On February 1, 2020, the new Law on Lease of State-Owned and Municipal Property (the “Law”) came into force. The Law substitutes the old one that has been in use since 1992 and launches a fundamentally new mechanism for the lease of state/municipal property which aim to:
- simplify the leasing procedure
- minimize the potential corruption risks
In particular, the Law introduces the following basic novelties in the leasing procedure:
- The list of all premises which potentially may be leased, as well as information about the already leased property, relevant prices, main terms and conditions of lease agreements, are now public and will also be available online on the “Prozorro” online platform.
- The Law establishes 2 different procedures for the lease execution:
The general (main) procedure: all premises must be leased based on an auction, except for the premises that are directly covered by the out-of-tender procedure
Out-of tender procedure: lease of premises by state/municipal authorities and entities, educational and scientific institutions, diplomatic offices, museums, religious organizations (and other similar entities) may be done without an auction; sub-lease of such premises is prohibited
- All auctions, as well as all communications and document circulation during tender or out-of tender procedures (i.e. applications, resolutions, etc.), will be conducted online through the “Prozorro” online platform;
- Subject to certain exceptions (i.e. out-of tender procedure, etc.), the lease extension will also be made through an auction;
- The starting rental price for an auction in most cases will be calculated based on a balance value (as opposed to an independent evaluation);
- Due to the simplification of the leasing procedure, the total time for the lease execution is expected to reduce by half.
By Gennadii Roschepii, Counsel, and Oleksiy Feliv, Managing Partner, Integrites