How Ukrainians are cheated for money in anticipation of land market launch?

Author : Anna Peshkova

Source : 112 Ukraine

How unscrupulous officials profit from the participants in the scheme and whether the opening of the land market will prevent abuse in the future?
11:47, 29 October 2020


20 times less money

Ukrainians are offered to issue a document from a notary for the right to obtain ownership of a land plot for a fee. In fact, completely different persons control the land. As a result, the scheme participant is deprived of the opportunity to receive a plot of land from the state for free in the future. The agitators are looking for people without fines since with the introduction of an automated seizure system, the shares transferred by them can be seized.

"The essence of the work is that a piece of land is registered for you, which you rewrite to a certain person. And for this you get 500 UAH (18 USD) immediately in your hands," one of the agitators explains to us.

For a person who at least roughly understands the prices for land, such amounts can be confusing. Now a share of land costs about $ 1,200. The price may differ depending on the fertility of the land.

“It looks like some kind of fraud. It should be at least 10 000 UAH (358 USD) per hectare when the land is transferred to someone. Especially popular 2 years ago was a similar scheme with the participation of ATO officers. The income of intermediaries was about 20% of the cost of a hectare", emphasizes Leonid Kozachenko, president of the Ukrainian Agrarian Confederation.

Applications for land in the scheme with ATO participants were sometimes submitted by 10-20 people. In the Kyiv-Svyatoshinsky district, 320 hectares of land were privatized, although none of the beneficiaries was even registered in the territory of the Kyiv region, and one of them died at the time of allocation of the site. In 2016, suspicions were even voiced that the benefit for the military was deliberately introduced for the implementation of such schemes. The head of the ATO Veterans Society Kyrylo Sergeev said that 85% of the fighters are selling their plots.

The remuneration for representatives of the privileged category, who have a preemptive right to land, is significantly higher than what is offered now: sometimes the amounts reached thousands of dollars. The businessmen explain to those who are outraged by the current "dumping": it is very difficult to get this land.

"Go, stand in line for 2 hectares of land. Do you think they will give it to you?" writes the agitator Anna.

Indeed, it is easy to get a share only on paper. The bureaucracy can discourage any desire to exercise their legal right to land. To use it, you need to choose a free site on the State Cadastre website or submit an appropriate request to the Department of Architecture, Urban Planning and Cadastre, get a copy from the cadastral map, pre-ordered from the Land Resources Department, prove experience in agriculture or the presence of agricultural education (if you wish to farm). Then it is necessary to apply with a passport and an application to the department of the authorized body (usually a village or city council).

However, even if you understand the procedure, it is far from the fact that the local authorities will want to give you a share. Not only is there not much free land left in Ukraine, but the Cabinet of Ministers also slowed down the procedure, since it limited the amount of land to be issued to only a quarter of the entire state land fund. Even if you point to such a site, it may turn out that it has already been applied for. The queue for a share may never reach you.

"I cannot say that everyone in our country can independently obtain a good land plot as a result of privatization. Firstly, it is not so easy to find out about vacant land plots. Local councils and government officials are usually involved in these schemes of " mass privatization ", and therefore no one is interested in disclosing information about free land. Secondly, even if by some miracle you become aware of this, you will simply be" kicked "at the initial stage. And while you will be in court for years to prove your right, the land will go into "the right hands", explained Maksym Mogilnitsky, head of the Mogilnitsky and Partners lawyers association.

However, it was difficult to get land before. "Dumping" could also provoke difficulties with citizens receiving income during the quarantine period, as well as forecasts of a reduction in the cost of the land after the opening of the market (according to the Moldovan scenario).

Analysts suggest that the government's forecasts of "$ 6,000 per hectare" may not come true, despite the high quality of Ukrainian chernozems. Everything indicates that the market will not be active in the current conditions, which means that the price of a hectare will not grow either.

"Over the past 3 years, land prices in Ukraine are extremely low. And closer to the opening of the market, neither lending, nor investments, nor an increase in rent occurred. Therefore, expectations of a price increase from July 1 will definitely not be justified and could not be justified According to our surveys, 97.6% of farmers will not take part in buying land. As for medium-sized businesses, there is no particular excitement. Agricultural holdings are also not interested," Ivan Tomich, president of the Association of Farmers and landowners of Ukraine says.

Financial analyst Oleksiy Kushch also does not believe that after the opening of the market, the cost of a hectare of land will amount to tens of thousands of dollars.

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"The price of land directly depends on the rent fee that it can bring. It is either bought by an agricultural enterprise or an investor for the sake of passive income from rent. For each of the methods, land cannot be expensive. In the first option, the added value with hectare is about $ 250, because the land is mainly used for growing a certain number of crops. If the use of land were diversified, for example, also for animal husbandry, it would bring more income - about $ 900 per hectare. So its price is unlikely to be much more than a thousand dollars per hectare,"  says Oleksiy Kushch.

Some landowners may start selling their land at a cheaper price even if Bill No. 3131 is adopted. According to it, a minimum tax is proposed for landowners and users: about UAH 3,000 (107 USD) per year will have to be paid from two hectares of state.

It is not surprising that Ukrainians are not only more and more often responding to announcements for the quick sale of land rights, but also posting relevant offers themselves.

