As of mid-February 2023, more than 350,000 reports of damaged and destroyed property were submitted through Diia. To solve the problems of those whose homes had suffered from hostilities, the parliament, after almost a year of discussions and improvements, introduced a mechanism for compensation for losses. It should come into effect no earlier than May 22. Until then, the government must resolve certain issues of its implementation.

Recently, the Cabinet of Ministers has approved the procedure for providing compensation to restore damaged property. Since May 10 it is possible to receive funds using the eRecovery electronic service in Diia. The government expects that the program will help more than 160,000 households.

Sources for financing compensation will be both funds from the state budget, in particular the Fund for the Liquidation of the Consequences of Armed Aggression, and funds from international donors and creditors.

Who can use the program?

Citizens of Ukraine whose private (country, garden, semi-detached) houses, apartments (residential premises)* were damaged as a result of hostilities and are subject to repair. To do this, one needs to apply for compensation through Diia.

Priority will be given to combatants, war veterans, mobilized persons, family members of the deceased military personnel, persons with disabilities (groups I and II), large families, persons from among orphans and children deprived of parental care, parents-educators of a family-type orphanage, foster parents, foster carers, guardians/caregivers.

* — compensation is provided if the damage to the apartment (residential premises) is not associated with general damage to the house (when common areas are not damaged) or if the apartment has its own entrance from the street (for small apartment buildings). In other cases, the apartment is subject to restoration together with an apartment building.

Property owners who do not have access to the Diia portal or mobile application will currently not be able to receive compensation under the eRecovery program. Moreover, sanctioned persons and those who have a criminal record for committing crimes against the foundations of national security of Ukraine, as well as their heirs, cannot claim compensation.

In addition, the government has imposed restrictions on certain categories of damaged real estate for which compensation can be obtained. It will not be provided for property damaged before February 24, 2022, or if it is located in an area where active hostilities are taking place, or that is temporarily occupied by russia. In addition, compensation will not be provided for property that the owners have already repaired after the damage.

Who will make the decision?

A special commission under a local government body or military administration of the settlement will consider the application and make a decision on granting or refusing to grant compensation.

The term of consideration of the application should not exceed 30 calendar days from the date of its submission (in exceptional circumstances, it may be suspended). During this time, the commission must inspect the damaged property, enter data about it in the Register of Damaged and Destroyed Property and determine the cost of its restoration. The amount of compensation will not exceed UAH 500,000 for one damaged object.

The decision to grant or refuse to grant compensation will be approved by the executive body of the local council or the military administration of the settlement. If the recipient does not agree with the decision on compensation or its amount, they will be able to contest it with the court.

Decisions on granting or refusing compensation will be entered in the Register of Damaged and Destroyed Property. It will automatically form a line for payments, considering the priority right of recipients and available funding. If the state does not have the funds to provide compensation, payments may be suspended.

Use of compensation

Funds will be credited to a special account. Crediting, cash withdrawal, transfer of funds from such an account (except for their intended use) is prohibited.

The use of compensation is also limited. It can be spent only on the purchase of a list of goods specified by the government (construction and sanitary materials, windows, doors, roofs, etc.), as well as on payment for construction work. Such goods and works can be purchased exclusively from those sellers and contractors who will participate in the implementation of the eRecovery program through the Diia portal.

The term of use of compensation funds will be one year from the date of their accrual. After the expiration of this period, the bank will close a special account, and the remaining unused funds will be returned to the state.

TI Ukraine specialists cooperated with the Ministry for Reconstruction during the finalization of the draft procedure for providing compensation to restore damaged property. Some of our suggestions and recommendations have been considered. Among them are:

–       harmonization of the provisions of the procedure with the provisions of Law 2923-IX, in particular in terms of the list of objects for which compensation can be granted;

–       determining the list of grounds for suspension of consideration of the application or refusal to grant compensation;

–       clarification of the list of entities that can provide housing restoration services.

We paid special attention to the mechanism for determining the amount of compensation. The initial version of the procedure provided for several compensation packages, depending on the estimated level of damage to the object. This approach was replaced by the definition of the actual works required to restore a particular object. The amount of compensation will be determined according to the evaluation checklist, which will allow implementing a more objective and individual approach.

Moreover, significant risks arise regarding the objectivity of the work of special commissions. Back at the stage of development of the draft law 7198, TI Ukraine noted that entrusting such functions to the collegial advisory body, which is such a commission, leads to the lack of responsibility of commission members for the objectivity of the decisions taken. For the victim, it remains possible to contest the commission’s decision with the court. But if the amount of compensation, on the contrary, is inflated, it will be almost impossible to influence or bring the members of the commission to justice.

In addition, this procedure is only the first of the tools that should ensure the transparency and objectivity of the compensation mechanism. After all, now, the Ministry is developing a number of other regulatory acts, in particular, regarding the functioning of the Register of Damaged and Destroyed Property and the procedure for the work of the commission. It depends on them how open the information on compensation will be and whether the public will be able to control this process. Currently, the only effective tool for monitoring the work of the commission is to participate in the work of such commissions at the local level. In cooperation with the Ministry for Reconstruction, TI Ukraine is actively working to ensure that the developed regulatory acts provide the necessary level of transparency and confidence in the compensation process.

The material was prepared with the support of the American people through the United States Agency for International Development (USAID) within the framework of the project “Support to Anti-Corruption Champion Institutions in Ukraine” and USAID / UKaid project “Transparency and Accountability in Public Administration and Services / TAPAS.”