Austria: New Laws Contribute To Successful Construction

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

Ukraine is confidently improving its legal climate for investing in construction. This article analyses some major recent improvements in the Ukrainian development and construction laws.

Ukrainian development rules – starting from obtaining land rights to registering title to new buildings – have dramatically changed within the last year, becoming more transparent, predictable and efficient. The time and cost of development procedures have clearly been reduced.

Land title transfer procedure enhanced

There are new rules for the transfer of title to private land in Ukraine1. Formerly, the buyer of a privately owned plot of land could become its owner only upon obtaining a new act on title to land. This often took up to a year. Prior to getting the act, a buyer could not develop, mortgage, sell or otherwise dispose of the land.

This requirement has been eliminated. The buyer now becomes the owner of the land once the land department registers title. The department must do this within 14 calendar days after the buyer files the sale-purchase agreement. The department marks the transfer on the basis of the existing act attached to the agreement. No new act is necessary.

Development procedures advanced

The latest amendments to Ukrainian development laws will considerably benefit developers and investors. These amendments include:

  • Certain development procedures are no longer required. For example, a construction permit formerly required to obtain an input data is now obsolete. To start development, a land owner or lessee who wishes to develop the land is free to submit its development plans to the local authorities, who must then provide the relevant input data2.
  • Some legal changes have reduced development costs. One example is that the developer's expenses for connecting to electricity, gas, water and other utility networks are subject to reimbursement by the respective utility company3. Another example is that the maximum amount of mandatory city infrastructure contribution has decreased (i) from 10% to 4% of the cost of construction of residential, cultural, educational, medical and recreational buildings and (ii) from 20% to 10% of the cost of construction of non-residential and other buildings4.
  • Certain development risks have diminished. This, for instance, relates to conducting public hearings, where the community representatives express their proposals and remarks on a development. In the past, the hearings were quite problematic since the developers had to conduct them after completion of certain development steps. There was a risk that, after investing a large amount of money, a developer would be blocked from proceeding further due to negative results of public hearings. Since recently, however, a developer must conduct such hearings only before expensive development steps, not after.
  • Some amendments grant developers more favourable conditions. For example, the city infrastructure contribution is now payable within a month after commissioning a building, while until recently it was payable no later than a month prior to planned commissioning. The latter often took longer than expected due to bureaucratic obstacles. The above postponement of payment of the contribution will now motivate the local authorities to commission the finished building as fast as possible in order to get the contribution sooner.

Euro 2012 law improved

The new Euro 2012 Football Championship law provides the grounds and procedure for the buyout or compulsory expropriation of private property for the Champion-ship's needs5. This law allows for eminent domain with respect to private land, residential buildings and other structures.

The law, at the same time, prohibits unlawful deprivation of ownership. The buyout of private property requires the owner's consent. Disputes relating to the buyout price are subject to court resolution.

The law also releases developers of certain Championship- related objects from payment of the city infrastructure contribution6.

Road concessions advantaged

The new road concession law benefits concessionaries substantially more than before. This is because the state:

  • may co-finance construction and operation of roads;7
  • must ensure that the purpose designation of the land does not change;
  • must warrant the absence of any restrictions or encumbrances over the land;
  • must assist the concessionary with obtaining licenses and permits; and
  • has other rights and obligations under the concession agreement8.

The concessionary, in turn, has the right to construct road services on the road lands. Moreover, it is no longer required to:

  • provide at least 90% of its work places to Ukrainian citizens during the road construction and operation; or
  • use Ukrainian-produced construction materials, goods and structures for at least 70% of the value of the construction or repair works9.

As can be seen, Ukrainian law continues to become friendlier to developers and investors engaged in construction in Ukraine.

The latest amendments to Ukrainian development laws will considerably benefit developers and investors.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

Footnotes

1 Sections 1, 2, and 6, Article 126, Land Code of Ukraine, 25 October 2001, No. 2768-III.

2 Article 24, Law of Ukraine On Planning and Development of Territories", 20 April 2000, No. 1699-III (Development Law).

3 Subsection 5, Section 4, Part III, Law of Ukraine On Prevention of Impact of World Financial Crisis on Development of Construction Industry and Housing Construction in Ukraine", 25 December 2008, No. 800-VI.

4 Article 27, Development Law.

5 Article 8, Law of Ukraine On Organizing and Conducting the Final Part of the European Football Championship 2012 in Ukraine", 19 April 2007, No. 962-V, as restated by Law of Ukraine, 5 June 2009, No. 1474-VI (Euro 2012 Law).

6 Section 3 of Article 7, Euro 2012 Law.

7 Section 4, Article 2, Law of Ukraine on Concessions on Construction and Operation of Automobile Roads, No. 1286-XIV, dated 14 December 1999 (Original Road Concession Law), as restated by Law of Ukraine, No. 891-VI, dated 15 January 2009 (Restated Road Concession Law).

8 Article 5, Restate Road Concession Law.

9 Paragraph 1, Article 12, Original Road Concession Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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