To reduce the negative impact of the global financial crisis on the construction industry in Ukraine several legislative acts have recently been adopted.
Specifically, the procedures for obtaining the necessary permits and preparing technical documents have been simplified and made more transparent to make the construction business more attractive to
To construct buildings, from now on three specific permits will have to
be obtained during the procedure: Urban Conditions and Construction Limitations, a Construction Permit and a Certificate of Compliance. Additionally, a Preparatory Works Permit may also be applied for to accelerate construction work.
The Urban Conditions and Construction Limitations replace the Permit for Allocation of the Building. These limitations are a mixture of urban conditions and architectural requirements imposed by local authorities for an envisaged construction on a determined land plot in compliance with local urban planning rules. If there are no local urban rules on construction in a particular case, the limitations will be determined upon discussion on the construction at public hearings. The limitations serve as the basis for developing project documents for future constructions and do not authorise a developer to start construction.
The Preparatory Works Permit introduced by the recent reform may also be obtained. This permit allows a promoter to start preparatory works on a building site (such as enclosing a construction plot or installing temporary utilities) even before obtaining a construction permit.
The Construction Permit allows the promoter to fully start construction work. Following the reform this permit will be issued upon an application and technical documents submitted by both the developer and its construction contractor. The required annexes to the developer’s and contractor’s applications differ; a contractor must provide confirmation of its abilities. What is new when applying for a construction permit is that foreign legal entities, in addition to the standard documents, must submit a proof that they will involve a Ukrainian element in the construction. Specifically, they must show that at least 90 percent of the construction-assembly works will be done by Ukrainian citizens/legal entities and at least 50 percent of the materials used in the construction will originate in Ukraine.
The Certificate of Compliance is obtained after the completion of the construction works to allow use of the building. It also serves as a basis for registering related ownership rights. The procedure has been simplified and accelerated and it should no longer be necessary to obtain special approval from the previously existing state commission. The cancellation of this step, however, is not fully guaranteed, since there are discrepancies between the amending act and the specific act regulating this procedure.
The project documents are prepared on the basis of thoroughly produced initial data on the project, which included architectural and planning tasks, the technical conditions for providing utilities for the future construction and project implementation tasks. Due to the recent amendments, however, a previously required special architectural and planning task, which was one of the most problematic documents to prepare, is no longer needed. It is now covered by the Urban Conditions and Construction Limitations.
Another new measure is that approval of the project documents by local authorities is no longer required. However, if it is impossible to execute the project documents in light of technical conditions imposed by specially authorised institutions, it must be approved by these institutions.
The procedure for preparing and approving the planning documents has been simplified. A decision of the architectural and construction council on the project and further coordination of the project documents are no longer required. In addition, the new legislation imposes strict requirements on advertising the construction, confirms the right to register the ownership title to an incomplete construction and includes incomplete constructions and related property rights as the possible subject-matter of mortgages.
In conclusion, the recent amendments to construction legislation aim to support the Ukrainian construction industry and create more favorable conditions for developers on the Ukrainian real estate market. Simplifying the construction procedures for obtaining permits, preparing technical documents, allowing exploitation and lessening dependence on state authorities are intended to create attractive conditions for investors. Problems remain, however, and solving them requires practical application, updating or adopting new regulations and achieving coherence between existing ones.
By Peter Danis, Director and Attorney at Law of PETERKA & PARTNERS LLC KYIV, Ukraine
This article is of an informative nature only and under no account can it be considered to be a legal opinion. Should you need any further information on the issues addressed in this article, please contact our
Law Office PETERKA & PARTNERS:
Tel. +421 (2) 544 18 700
* * *
Founded in 2000, PETERKA & PARTNERS has grown into a fullservice firm with 70 lawyers and
four offices in Prague, Bratislava, Kyiv and Sofia and has built up a highly regarded practice within the CEE region. PETERKA & PARTNERS has been consistently ranked among the best practices in the leading publications on the legal services market, such as Chambers, Legal500 and IFLR1000.