At the end of April, the Ministry of Development of Communities and Territories of Ukraine posted on its website for public discussion a bill “On Amendments to the Law of Ukraine” On Comprehensive Reconstruction of Quarters (Neighborhoods) of Obsolete Housing “. The document provides for determining the future fate of Khrushchsvky.
Andriy Ryzhykov, Mind CEO and managing partner of the DC Evolution development company, told Mind CEO what the bill proposes in general, whether such houses will be reconstructed and when this process can be launched.
The real estate market of Ukraine is a great platform for melodramatic series: for decades, scripts have been written here about the abolition of equity participation, protection of buyers’ rights, completion of unfinished projects and other equally exciting problems.
There is a very old anecdote about how the company “Mercedes” bought the plant “AvtoVAZ”, reconfigured production, and at the exit – again received the “Lada”. It is about the same with this bill: no matter how it is rewritten, Lada cars are issued, and even those that do not drive at all.
What is wrong with the initiative
If you decide to read this treatise, be sure to read the text of the bill, not a comparative table or explanatory note. As often as we have – they are a little different.
Quarters to be comprehensively reconstructed are determined on the basis of master plans and detailed plans of territories.
The problem, which has been going on for decades, cannot be solved by old methods. DPT and city master plans are absolutely incompetent documentation that allows officials to imitate violent activities, and they are also shackles for the investor.
No good projects will appear if you rely on the town DPT and the approved master plan. In Kyiv, by the way, there is no current master plan, and the current one is not clear in what status.
What’s wrong with the residents
An equivalent real estate object is provided in an apartment building, which is located within the territory of the settlement, as well as the object that is vacated.
If in the current law and previous bills on its change there was a rule that the resettlement is carried out in the house within the quarter (neighborhood) of complex reconstruction, then the boundaries have increased up to the settlement. Here, imagine yourself: you live in an old, but such a favorite Khrushchev in Pechersk, and you are relocated somewhere on the Left Bank. It seems to me an unequal exchange, no matter how much they write that the cost and area of the apartment will be the same.
Administrations (city, district, regional) in accordance with their competence initiate the development of state target programs, develop and conduct public discussions of the program concept and exercise general guidance and control over the development of the program and the implementation of its activities and tasks.
One can only imagine the hype, screams and howls that will arise when the residents of 20 houses under reconstruction gather for a discussion. The very concept of public hearings is a destructive element in urban planning. You can’t ask people how to build properly. Any manifestation of democracy where professional knowledge is needed leads to the collapse of the system.
What is wrong with the probable customer
Executive bodies of village, settlement, city councils perform the functions of the customer of complex reconstruction of quarters.
The state cannot be a customer. An investor can be a customer, but a government agency in the person of a customer who has to do something on his own behalf is extremely difficult and uncomfortable.
Reconstruction of integral property complexes on the territory of quarters subject to complex reconstruction is carried out at the expense of their owners in accordance with the approved reconstruction programs.
At the very least, the notion of “property complexes” is beginning to disappear like a scoop atavism. But the main thing: let’s say I own a factory or a factory (and they do not necessarily pollute the environment), which have territory and property that are honestly owned. But the quarter in which it is located, they decide to reconstruct, and I am told: “You are not very beautiful here and be kind at your own expense!” Such an approach to business.
What will the investor be left with?
The essential conditions of the investment agreement are, in particular, benefits, as well as the conditions of their provision or termination, in particular the exemption of the investor-developer from the payment of equity participation in the development of infrastructure of the settlement.
It would seem that the shareholding has been completely abolished since 2021, but then there is a bill on its return, then in another bill even try to provide discounts by exempting it from payment. I really want clarity and understanding, so as not to rewrite the financial plan every month.
But there are some nuances that deprive the investor of the desire to enter into reconstruction projects, even if the bill is adopted in its current form.
The decision to classify apartment buildings as obsolete housing is published in the media and communicated in writing to each owner / tenant of real estate, and in case of inability to do so, the information is brought to the attention of relatives and family members.
