Goodbye, privatization. What the new housing code means for business and housing investors

The real estate market will soon begin to operate under new rules. Bill No. 12377 "On the Basic Principles of Housing Policy," which was adopted in January 2026, will send the old Soviet Housing Code to the dustbin of history. The new document, informally called the "New Housing Code," is intended to make housing more accessible. It is currently awaiting the president's signature.

However, this is not just a social document. If signed, the bill could "improve the lives" of housing investors and construction companies, as well as create a new type of business. Details in Lesya Solovchuk's article.

Housing reform: what's changing

In January 2026, the Verkhovna Rada in the second reading and in general adopted Draft Law No. 12377 "On the Basic Principles of Housing Policy". The document fundamentally changes the principles of state housing policy.

In particular, the requirements for housing quality and mechanisms for supporting construction, apartment purchases, and rentals are being increased. There were many reasons for the reform even before the war. The housing crisis of recent years, with millions of internally displaced persons who have nowhere to live and no money to buy an apartment, has brought the situation to a head.

Draft Law No. 12377 initiates housing reform, but its implementation requires the adoption of a number of other laws and by-laws. However, the defined framework provides a general idea of the changes.

"The advantages of the draft law are transparent rules of the game, the potential for public-private partnerships, more channels for housing sales, and a signal for investors and banks," says Oleksiy Koval, project manager at Perfect Group. The main disadvantage, in his opinion, is that the document is still a framework.

So, what innovations are expected?

New categories of housing in legislation

The main innovation in the draft law is the creation of a social housing fund. Communities will be able to buy existing apartments and build new housing, he emphasizes in an interview. LIGA.net the initiator of the draft law, People's Deputy of Ukraine Olena Shuliak.

Such apartments can be rented by vulnerable Ukrainians, for example, internally displaced persons, for a low fee – up to 30% of the family's income.

Social and affordable housing will be built and managed by operating companies. It is important that social housing operators will have the status of a non-profit organization and will not be able to withdraw funds from the system. "All rental income will be spent only on servicing apartments or on expanding the social housing stock," Shulyak emphasizes.

An important innovation is that private owners will also be able to provide apartments for social rent. The state will compensate them for the difference between the market and social prices.

LIGA.net I previously wrote about a similar case of a private company creating social housing. The turbine manufacturer Friendly Wind Technology from Kramatorsk built a residential quarter for its workers in Perechyn, Zakarpattia.

The end of apartment privatization

The most discussed innovation is that the new housing code abolishes the free privatization of apartments, houses, or rooms.

"This is a different mode of use, where housing belonging to the territorial communities' fund is not subject to privatization, alienation, sale, or any other form of disposal," emphasizes Oleksiy Hnatenko, a partner in the dispute resolution practice at the Juscutum law firm.

He cites the advantage of this approach as the preservation of state and municipal housing as a resource for social support. And housing policy is shifting from the gratuitous transfer of housing into private ownership to renting. "This is also in line with general international logic," says Hnatenko.

However, the new regulations do not affect owners of already privatized housing. "The draft law does not affect private property as such; the restrictions apply only to social housing, which includes the state housing stock and the housing stock of territorial communities," explains Hnatenko.

Alina Moskalenko, director of the NGO Housing Institute, also considers the cancellation of the privatization that has been going on since 1992 to be logical. More than 99% of citizens have exercised their right to ownership.

Free housing provided by the state will remain an exception, but only for a few categories. These include military personnel and their families, representatives of the National Police and the State Emergency Service, and orphans. Other citizens will be offered mechanisms such as social rent and state mortgages. eHome, other preferential housing programs.

"The state will no longer provide free housing to everyone (this was privatization), but instead should ensure affordable mortgages. Or, if you cannot afford to buy a home, you can opt for affordable social housing, where prices are lower than market rates," the MP explains.

Who will pay for the reform?

The construction of social housing should be financed from the budget, as well as with the help of international donors. Olena Shuliak names the European Investment Bank as the current key partner in construction, which has already selected a dozen communities and plans to invest 400 million euros in the project.

The focus on cooperation with international organizations will stimulate the state to bring order to the construction market, believes Yevhen Favorov, head of the Ukrainian Association of Developers.

The main problems in the industry are confusing permit issuance rules, the ability of local authorities to seize land plots legally obtained by developers, and the lack of regulation in land allocation.

The law also introduces financial and credit mechanisms to provide housing and support construction. These include preferential long-term loans, financial leasing, and lease-to-own agreements.

The transition to housing support through financial mechanisms is truly new in housing policy, according to Oleksiy Koval, project manager at Perfect Group. "The state does not promise free housing to the majority; instead, it launches financial instruments to stimulate demand and expand the market," he says.

New models of cooperation for business

The draft law does not establish new rules for the sale of apartments, investment in the primary market, or development procedures.

However, for investors, developers, and builders, it is important that the document contains references to special regulations. In particular, to the Law on Guaranteeing Property Rights to Real Estate Objects to be Constructed in the Future (the document was adopted in 2023). This is important for those who invest in buildings that are not yet completed.

In addition, the housing reform opens up opportunities for businesses to become operators of affordable housing, explains MP Shulyak. Such operators will be provided with land plots for housing construction on preferential terms. "Companies will be entitled to preferential long-term loans, grants, and compensation," the MP adds.

For businesses, the new housing code, if signed by the president, opens up new operating models – social rentals and public-private partnership tools, notes Yevhen Favorov, head of the Ukrainian Association of Developers.

"And the state's focus on creating opportunities for people to realize their right to housing will create new opportunities for developers," Favorov believes.

The most obvious example is that communities will be able to involve developers in social housing projects.