Since August 2023, the second component of the state program eRecovery has been launched—compensation for housing destroyed due to the war. 8,400 Ukrainians applied for financial assistance. Almost a quarter of them have already received their housing certificates to purchase a new home. Transparency International Ukraine described in detail the features of such compensations in a guide.
But the specialized law, in addition to certificates, which are mostly applied for by the owners of destroyed apartments, provides for the opportunity to receive funds to completely rebuild or build a new private house.
Of all the forms of compensation under the eRecovery program, only this one had remained unresolved. And finally, the government set out to fix it in mid-January. In addition, the Cabinet of Ministers updated the existing procedures for providing assistance for damaged and destroyed housing. Let’s find out what has changed, and what potential recipients of compensation should know.
The rules for calculating compensation for destroyed housing have been updated
According to the government, as of mid-January, the amount of compensation under more than 2,000 generated housing certificates was UAH 3.7 bln, which already exceeded the amount under payments (3.2 billion) for 35,000 applications for damaged property.
Given the significant amounts that the state would potentially have to pay citizens for destroyed housing, the government changed the approach to calculation and limited the compensated area of such objects to 150 square meters for private houses (estates, cottages).
Notably, the idea to limit the amount of compensation depending on the area of destroyed or new housing was previously laid down in the first version of the specialized law. However, when considered in the second reading, this provision was removed.
Consequently, the recipient will be able to receive reimbursement for the area for which no compensation has been accrued only at the expense of reparations or other sources.
Moreover, the indicator of the indirect cost of housing construction by regions will be considered as of the date of the calculation of compensation, not its payment.
Features of crediting and payment of compensation for construction
For the owners of destroyed private houses, garden or country houses, the government clarified the procedure for calculating and using compensation to finance construction.
The assistance will be accrued considering the current requirements for calculating compensation but will be paid in parts.
The first payment (50% of the compensation amount) will be paid after:
– the approval of the Commission’s decision on the provision of compensation;
– the registration of a notice of the commencement of construction works*;
– the termination of ownership of the destroyed object.
*To submit a notice, the recipient must have the right of ownership or use of the land plot on which the house will be built.
The balance of the amount will be paid after the recipient submits a notice of the intermediate stage of construction and the commission draws up a document based on the results of the intermediate inspection with a positive conclusion.
The recipient must use the first payment to purchase construction products and/or pay for construction works no later than 18 months from the date of crediting the compensation. After using at least 90 percent of this amount, the person must inform the commission about the possibility of conducting an interim inspection. This can be done through Diia, an administrative service center, the social protection authority, or the notary.
The recipient will have another 18 months to use the remaining balance. During this time, the recipient must notify the commission of the completed construction, and the latter must conduct the final inspection of the intended use of the compensation funds.
The procedure for termination of ownership has been simplified
To receive compensation for destroyed property, information about its ownership must be contained in the State Register of Real Property Rights. If such information is not available, the person must submit a document confirming this ownership.
The law requires terminating the ownership of the destroyed object to receive compensation, but it is not clearly defined at what stage this should happen. In addition, only data from the Unified State Electronic System in the Field of Construction could confirm the fact of property destruction, which significantly complicated the procedure for termination of ownership.
The government settled this issue and established that the termination of ownership shall take place after the approval of the commission’s decision to provide compensation and before the notarization of the contract for the purchase of new housing (in the case of obtaining a housing certificate) or before the payment of compensation (in the case of receiving funds for construction).
In addition, confirming the destruction of property will be possible with:
– an extract from the Register of Damaged and Destroyed Property, containing information on the inspection of the object with a conclusion about its unsuitability for use for its intended purpose;
– a report of commission or remote inspection with a final conclusion that the object is destroyed.
Appeals against decisions, actions, or omissions of the Commission regarding destroyed property
The procedure for providing compensation for destroyed real estate did not contain an algorithm for appealing against the decisions, actions, or omissions of the Commission for a long time, in particular regarding the amount of compensation or the data in the commission inspection report.
However, after the beginning of the relevant stage of the eRecovery program, there was a need to provide an out-of-court mechanism to protect the rights of compensation recipients. To do this, the government actually copied the appeal procedure, which is provided for by the procedure for providing compensation to restore damaged property.
According to it, if the applicant disagrees with the data of the commission inspection report, they will be able to submit an objection to the Commission within five working days from the date of the inspection or after submitting the application. If the applicant disagrees with the amount of compensation or other decisions, actions, or omissions of the commission, they will have the right to submit an objection or complaint to the executive body of the local council or the military administration of the settlement within five working days from the date of the decision, the date of such actions, or the deadline for such actions.
At the request of the applicant, the period for filing objections or complaints may be extended by five working days.
But such an appeal algorithm entails a number of risks.
Firstly, the terms for appealing the Commission’s decision shall begin from the date of the Commission’s decision. However, the Commission may fail to inform the applicant of its decision in a timely manner. This may result in the applicant missing the deadline for an appeal.
The Procedure does not oblige the Commission to send the full text of this decision together with the notice of the decision and does not determine how detailed the reasons for refusal should be set out in such a notice. Therefore, 5 days for appeal may expire before the applicant receives the full text of the decision and learns the reason for the refusal.
We have already noted these risks in the procedure for obtaining compensation for damaged property and appealed to the Ministry of Community Development, Territories and Infrastructure with recommendations on how to correct them. Unfortunately, the relevant changes were never introduced.
Other innovations
Other important changes include:
– the list of grounds for refusal to provide compensation for damaged property is supplemented with non-compliance with the conditions for its provision;
– the list of construction products that can be purchased by the recipient at the expense of compensation is supplemented with waterproofing products and products for heating/water heating;
– the form of the inspection report was updated, which will include a conclusion on the further payment of the balance of compensation or the intended use of compensation;
– the possibility of paying for the valuation of real estate, notarial certificates, administrative fees, other mandatory taxes, fees, and payments at the expense of the compensation provided has been limited;
– banks will be able to issue plastic payment cards to receive compensation.
The publication was prepared with the support of USAID / UK aid project Transparency and Accountability in Public Administration and Services/ TAPAS
