Money or Housing Certificate: Compensation for Property Destroyed by War

According to KSE, as of May 2023, the damage to the housing stock of Ukraine from Russian military aggression exceeded USD 54 bln. The lion’s share — USD 46.6 bln — accounts for the destruction and damage to apartment buildings. According to the latest data, a total of 18,600 such houses were affected: 13,200 — damaged, 5,400 — destroyed. More than USD 7 bln of losses are the result of destroyed and damaged private houses. Moreover, as a result of hostilities, 345 dormitories were affected, the direct losses of which are estimated at USD 0.5 bln.

Despite the fact that the war continues, mechanisms for compensation for damaged and destroyed housing have already been developed and are being implemented in Ukraine. We explained how to receive compensation for damaged property within the framework of the eRecovery program in the relevant guide. This time, we will cover the issue of what compensation can be expected if your housing is beyond repair.

Who is entitled to compensation

A citizen of Ukraine who is the owner (co-owner) of the damaged real estate object, or their heir, can receive compensation.

Priority right to compensation shall be granted to:

• combatants, war veterans, mobilized persons;
• large families;
• people with disabilities of groups I and II, with disabilities due to war;

Priority will be taken into account when considering applications for financing the purchase of housing and making payments.

The recipient of compensation cannot be:

• a sanctioned person;
• a person who has a criminal record for committing crimes against the foundations of national security of Ukraine (Articles 109-114^-2 of the Criminal Code);
• heirs of the above-mentioned persons.

Which destroyed objects can be compensated

The following are subject to compensation:

• residential houses of homestead type, cottages;
• summer and garden houses;
• apartments;
• living quarters (e.g., dorm rooms).

The number of destroyed objects for which compensation can be obtained is unlimited.

To receive compensation for the destroyed object, it must be:

• located on the territory of Ukraine, which was not temporarily occupied as of 24.02.2022*;
• located in an area where hostilities are not taking place or which is not temporarily occupied**;
• destroyed after February 24, 2022, as a result of hostilities, terrorist acts, sabotage caused by the armed aggression of russia***;
• unsuitable for restoration by carrying out current or major repairs, reconstruction, restoration, or whose recovery is economically impractical**.

* Territories defined in accordance with the Law

** List of territories in accordance with the order of the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine

*** Compliance with these conditions is established according to the witnessed inspection certificate and/or the report on the technical inspection, which can be carried out both before and during the consideration of the application for compensation

Compensation type

If your housing has been destroyed and is not subject to restoration following the results of the inspection, the type of potential compensation will depend on the type of the housing you have.

The first option is a housing certificate. It can be claimed by the owners of both apartments and private houses. A housing certificate is a document confirming the state’s guarantees to provide financing for the purchase of housing in the amount specified therein.

You can apply for this type of compensation from August 1, so far, only through Diia. But soon, there should be an opportunity to submit an application in paper form.

Owners of private houses will also be entitled to receive monetary compensation for the construction of a new house — as an alternative to a housing certificate. However, this mechanism is not yet available: it is being finalized.

If you may qualify for different types of compensation, you must indicate your preference on your compensation application.

How to apply for compensation

You can apply for compensation in two ways — through Diia in electronic form, or in paper form — through an administrative service center, a notary, or a social protection authority.

In the second case, as a result, the applicant must receive a copy of the registered application, indicating its registration number and digital code. In the future, all notices regarding the procedure for obtaining compensation shall be communicated by the commission or the competent authority to the applicant in the form in which the application was submitted.

By the way, it is not necessary to apply at the place of registration or location of the destroyed object. Any administrative service center, notary, or social security authority will do.

The application is registered automatically in the Register of Damaged and Destroyed Property with the assignment of a registration number.

NB! If you have previously submitted an information notice about the destroyed housing through Diia, you do not need to apply for compensation for it — it will be referred automatically.

The application for each destroyed object shall be submitted separately.

Who can apply

If more than one person owns the housing at the same time, the application can be submitted by all co-owners separately or by one of them — in this case, it will be considered as submitted by all co-owners. If another co-owner has objections to receiving compensation or the chosen method of obtaining it, he or she may submit them in the manner prescribed for filing an application.

The application may be submitted by a representative of the person entitled to receive compensation. To do this, a document certifying their authority should be attached.

Open a special bank account*

*If you qualify for monetary compensation, you should also open an account with a special mode of use for crediting compensation before submitting an application. This can be done in one of the banks of Ukraine, with which the Ministry of Digital Transformation has concluded an appropriate agreement on information interaction. The list of banks that will take part in the program can be found at the link or in Diia.

NB! Information about opening an account, in particular its number, is transmitted by the bank and must be reflected in Diia when submitting the application.

