Olena Shuliak: Business must have the right to choose mechanisms for investment in construction independently

The legislative provision obliging to invest in housing construction only through the Construction Financing Funds or other financial tools does not protect investors and essentially influences the housing cost. The most of members of the round table “Protection of citizenry and real estate developers’ rights and interests: Why the Law “On Investment Activity” is not efficient” stand assured of this fact. The Better Regulation Delivery Office BRDO Construction Sector Head Olena Shuliak became its moderator.

“In January, the BRDO started the regulatory legislation review – Rolling Review. It is a kind of antivirus positing that all statutory regulations must be reviewed regarding their importance for business and unprofitability for the state. And if these provisions are not necessary – we recommend to abolish them,” Olena Shuliak said.

The Law “On Investment Activity” became one of the first regulatory acts in construction sector analyzed by BRDO experts. Its review has a top-priority for business. That is why it was discussed during the round table in terms of construction issues (particularly, part 3 of Article 4 of the law).

According to UPD legal consultant Sergij Perchak, such tools as Construction Financing Fund (CFF) do not guarantee investments protection and possibilities to finish the building. Fund is not an efficient mechanism for real estate developers. The “Granit Plus” director Larisa Shevchuk said that the CFF makes the building process more expensive because most of these funds are “pocket” ones and investors stay unprotected.

Ukraine Turnaround Real Estate Fund partner Sergij Ovchynnikov insisted that all parties had to negotiate contracts without stakeholders by recording them by a notary. According to him, this mechanism is applied across the whole continental Europe. Therefore, only the introduction of state property rights registration for projects under construction can create the market transparency.

However, the Financial Company “Zhytlo-Kapital” director Yegor Smilyj is sure that the implementation of such a state registration is unreasonable as it can lead to new abuses. According to him, the CFF protects market members, as finances that come to fund’s accounts can be used only for building within one BFF. Therefore, the real estate developer gets the money and the investor – the immovable property.

Summing up the discussion results, Olena Shuliak paid attention to the fact that the business must have the right to choose mechanisms for investment in construction independently.

It is to be reminded that the round table was organized by the Ukrainian Building Community together with the Better Regulation Delivery Office BRDO and the ILC Dentons.