Construction in Ukraine: why transparency is needed, according to the NACP

The National Agency for Corruption Prevention (NAZK) is preparing a new Anti-Corruption Strategy and State Program for its implementation for 2026-2030. Discussions on specific sections of the Strategy are still ongoing. At one point, there was a discussion of the section on construction. So, what aspects of the construction sector are being taken into account by the National Agency?

Top 11 problems in the construction industry according to the NACP

The NACP initially identified more than ten key problems in the construction industry that pose potential corruption risks and need to be addressed. At the same time, according to the Ukrainian Association of Developers, not all of them are equally urgent. 

That is why it is important to highlight the issues that market experts consider to be the most pressing, as they create the greatest scope for abuse and significantly increase the risk of corruption.

Here is the list proposed by the NACP:

• Problem No. 1. Outdated, non-public urban planning documentation and a complex procedure for its development, which creates opportunities to build in violation of the law;
• Problem No. 2. Procedure for obtaining initial data for design;
• Problem No. 3. Imperfections in the regulatory framework governing the procedure for issuing land development permits; 
• Problem No. 4. Imperfect regulation of project documentation, resulting in damage to safety, comfort, and the environment;
• Problem No. 5. Imperfect procedure for obtaining permits for preparatory and construction work;
• Problem No. 6. Ineffective regulation of the commissioning of facilities and their connection to networks; 
• Problem No. 7. Control and supervision system in construction; 
• Problem No. 8. Excessive regulation of address assignment and weak accountability of authorized officials;
• Problem No. 9. Shortcomings of technical inventory;
• Problem No. 10. Shortcomings in technical regulation and pricing;
• Problem No. 11. Conflicts in the legal regulation of property rights of authors of urban planning and design documentation.

According to experts from the Ukrainian Association of Developers, issues 1 and 2 are of utmost importance for the market. 

Some points of the strategy, such as simplifying the address assignment system (No. 8), improving technical inventory (No. 9), and regulating the property rights of authors of urban planning and project documentation (No. 11), are not relevant enough to be included in the Strategy for the coming years. Fortunately, in the updated document dated August 1, these issues have been removed from the agenda.

Unnamed problems in the industry

The list proposed by the NACP is not exhaustive. In addition to the factors already mentioned, and in some cases to a much greater extent, developers face other problems that have a particularly acute impact on their activities and directly shape the cost of construction, and thus the final cost of housing for citizens:

• inconsistency of government actions. Often, government decisions are revoked after work has already begun. The result is that the project is halted, the investor's expenses are not compensated, and housing becomes more expensive for people;
• lack of accountability among officials. There is no practice of punishing officials for illegal actions or inaction;
• low quality of regulatory acts. For example, there are still disputes regarding share participation, which was formally abolished in 2020;
• pressure on businesses by law enforcement agencies and political dependence of decisions. The 2024 audit showed that pre-trial investigations take at least four years, and in more than 50% of cases, the articles under which criminal proceedings are initiated relate to crimes committed by officials. However, arrests, searches, and interrogations are applied specifically to businesses;
• blocking VAT and tax invoices. As a rule, this is completely unfounded, as more than 90% of cases are overturned by the courts;
• difficulties with land registration. The procedure is overly bureaucratic and depends on many authorities, which delays construction and increases prices. Currently, the registration of land plots is governed by the provisions of about 30 regulatory acts of Ukraine. This cycle involves collecting a large number of documents (up to 57 documents in certain cases) and going through numerous procedures (up to 15 procedures)!

In practice, all these problems mean that construction slows down, the cost of work increases, and people get fewer affordable apartments.

Developers are now in close communication with the National Agency for Corruption Prevention (NAZK) and other government agencies in order to combine their efforts and expertise. Their joint actions have one goal: to ensure that construction is transparent and housing is affordable for people.

‍