Leasing state-owned property will no longer be a backdoor to a “quiet” buyout

The government has changed the rules for small-scale privatization: now, leased state-owned and municipal properties that have undergone substantial improvements will be sold exclusively through open online auctions on Prozorro.Sales.

What is changing?

Previously, a non-competitive buyout mechanism was in place: the lessee invested funds in the repair or modernization of the property and received the right to buy it out without open competition.

Now, openness and competition are the guiding principles.

The price will be determined by the market and competition among participants;

The state and communities will be able to receive fair market value for assets;

All participants will have equal access to purchasing property.

At the same time, it is important to note: the changes do not deprive businesses of protection. The tenant’s verified expenses for essential improvements to the property will be compensated or credited during the final settlement.

According to estimates by Transparency International Ukraine, on average, non-competitive buyouts generated approximately 45% less revenue for the state and communities than open auctions. In 2021–2024 alone, open auctions generated over UAH 3 billion in revenue.

Small-scale privatization should operate on the principles of level playing field, transparency, and maximum economic efficiency.