Required documents

The following should be attached to the application:

• a copy of the document confirming the ownership of the destroyed object (if such a right is not registered in the State Register of Property Rights to Immovable Property);
• a copy of the inheritance certificate — if the application is submitted by the heir;
• a copy of the document confirming the priority right to receive compensation (if any);
• documents about the object, in particular, materials of photo and video recording before and after destruction (if any);
• police clearance certificate*.

*Can be ordered in Diia

If any of these documents are lost, the applicant can add them after submitting the application* or ask the commission to assist in obtaining the relevant documents. If the documents/information regarding the destroyed housing are contained in the existing registers, for example regarding the ownership, this should be indicated in the application — the commission will receive these documents/information independently in the future.

*in this case, the additional submission of documents is not subject to restrictions on the deadline for submitting the application

Application deadline

You can apply for compensation during martial law and one year after its abolition in the territory where the destroyed property is located (was located). If the housing was destroyed after the end of the war, but due to circumstances caused by it (mining, demining, etc.), an application for such an object can be submitted within 3 years from the date of abolition of martial law.

The application stage ends with the receipt of a notice of registration of the submitted application and the beginning of its consideration.

NB! By submitting an application for compensation, the person automatically agrees, at the same time as receiving compensation, to assign to the state/territorial community the right to demand compensation from russia for losses due to the destroyed object in the amount of the compensation received. This will not prevent you from obtaining compensation for the remaining damage caused to your property in the future within the framework of the international compensation mechanism or reparations.

Who and how considers the application, makes the decision

A special commission under the local self-government body or the military administration of a settlement considers the application and decides on the provision of compensation. The commission also provides applicants with information and advice on how to obtain compensation. Applications are considered in the order of their receipt in the Register of Damaged and Destroyed Property.

The term of consideration of the application shall not exceed 30 calendar days from the date of its submission. The commission, by its decision, may extend the consideration of the application for 30 calendar days if the destroyed object is located in the temporarily occupied territory or in the area of hostilities.

During the period of consideration of the application, the commission must:

• ensure the inspection of the damaged object (if it was not carried out before the consideration of the application);
• collect documents and/or information necessary to make a decision on the provision of compensation;
• establish the presence/absence of the right and grounds for granting compensation and priority right;
• make a decision to provide/refuse to provide compensation, calculate the amount of compensation.

Suspension of application consideration

The consideration of the application may be suspended if the applicant has not submitted documents for compensation, or has not submitted them in full. The commission shall notify of such a decision no later than the next working day after it was taken, in the form in which the application was submitted (through Diia or on paper).

NB! The commission has the right to demand only those documents, the absence of which became the basis for the decision to suspend the consideration of the application unless otherwise follows from the documents provided additionally.

Within five working days from the date of elimination of the circumstances that became the basis for the suspension, the commission must resume the consideration of the application. The period of consideration of the application shall be extended, considering the time elapsed before its suspension.

How compensation is calculated

The amount of compensation is determined based on:

• type of destroyed object;
• its total area;
• number of rooms
• year of construction;
• indicator of the cost of 1 square meter of housing in Ukraine as a whole;
• region of location.

You can learn more about the formulas for calculating compensation here.

Grounds for refusal

The commission may refuse compensation only if:

• the application was filed by a person who cannot be the recipient of compensation or does not have the authority to submit an application;
• it found inaccurate data in the application;
• the application was submitted after the expiration of the deadline for its submission.

The commission shall notify the applicant of the decision to refuse or provide compensation without delay, but no later than the next working day from the date of taking the relevant decision through Diia or in paper form, depending on how the application was submitted.

NB! The decision to provide/refuse to provide compensation must still be approved by the executive body of the council or the military administration of the settlement within five calendar days from the date of its adoption by the commission.

Compensation is to be granted — what’s next?

In order to receive compensation, it is necessary to terminate the ownership of the destroyed property. To do this, the owner should appeal to the state registrar with an appropriate application; the authenticity of the signature on it shall be certified by a notary. If the destroyed property is jointly owned, the application must be signed by all co-owners.

A document certifying the ownership of the property must be attached to the application unless the ownership of such object is already registered in the State Register of Rights or when such document is lost, damaged, or spoiled.

NB! Persons whose property was destroyed as a result of the armed aggression of russia against Ukraine are exempt from paying the administrative fee during the state registration of termination of ownership.

After that, you can receive compensation in the form of money for the construction of new housing or a housing certificate.

Monetary compensation

Compensation to finance the construction of a house will be transferred to an open account of the recipient, with a special mode of use. The Register of Damaged and Destroyed Property will determine the order of payments automatically, considering the procedure for making decisions on the provision of compensation and the priority right to receive it.

NB! Compensation is paid within the limits of available funding, so, in the absence of funds, accruals may be temporarily suspended, and the recipient shall be notified of it. Information on the availability/lack of funds will be posted on the website of the Ministry for Restoration.

