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Lease of Land Shares in Donetsk Oblast as of January 1, 2009


     At the meeting in Donets Oblast State Administration the following information was made public:
  1) in total, there are 176673 contracts for lease of land shares (pai). That number makes 75,4% of all land share certificates issued to peasants. The number of contracts providing for lease reant 3% and more amounts to 9.2% of all contracts concluded [the minimal rent of 3% is provided for by the Decree of President of Ukraine of August 19, 2008; many lawyers think that this Decree is a recommendation only and cannot be enforced - MyLand];
  2) the average size of annual lease rent is UAH 198.25 per ha or 1.8% of normative monetary valuation of agricultural land;
  3) as of January 1, 2009 tenants paid to owners of land shares UAH 195,2 million of lease rent, including:
- monetary (pecuniary) payments UAH 78,9 million (40,4%);
- in kind (agricultural commodities) UAH 107, 3 million (55,0%);
- in kind (works and services) UAH 9,0 million (4,6%).
  *Oblast State Administration expressed its concern about prices of agricultural commodities used for payment of lease rent which it thinks to be too high;
  4) normative monetary valuation of agricultural land was recalculated according to the special index (see here), which recalculation led to the growth of land value used for purposes of calculating lease rent. At the same time average prices of agricultural commodities are lower than in 2008. Taking into account that recalculated lease rent is included into the production cost of agricultural commodities, the Oblast State Administration foresees drop of profitability of agricultural enterprises in the Oblast in 2009;
  5) In pursuance of the Decree of President of Ukraine mentioned above (see point 1) tenants and landowners are making necessary changes into lease contracts. At the same time the law says that any changes made into land lease contracts are subject to state registration (in cadastre). Such registration is a paid service, and it may cost from UAH 36 to UAH 200 and even more per contract (this sum is paid by the tenant). Thus the State Administration concluded that the current law does not support the process of adjustment of concluded land lease contract to the requirements of the said Decree.


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