Trends in the Legal Regulation of the Urban Development Market

Despite the war and the difficult economic and security situation, Ukraine’s urban development market is not only operating steadily but is also developing and attracting considerable investment.

According to information published in July of this year by the Ministry for Development of Communities and Territories of Ukraine, the sector has entered a phase of sustained growth. In 2025, the volume of construction work in Ukraine exceeded UAH 258 billion. This was 17% more than in 2024, more than in the record year of 2021, and the highest figure since 2015.

At the same time, the regulatory framework governing the urban development market is being improved with a view to establishing a clear, transparent and predictable system of legal relations in this sector.

In view of this, it was extremely important for JN Legal, as a law firm with substantial experience in this practice area and a deep analytical understanding of the market’s problems, to test in practice and through its own cases the effectiveness of reform measures recently implemented by the state, primarily those aimed at mitigating the corruption risks inherent in this sector.

The conclusion appears obvious: the directions and steps for further reform have been chosen correctly, and their successful implementation will contribute to the introduction of civilised rules of the game in the market and the modernisation of the substance of the state’s regulatory function in the field of urban development.

At this point, attention must once again be drawn to the issue of urban planning conditions and restrictions on land development.

The persistence of corruption risks in this seemingly straightforward administrative procedure for obtaining a document that is not a permit but merely informational in nature, essentially regarding the existing restrictions on the development of the relevant land plot, is frankly striking. At the same time, without obtaining this document, the implementation of the vast majority of development projects grinds to a halt.

In the context of addressing this problem, the Ministry for Development of Communities and Territories of Ukraine recently announced the continued expansion, as part of the development of digital services in urban planning, of interoperability between the State-level Urban Planning Cadastre and the Unified State Electronic System in the Construction Sector.

This relates to the introduction, from July 2026, of a new mechanism for using Urban Planning Cadastre data when preparing urban planning conditions and restrictions. There are expectations that this will mitigate the risk of decisions on the issuance of urban planning conditions and restrictions being made on the basis of invalid or unavailable information, as such decisions will be made exclusively on the basis of current urban planning documentation entered in the State-level Urban Planning Cadastre.

Accordingly, for market participants, this will be an important factor affecting both the substance of urban planning conditions and restrictions and the time required to obtain them, as well as their ability to protect their interests within the legal framework in the event of an unjustified refusal to issue urban planning conditions and restrictions or the groundless inclusion of particular restrictions in them.

An equally important step towards mitigating corruption risks was the adoption by the Cabinet of Ministers of Ukraine of Resolution No. 528 of 24 April, 2026, which launched an experimental project concerning specific aspects of the provision of administrative services. The project provides construction clients with the right to choose the location where to obtain administrative services in the construction sector in respect of facilities classified, according to their consequence (liability) class, as facilities with minor (CC1) or medium (CC2) consequences.

In particular, it provides that, in order to obtain such administrative services, a construction client may, at its discretion, apply either to the local state architectural and construction control authority, where such an authority has been established, or directly to the State Inspectorate of Architecture and Urban Planning of Ukraine.

For lawyers practising in the field of urban development, the reasons for the Government decision are clear, while the fact that this regulatory act was challenged at an administrative court almost immediately by the Department for State Architectural and Construction Control of Kyiv City of the Executive Body of Kyiv City Council (Kyiv City State Administration) is particularly indicative in this regard.

When discussing recent measures aimed at improving the state’s regulatory function in the field of urban development, attention should also be paid to the updated procedure for establishing and applying sanitary protection zones.

In particular, Order No. 40 of the Ministry of Health of Ukraine of 13 January, 2026 amended the State Sanitary Rules for the Planning and Development of Settlements (DSP No. 173-96).

One of the innovations is that the list of facilities now treated as residential development has been clearly defined. Most importantly, the mechanism for establishing, changing and reviewing the size of sanitary protection zones for different types of enterprises and facilities has been improved and regulated. Consequently, subject to appropriate and proper scientific substantiation, opportunities are opening up to adapt the boundaries of sanitary protection zones established 20–30 years ago to actual urban development and production conditions.

As a result, despite the seemingly narrow scope of this issue, the changes introduced will significantly affect the range of risks faced by businesses, as well as plans and opportunities for territorial development and the implementation of development or investment projects.

With regard to judicial practice and the practice of applying the law in the field of urban development, analysis of the cases handled by the firm over the past year indicates a noticeable quantitative shift towards an increase in disputes regarding the protection of property rights and investments. Most of these disputes relate, to varying degrees, to the application of Law of Ukraine No. 4292-IX On Amendments to the Civil Code of Ukraine to Strengthen the Protection of the Rights of a Bona Fide Acquirer, which came into force on 9 April, 2025.

Moreover, such disputes are increasingly being initiated following investigations conducted within the relevant criminal proceedings.

The protection of the rights of a bona fide acquirer (purchaser) is an important element in ensuring legal certainty and the stability of the civil law circulation of property, particularly land plots and other immovable property, which constitute the material basis of any development project or serve as investment assets during implementation of it.

At present, the application of law has, in this category of cases, reached the stage at which current Supreme Court of Ukraine case law is being formed. One of the principal points of emphasis in that case law is the mandatory assessment of the balance between interference with property rights and the public interest, in compliance with the principle of proportionality and taking into account the standards of the Convention for the Protection of Human Rights and Fundamental Freedoms.

At the same time our firm has, in its practice, also encountered the particular issues involved in protecting the rights of a bona fide acquirer in cases involving claims to have transactions on immovable property to be declared invalid on the grounds that they were entered into through  defrauding of creditors.

According to settled case law, declaring a transaction entered into through defrauding of creditors to be invalid does not constitute an unconditional basis for recovering the property transferred under that transaction from the possession of the ultimate acquirer (purchaser). A necessary prerequisite for such recovery is establishing that this particular acquirer acted in bad faith (judgment of the Supreme Court of 22 May, 2024 in Case No. 924/408/21).

The conclusions set out in the judgment of the Grand Chamber of the Supreme Court of 4 February, 2026 in Case No. 910/6654/24 are also extremely important for this category of cases. This judgment contains a number of important legal conclusions regarding the grounds for challenging, and the standards of proof applicable to, transactions entered into in the defrauding of creditors outside bankruptcy or insolvency proceedings involving the debtor.

Adherence by the courts to the recommendations and directions set out by the Supreme Court will contribute to greater legal certainty, which is still lacking in cases of this type, while also ensuring appropriate legal safeguards and predictability in the practice of applying the law and in judicial practice.

Thus, the contemporary development of urban planning legislation is characterised by the simultaneous reform of administrative procedures, with the increasing introduction of digital tools, and the active formation of new case law regarding the standards applicable to the protection of property rights, investments and good-faith civil law transactions.

Accordingly, these factors increasingly determine the limits of acceptable risk when implementing investment projects in such a highly-competitive environment as the urban development market. For developers today, taking these factors into account is becoming just as important or significant as having a land bank or financing.