The use of compensation funds is limited. They are provided solely to finance the construction of a new house in order to:

• purchase construction products (according to the exhaustive list) and build a house independently with their help;
• order the performance of the relevant works.

Such goods and works can be purchased only from those sellers and contractors who will participate in the implementation of the program. Their list will be published on the Diia portal.

Depositing, withdrawal of cash, transfer of funds (except for their use for the intended purpose) from such a special account is prohibited. At the same time, the funds on it cannot be foreclosed and seized.

The deadline for the use of compensation funds is 3 years from the date of their accrual. After its expiration, the bank will close the recipient’s special account, and the balance of unused funds will be returned to the state.

Housing certificate

A housing certificate is a document confirming the state’s guarantees to provide financing for the purchase of housing in the amount specified therein.

If the commission has decided to compensate through a housing certificate, it must send it to the recipient through Diia, by e-mail, or in paper form by mail, if the application was submitted in that way.

NB! A hard copy of the housing certificate can also be obtained from an administrative service center, a social protection authority, or a notary.

What you need to check in the certificate

Once you have received your housing certificate, it is important to ensure it contains all the necessary information about:

• the recipient of compensation;
• the presence/absence of a priority right to receive compensation;
• the amount of compensation (it must match the amount specified in the decision of the commission);
• the registration number of the housing certificate in the Register of Damaged and Destroyed Property;
• the decision of the commission and the executive body of the local self-government body/military administration, on the basis of which it was issued;
• the destroyed object of immovable property, for which compensation is provided;
• a generated QR code for fast recognition by scanning devices.

How to use the certificate: choosing housing

The housing certificate may only be used by the owner or their heir for a period of 5 years from the date of issue. It cannot be sold or donated to third parties.

With the certificate, you can buy an apartment or a house in both the primary and secondary markets. You can also invest in housing that will be built in the future.

NB! Funds can also be used to purchase a land plot on which a private house that you want to buy is located.

With the certificate, you can purchase housing in any locality of the country, except for the temporarily occupied territory or territorial communities located in the area of military (combat) operations. It is not allowed to purchase housing from a construction customer in respect of which a bankruptcy case has been initiated, which is in the process of dissolution, or has no right to perform construction works at the relevant object.

NB! One or more housing certificates belonging to one or more owners can be used to purchase housing.

How to use the certificate: apply for funding

When the recipient of compensation has chosen housing, they must submit an application for financing the purchase of housing through a notary, administrative service center, social protection authorities, or Diia to JSC Ukrposhta, which is the contractor of the compensation program.

If the cost of the housing chosen for purchase is lower than the amount of money indicated in the housing certificate, information on the difference will be entered in the Register of Damaged and Destroyed Property. This amount will be paid later at the expense of funds received from russia as compensation for losses caused by the aggression against Ukraine.

If the cost of the housing exceeds the amount specified in the certificate, the recipient must pay the difference themselves. The taxes and mandatory payments established by law are to be paid independently, for example, for notarial deeds, administrative fee for state registration of property rights, etc.

The application for financing shall indicate:

• information about the housing chosen for purchase (address, area, number of rooms);
• the price of such housing previously agreed upon with the owner/customer of the construction;
• information about the housing certificate (number and date, amount of compensation);
• information regarding the means of communication with the compensation recipient (phone number, postal address, e-mail address).

Applications for financing the purchase of housing are considered in the order of their receipt, taking into account the priority right to receive compensation. The term for consideration of the application is no more than 10 working days. Compensation is carried out within the limits of available funding, so, in the absence of funds, the period for considering applications for financing the purchase of housing is automatically stopped and resumed after the program provider receives the funds.

Funding agreed — what’s next?

Confirmation of financing the purchase of housing using a housing certificate is valid for 30 calendar days from the date of the relevant decision. During this time, you need to conclude and notarize an agreement on the purchase of housing using a housing certificate. If this is not done within the deadline, the application for funding will be considered withdrawn.

NB! Simultaneously with the certification of the agreement on the purchase of housing, the notary imposes a prohibition on the alienation of the acquired property for a period of five years.

Along with the certification of the agreement, the notary shall enter the details of the signed agreement, the bank details of the seller(s) for payment, the cost of housing under the agreement, the amount for payment under the housing certificate, the full name of the seller of the property object in the Register of Damaged and Destroyed Property. The program provider transfers funds to the seller’s account within 5 working days from the date of entering the data on the agreement into the Register.

From the date of crediting funds to the seller’s account, the housing certificate is considered used; the corresponding information is entered in the Register of Damaged and Destroyed Property.

This publication was made possible by the support of the American people through the United States Agency for International Development (USAID) within the SACCI Project. The content of this publication is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of USAID or the United States Government.