I wonder how many owners have changed apartments in Khrushchev for more than half a century of their existence, and how many of them live there now? Finding owners, especially in a big city, is not an easy task. For example, a cousin or nephew was informed, they agreed to the reconstruction, and after a while the owner appeared and stated that he did not agree. The investor’s lawyers will simply not leave court hearings.
If during the meeting of co-owners for the decision is not obtained the required number of votes “for” the decision is considered not adopted. Such an apartment building is excluded from the investment project.
Consideration of the issue of alienation of land plots located within the quarter that falls under the reconstruction program is terminated in case of disagreement of more than 25% of the owners of such land plots.
At some point, dissenting landowners may become more than 25% of the law, or the condominiums of a detached house have decided that they do not want to participate in the reconstruction and voted against. Everything is for this house, the whole quarter, if it is more than 25% of landowners. But the whole value – in complexity, the loss of individual elements immediately violates all indicators. And, according to the law, such a project of complex reconstruction is made at the expense of the investor.
That is, the investor made an inventory of all apartments and plots, inspected all buildings and structures, made a masterpiece project with the famous architect, found money, came to the local council, approved the project there … and here half of the houses say: “No!” And then what to do to the investor? Draw a project? No, it will not be, because a smart investor will not initially agree to such a shaky condition. Investing in a project that can stop at any time is a very short-sighted idea.
Reconstruction of territories within the historical areas of settlements, their separate parts should be carried out taking into account the requirements of the legislation on protection of cultural heritage, and the basis for decisions on reconstruction of the specified territories is the historical and architectural reference plan.
You will probably be surprised, but half of the Kyiv industrial zone is part of the historic area, without being architectural monuments. But the main thing is not that, Kyiv has not yet adopted and it is unknown when the same historical and architectural reference plan will be adopted. And the situation is similar in more than 400 cities of Ukraine. We have a law “On the protection of cultural heritage” – one of the most destructive in relation to urban planning. And here also complex reconstruction gets under coordination with the Ministry of Culture. So this is an epic for decades!
The state policy in the field of complex reconstruction of quarters is implemented by combining funds of local, state budgets and investors-developers for engineering training, construction of social, engineering and transport infrastructure, landscaping and landscaping of adjacent areas, creating a barrier-free environment. .
The investment agreement shall specify the obligations of the investor-developer on free transfer of social and engineering-transport infrastructure facilities to communal ownership after their commissioning, indicating an exhaustive list of such facilities and transfer conditions.
It turns out, first you build with your own money, and then you just give it away. No investor will do this on such a scale. It is the city’s duty to find money, bring all the infrastructure to the site and only then tell the investor: here is a working site for you – upgrade. When cities have a choice, to build infrastructure at their own expense or at the expense of the developer, of course, he will choose the second option. I have no idea where in such conditions the investor should look for margin.
Owners of apartments located in an apartment building under reconstruction, which are on the day of the decision on the comprehensive reconstruction of the quarters registered citizens in need of better living conditions, provided a new equivalent apartment, taking into account the norm of living space established by law based on the number of persons registered at this place of residence on the day of the decision on comprehensive reconstruction.
You can imagine this queue, which grew in one day – just the whole quarter will need to improve living conditions. Again, the investor pays for all this.
If the owner of the apartment refuses to enter into an agreement on the provision of an equivalent real estate object, he may be provided with monetary compensation, which is determined on the basis of an expert monetary assessment. If the owner of the object does not agree with the results of the assessment conducted by the subject of appraisal activity, designated by the local government, he may involve another subject of appraisal activity to determine the value of real estate or to review the report.
Unfortunately, there are many appraisers who will estimate the ruins several times more expensive than their real value. Will the investor pay for it again, and what should he do in this case? Go to court every time?
The bill is “beautiful”, and if it is passed in this form, in the next 10 years no prudent developer will even want to read it, because lawyers will say: “Don’t look there, it’s better to deal with industrial zones and urban expansion at the expense of reserve lands.” The question remains: why was this bill written and who benefits from it?