How do dealers work

Renting a field is not an easy task. We are talking about specific areas with their boundaries, which cannot be changed without the consent of the participants. It can be very, very difficult to reach out to landowners and bargain with them about the price. And after the launch of the market, the task will be further complicated by the effective right of priority purchase of land by its tenant.

Dealers, at the buyer's request, are looking for vacant land plots throughout Ukraine, form a package of documents, and, through dummy persons, draw up a purchase and sale agreement. We have already observed something similar to dacha cooperatives. The land was distributed allegedly for gardening, and then all of it passed into the hands of one person.

Of course, this scheme is not for large agricultural holdings, because for this it would be necessary to search for tens of thousands of people. But for small agricultural enterprises, it is quite a profitable business. It can also be beneficial for tenants who want to get their own land.

The head of the State Geocadastre talked about the land of the local council which was transferred to 34 different people for personal farming. Later the former tenant became the owner of these plots. This is about UAH 240 000 (85 715 USD) of losses for the local budget per year.

Of course, it is impossible to carry out the search for free shares and their accelerated privatization without the help of the State Geocadastre officials, who earn on kickbacks. The fifth-largest government agency distributes land to state and communal property and controls how this is done, which is paradoxical in itself. There is no general register of lease agreements, it is a very long time to check manually for how many years and at what rates they were signed, whether there were subcontracts.

For people who are desperate to get their legal hectares and re-register land for nothing, the consequences can be much worse than just the loss of land. Practice shows that it is impossible to outplay the scammers and return the plot in the future.

The "barkers" claim that there will be no responsibility for the participant in the scheme. Like, how he disposes of his property after the exercise of the right to benefits is his own business. However, if illegal transactions are carried out on behalf of our principal on the basis of a power of attorney, he risks being charged with a crime committed by a group of persons, for example, fraud. You can get a real term, and what it will depend on the crime committed with your "participation".

"In the future, he can be held as an accomplice in a crime. After all, the purpose for which he was given the land was fictitious. Depending on the amount of damage, it can be from 5 years in prison with confiscation of property," lawyer Rostislav Kravets explained to ...

Will this scheme be suppressed after the introduction of the land market?

Of course, the "2 hectares" scheme is far from the only variant of land fraud. Controversial is emphyteusis - the lease of land for 200 years, which, in fact, is its purchase. In addition, raiding has intensified over the past 3-5 years.

With the launch of the land market, in theory, such manipulations should be stopped. Roman Leshchenko assures that by the end of the year this will eliminate a number of corruption risks. However, this is hardly possible. The land inventory is still not finished: the companies involved in it, being in collusion with officials, according to Leshchenko, did not even go to the fields and put "shadow" data on the public map. You also need to enter in the register and archival data on privatization. The promised unified base of land plots and real estate has not yet been developed.

Derzhzemkadastr is generally not protected from third-party interference in its database and uses outdated data storage systems. But instead of solving the problem, representatives of the department are waiting for the conclusions of the audit of the World Bank over the past 10 years, in particular regarding a possible data leak. The results of the audit will become known only from the new year. After that, recommendations for the phased implementation of the blockchain system will be presented.

What is the reason for this delay is not clear. Experts suggest that it is unprofitable to show the real picture and vacant land, for which a queue can immediately line up. For example, Olexiy Kushch believes that we are on the verge of another redistribution of land capital. In his opinion, the new cadastre is fiction, and the "schemes" will not be suppressed.

“We are institutionally not ready to open a land market due to the fact that property titles are not taken into account by the state. This is about the principle of English law in the records of land rights: if they are registered, they do not need to be proven; if they are violated, the state must compensate losses from a specially created fund. In addition, blockchain technology should be used to protect registries. It makes the so-called “land theft” impossible. But for some reason, no one talks about this," the expert emphasizes.

Supposedly, corruption should be stopped by transferring the authority to allocate land from the State Geocadastre to local governments, as was the case in 1900-2002. It is planned that now it will decide whether to distribute 2 hectares of land to people or not. The department will have control and supervisory functions for all lands in Ukraine. However, the expert is sure that such a maneuver carries a huge risk and is only an attempt to create a "smokescreen" for the land market.

Experts suggest that other frauds await citizens in the future.

"The speculators will work out new and new schemes and only reduce prices. They will become especially active since July 1. The real price of a hectare on the market may even be lower than the minimum established bar - it will be realized by the schemes due to the lack of demand," says Ivan Tomich.

Manipulations are predicted around the sale of the priority right to purchase land, which will lead to its purchase for a pittance by international agricultural holdings. At the same time, it will be even more difficult to implement the constitutional right to receive a plot. After all, the land in Ukraine is not endless.

"After the launch of the land market, everything will be much more complicated. The size of the plot will be limited to one hectare, and only social workers living in the village or pensioners who worked in these specialties will be able to obtain the right to free privatization," Maksym Mogilnitsky emphasizes.

Whether there will be new schemes in this area is still unknown. The launch of the land market narrows the rights of citizens, which is contrary to the Basic Law of Ukraine. Therefore, experts suggest that in its current form, the document may be at least partially recognized as unconstitutional.

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