Ukraine passes law to creating affordable housing with help from private and international donors
On 13 January 2025, the Ukrainian Parliament adopted at second reading the Law of Ukraine No.12377 On the Basic Principles of Housing Policy. When signed by the President and implemented, this law will change the basic regulatory model of the housing sector and create legal conditions for the development of affordable housing, including with the involvement of the private sector and international donors. The Law is also a part of Ukraine’s commitments under the Ukraine Facility programme.
New model of housing funds and circulation of housing
Ukraine’s housing sector has long been regulated by outdated legislative acts that failed to reflect modern market realities or contemporary European approaches to housing policy. Russia’s full-scale invasion of Ukraine has further aggravated the housing crisis due to mass internal displacement and the destruction of housing stock. Moscow’s ongoing war of aggression has significantly complicated the realisation of the constitutional right to housing.
The Law breaks housing stock into clear classifications of private housing, state housing, and housing owned by territorial communities. State housing and housing of territorial communities are further divided into social housing and service housing. Housing belonging to the state housing fund and the housing fund of territorial communities will not be subject to privatisation, as a general rule.
Service housing is provided to individuals exclusively for the period of employment or service and may not be privatised, except in cases where disabilities occurred in the performance of official duties.
At the same time, the Law allows housing from the private housing fund to be used for the provision of social housing by decision of the owner. This creates a legal basis for cooperation between local self-government bodies and private owners and developers without changing the housing ownership regime.
Rental model and rent-to-own
The Law establishes rental as the primary method of providing social housing from state and municipal housing funds. Such housing is provided based on the income and property status of individuals and with the application of state subsidy mechanisms.
The Law also provides for the possibility of concluding rent-to-own agreements for social housing. This right may be exercised by persons who have resided in the relevant housing for at least ten years. The purchase price must be market-based and may not be lower than the cost of constructing new social housing to replace it. Funds received from these agreements are allocated to dedicated revolving funds and may be used exclusively for the construction and maintenance of social housing.
Introduction of affordable housing operators
The Law introduces the institution of affordable housing operators — enterprises, institutions, or organisations whose main statutory activity is the construction of affordable housing and the management of this housing. Operators may be established regardless of their form of ownership and will recognised according to procedure to be determined by the Cabinet of Ministers of Ukraine.
The Law also prohibits the use of affordable housing for purposes other than its intended purpose.
Affordable housing operators can benefit from preferential financing, including long-term loans, grants, and compensation funded from state and local budgets, international technical assistance, and other sources.
Public-private partnership and financing of housing projects
The Law provides for the implementation of housing projects through public-private partnership mechanisms in accordance with the Law of Ukraine On Public-Private Partnership. Housing funds can be formed and financed from state and local budgets, international donors, voluntary contributions from individuals and legal entities, and other sources not prohibited by Ukrainian law.
Digitalisation and housing register
A key element of the new housing policy is the creation of the Unified Information and Analytical Housing System, which will include information on housing from private, state and housing of territorial community funds, and on individuals who are eligible for state support in the housing sector. The system will be integrated with other state registers through electronic data exchange.
The introduction of a unified electronic housing register is intended to increase transparency, improve the efficiency of housing fund management, and reduce the risk of abuse in the housing policy.
A framework and a start for further improvement
The Law is a framework that establishes the basic principles and institutional model for the formation and implementation of state housing policy. Its practical application will depend on the subsequent adoption of secondary legislation, and the approval of the State Housing Strategy and regional programmes, which will define specific mechanisms for implementing housing policy at national and local levels.
For more information on Ukraine’s housing sector, contact your CMS client partner or our CMS Ukrainian experts who contributed to this article: Natalia Kushniruk.
