularly valuable lands themselves. And then the developer’s lawyer files a motion to close the proceedings in the commercial court.”
At the same time, Agrokombinat files a lawsuit in the famous Kyiv Administrative Court District. Now, with the demand to cancel the conclusion of Ukraine Justice Ministry Board , it was adopted after the abolition of the lease. And this is at a time when in parallel in the Commercial Court is still considering the case on the legality of the right to lease this category of land for construction!
16 hectares of valuable land
Here the developer’s plan is simple:
1) on the bureaucratic application for the abolition of the right to lease, to close the proceedings in the Commercial Court (thus it will be possible to get rid of the question of the legality of obtaining land);
2) after the closure of the said proceedings, to “restore” the right to lease the plot, canceling the result of consideration of such application.
However, from a formal point of view such manipulation fits perfectly into the procedural framework, in practice – it is nothing more than a scam, because the legal actions of the developer are not aimed at real legal consequences. In fact, the developer in this situation uses the procedural rule to simply cancel the material record of the right and escape from the question of the legality of obtaining (acquiring) such a right.
At the same time, the dispute over the right itself does not disappear, and such a legal action of the developer is necessary only in order to begin construction, issue their own right to an unfinished construction site (construction site) and “bring” the land into private ownership., bypassing the question of the legality of the acquisition of the right to use it.
The final point in this story is to be set on January 20. If the Commercial Court decides to close the case, the Kyiv community will lose another 16 hectares of especially valuable land for historical and cultural purposes.