A new Regulation on lease of state and communal property entered into force but leasing under the new rules can’t be unblocked yet
A new Regulation on lease of state and communal property approved by the Cabinet of Ministers of Ukraine of 03.06.2020, entered into force today, on June 16, 2020, after its publication on the Government Portal.
On October 3, 2019, the Verkhovna Rada adopted the Law of Ukraine “On lease of state and communal property”. On February 1, 2020, the law entered into force.
According to the Law, the Cabinet of Ministers of Ukraine had to develop and make public a number of legislative and regulatory acts in a three-month term with the aim to make procedurally available leasing under the new law. Besides the today promulgated Regulation on lease of state and communal property (hereinafter the Lease Regulation) the Cabinet of Ministers of Ukraine also has to approve and make public a new lease contract forms, structured under the new leasing conditions, and a new methodology of rental charge calculation.
Thus, paragraph 51 of the Lease Regulation states that “draft of lease contract that is posted in an announcement of property leasing through an auction has to contain all information required by a standard lease contract except information on person of leaseholder and rental charge”. Therefore, in the absence of standard lease contracts’ texts approved by the Cabinet of Ministers of Ukraine, leaseholders won’t be able to make publish their announcements of property leasing in ProZorro.Sale system.
The State Property Fund of Ukraine stresses that the Lease Regulation includes the unified standardized rental rate that it applied to determine the starting rental charge for any lease objects to be leased through auctions. This rental rate is established by paragraph 52 of the Leasing Rules. At the same time, individual property leasing that is not real estate or means of transport and also property leasing without auctions to some preferential categories of leaseholders won’t be possible until the new Methodology of rental charge calculation is adopted by the Cabinet of Ministers of Ukraine.
Drafts of standard real estate and unified property complex lease contracts are published on the State Property Fund’s site (primary one – on February 27, 2020, finalized one – on April 15, 2020; reference to the document -https://bit.ly/30La7j9). As of now, these drafts obtained the State Regulatory Service of Ukraine’s decision on approval and conclusion of the Ministry of Finance of Ukraine. The Fund expect the Ministry of Economic Development, Trade and Agriculture of Ukraine and the Ministry of Justice of Ukraine’s conclusions on conducting legal due diligence. After obtaining these conclusions the drafts will be forwarded by the Fund to the Cabinet of Ministers of Ukraine for its consideration.
Draft of the Methodology of rental charge calculation is published on the State Property Fund of Ukraine’s site (primary one – on February 27, 2020, finalized one – on April 22, 2020; reference to the document -https://bit.ly/3daUq7n). As of now, this draft obtained the Ministry of Finance of Ukraine and the Ministry of Economic Development, Trade and Agriculture of Ukraine’s conclusions. The draft is also sent to the Ministry of Justice to conduct legal due diligence. After obtaining the Ministry of Justice of Ukraine’s conclusion, the Fund will forward the draft to the Cabinet of Ministers of Ukraine for its consideration.
Therefore, the Fund stresses that the new Lease Regulation’s entry into force is, unfortunately, an insufficient condition to launch procedures of new lease contracts conclusions.
It still remains the problematic issue that during more than 4 months none of leaseholders willing to lease state or communal property can’t conclude lease agreement. The public and local authorities can’t legally lease its property.
Therefore, the Fund expects that the Government, as soon as possible, will adopt necessary normative documents to unblock state and communal property leasing under the new rules according to the new law.