The State Property Fund of Ukraine has published a draft Law of Ukraine “On Amendments to the Law of Ukraine ‘On the Lease of State and Municipal Property’ Regarding Certain Valuation Issues in Determining the Value of Lease Objects”.
The draft law proposes to increase the threshold of residual book value of a lease object at which its value must be determined based on market valuation to 50 percent. As a result, the starting rental price at auctions for the lease of state and municipal property is expected to increase by improving the mechanism for determining the value of a lease object for the purpose of rental calculation. In particular, the draft provides for the replacement of the current mechanism requiring revaluation by the property holder with an independent valuation.
Key provisions:
- Property valuation may be paid by a prospective lessee – currently, this is the obligation of the property holder, which often blocks lease transactions. Following the amendments, the lessee will be able to cover these costs – even before the auction or conclusion of the agreement.
- If the asset has not been revalued for years or its residual value is only nominal “on paper,” the starting lease payment is significantly understated. The proposed changes aim to ensure the use of actual market valuation.
- No valuation required – for beneficiaries. Where the lease is granted for UAH 1 or under social programs, valuation will not be required at all, easing the financial burden on budget-funded institutions.
- Lease renewal – simplified and without revaluation. The draft proposes to cancel the requirement to approve a valuation report and to conduct an independent valuation of the lease object when extending a lease agreement.
Following the adoption of the proposed law, the lease amount will not increase directly; however, the starting rental price may be higher if market valuation is applied. In addition, the law is expected to eliminate one of the key obstacles to leasing state and municipal assets — the financial incapacity of property holders to fund valuation procedures.
This draft law may be discussed in the group Urban Planning in Ukraine.
Ⓒ 2025