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Ukraine

Green lease law and regulation in Ukraine

Table of contents
  1. 1. Issues regarding the building itself
    1. a. Requirements under public building law regarding energy efficiency.
    2. b. Do the regulations applicable under a) only affect new buildings or have all the buildings be provided with energy efficiency facilities?
    3. c. Does the market pay any attention to energy certificates?
    4. d. How popular is certification of buildings (LEED, BREEAM, etc.)?
  2. 2. Issues regarding the use of the building
    1. a. Can the landlord push on the operating costs (mainly for electricity, water, heating) to the tenant following consumption or does that need to be established by the lease? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?
    2. b. Does a landlord have the right to perform construction measures to improve the energy efficiency of a building (also against the intention of the tenant). Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial etc.)?
    3. c. Does a landlord have the right to receive a reimbursement of the costs for the measures under b)? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?
    4. d. If the respective rights mentioned in b) and c) do not exist by statute, but need to be established by the lease contract: Does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.
    5. e. Which other obligations regarding sustainability (building materials, energy efficiency, waste management etc.) exist? If they need to be imposed by the lease contract: does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.
  3. 3. Allocation of costs; incentives to improve sustainability of buildings or its use.
Ukraine

1. Issues regarding the building itself

a. Requirements under public building law regarding energy efficiency.

Despite the growing interest and capacity of Ukraine in carrying out the energy efficiency measures (in particular, according the Tax Code of Ukraine 50% of profit received from sale of energy efficient projects is tax-exempt), there are very few requirements under public building law regarding energy efficiency.

The Energy Conservation Law contains general provisions on energy conservation standards, energy consumption, and economic incentives for energy saving as well as provides for financial liability for energy wasting. However, the Energy Conservation Law has declaratory nature since incorporation of general provisions leading to further implementation in the statutory and delegated legislation by relevant government agencies and local authorities is required. In many cases there has been no development of supporting regulations and some provisions of the Energy Conservation Law still have limited application.

According to Article 31 of the Town Planning Law the design and project documentation in respect to the buildings of certain degree of complexity should be subject to comprehensive state examination, which includes inter alia energy control examination.

Furthermore, construction of buildings has to meet certain State Construction Norms (in Ukrainian “DBN”) governing energy efficiency measures, in particular DBN B.2.6-31:2006 “Buildings structure. Thermal isolation of the buildings” (the “DBN B.2.6-31:2006”).

b. Do the regulations applicable under a) only affect new buildings or have all the buildings be provided with energy efficiency facilities?

The regulations mentioned in Town Planning Law and DBN B.2.6-31:2006 apply to construction of the new buildings.
There are no energy efficiency requirements in respect to the existing buildings.

c. Does the market pay any attention to energy certificates?

No, not seriously. There are no requirements with regard to the obligatory energy certification of the buildings in Ukraine. However, some of the municipal and local authorities use the system of energy certification supported by the European voluntary energy certification system “Display”, which was elaborated in 2003 by the experts representing 18 European countries and with financial support of the European Commission.

The certification of buildings according to LEED, BREEAM and other standards is not popular in Ukraine. According to the information provided by the Public LEED Project Directory there are only two real estate objects (business center in Kyiv and residential complex in Mykolayiv) certified under LEED standard in Ukraine.

2. Issues regarding the use of the building

a. Can the landlord push on the operating costs (mainly for electricity, water, heating) to the tenant following consumption or does that need to be established by the lease? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?

A landlord is not obligated to charge operating costs from the tenant, irrespective of the type of the building. The parties of a lease contract are free to agree on the payment of operating costs. Therefore, usually the obligation of the tenant to pay operating costs is provided in the lease contract.

The operating costs are usually charged in Ukraine in accordance with the invoices issued to the tenant by the landlord. The payable amount is determined pursuant to the metres readings installed in the building or based on the invoices issued monthly by local municipal exploitation organisations (where no metres readings are installed in the building). The consumption of water, gas, heating and electricity is calculated by such organisations pro rata to the total amount of services consumed by the companies and individuals in the district.

It may also be provided in the lease contract that the tenant pays the operational costs directly to the respective service providers on the basis of the mentioned metres readings or invoices from the local municipal exploitation organisations.

Generally the operating costs are paid monthly. However, advance payment with subsequent set off is also often practicable.

b. Does a landlord have the right to perform construction measures to improve the energy efficiency of a building (also against the intention of the tenant). Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial etc.)?

The Ukrainian law does not provide clear regulation to this matter. A landlord does not have statutory right to perform construction measures to improve the energy efficiency of the building despite the tenant’s intent.

According to Article 776 of the Civil Code of Ukraine the landlord is responsible for conducting of the capital repair of the building unless otherwise is provided in the lease contract. The capital repair should be carried out within the term established by the lease contract, except for urgent cases, when capital repair should be carried out within reasonable time.

Therefore, the parties to a lease contract are free to define the scope of the capital repair, and to agree on the provision of energy efficiency measure.

c. Does a landlord have the right to receive a reimbursement of the costs for the measures under b)? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?

Since this matter is not regulated by the Ukrainian law the parties may provide for such reimbursement in the lease contract, otherwise the landlord shall have no entitlement to such reimbursement.

d. If the respective rights mentioned in b) and c) do not exist by statute, but need to be established by the lease contract: Does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.

There is no standard for such regulation available in Ukraine. The parties are free to agree on any arrangement they prefer.

e. Which other obligations regarding sustainability (building materials, energy efficiency, waste management etc.) exist? If they need to be imposed by the lease contract: does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.

No other obligations regarding sustainability exist. There is no standard for such regulation in Ukraine.

3. Allocation of costs; incentives to improve sustainability of buildings or its use.

Article 776 of the Civil Code of Ukraine provides that capital repair of the building shall be carried out at the costs of the landlord unless otherwise provided in the lease contract. The costs of the current repair shall be borne by the tenant, unless the parties to the lease contract agree otherwise. Hence, the allocation of costs may be agreed between landlord and tenant when concluding a lease contract.

No legislatively established incentives to improve sustainability of buildings or its use exist. The parties may contractually agree on measures for improvement of sustainability of building or its use.