Ukrainian Parliament finally adopts housing reform bill

Ukraine's Verkhovna Rada has adopted at second reading the bill "On the Fundamental Principles of Housing Policy" (No. 12377), which repeals Ukraine's currently effective 1983 Housing Code and changes the rules governing the housing sector.

A total of 250 members of parliament voted in favor of the decision, according to Olena Shuliak, chair of the parliamentary committee on state power organization, local self-government, regional development, and urban planning, and head of the Servant of the People party.

According to Shuliak, nearly 2,000 amendments were submitted to the bill after it passed first reading on July 16. The committee, together with a number of ministries, all key market stakeholders, as well as international experts and financial institutions, worked on refining the bill for more than five months. The document is part of Ukraine's commitments under the Ukraine Facility program and also a response to an urgent problem highlighted by the full-scale invasion – the long-standing apartment waiting lists, on which citizens in need of improved housing conditions have stood for decades.

Under the adopted document, free housing provided by the state will be available to four categories of the population – military personnel, emergency responders, police officers, and orphans. For all other citizens who are effectively stuck in hopeless apartment queues, affordable housing and social housing will be introduced.

"Affordable housing is housing that people on waiting lists for improved housing conditions will be able to purchase on preferential terms, through a number of mechanisms that are being introduced. This includes several types of preferential mortgages, an updated mechanism for housing construction cooperatives, leasing, and so on. Social housing is housing that can be used temporarily under the terms of so-called social rent," Shuliak explained.

In addition, the final version of the bill changes the rules governing service housing: from now on, it will be provided exclusively on a temporary basis, cannot be privatized, and may be occupied only for the duration of official duties at a preferential rental rate. Once employment ends, the housing must be vacated. The only exception applies if a person became disabled while performing official duties.

Another instrument being introduced is rent-to-own. This is housing that can be acquired into ownership after 10 years of renting, but this right can be exercised only once. The payments made by the tenant during this period will go into a special revolving fund, from which new social housing will be built. Payments for social rent will also flow into this fund; the level of such rent will be calculated individually for each family, as it must not exceed 30% of household income.

"Rent-to-own is one of the most popular instruments in the EU. Similar mechanisms exist in different countries around the world. For example, in the United States, such a transaction is known as a 'lease with option to purchase' or 'rent-to-own.' In the United Kingdom, it is called 'rent-to-buy' or a 'lease option.' International partners insisted on the introduction of this instrument," Shuliak explained.

Ownership of social housing used for social rent will lie directly with local communities. Two types of operators will be introduced, a social housing operator (a municipal non-profit organization supporting vulnerable groups) and an affordable housing operator (a business offering rent-to-own or sales). To ensure housing is genuinely affordable, cost-reduction tools are proposed: communities will be able to allocate land for construction free of charge and provide low-interest loans or local guarantees to attract financing.

At the same time, the "heart" of the new housing policy, Shuliak emphasized, will be digitalization, which will make any corrupt abuses impossible. In particular, a unified information and analytical system in the housing sector will be created. First, it will digitize all housing waiting lists; second, it will function as a single digital hub that consolidates all data in one place and automatically interacts with other state registers.

The system will collect and process information in three main areas: people, housing, and the list of available programs.

"There will be no 'manual control' or lost paperwork. You will be able to independently search for housing provided with the support of the state or your community. The system guarantees that your place in the queue or your right to a benefit is recorded and protected," Shuliak said.

In conclusion, she added that the adopted bill is a framework law. The new housing policy will require a number of additional laws, including specialized ones, as well as amendments to existing legislation, in particular tax laws, and a range of regulatory acts.

In particular, this concerns draft laws on the social housing fund and on the management of that fund. These bills have already been prepared, and their registration is expected in the near future. The first of them, the bill on the social housing fund, is expected to be adopted by parliament next year, as it is also a requirement under the Ukraine Facility.