Compensation for housing destroyed by war: legislative mechanisms of compensation and responsibilities of local governments

Ukrainians have filed more than 350,000 applications for property destruction since the start of Russia’s full-scale invasion. This is more than 23.5 million square meters of damaged and destroyed housing. These figures are not yet finalized. For people whose homes have been damaged, the government has developed a mechanism to compensate them for the reconstruction costs – the Parliament of Ukraine has already passed the relevant draft law. What compensation mechanisms are envisaged? What is the difference in the procedure for compensation for destroyed and damaged property? What responsibilities does the draft law impose on local governments? And when will these mechanisms start working?

Representatives of the Ministry of Communities, Territories and Infrastructure Development of Ukraine, international projects, local governments, and experts discussed these issues during the “Legislative Mechanisms of Compensation for Damage and Destruction of Real Estate because of the Military Aggression of the Russian Federation” round table. The event was organized by the USAID Governance and Local Accountability (HOVERLA) Activity in cooperation with the Ministry of Communities, Territories, and Infrastructure Development of Ukraine.
Marat Kyurchevsky, USAID/Ukraine Project Management Specialist noted that the implementation of legislative mechanisms, which are possible only through cooperation between the central and local authorities, will help in the restoration of destroyed communities.

“The devastating impact of the war on Ukrainian civilians cannot be overstated. The destruction of homes and infrastructure has hindered the ability of communities to rebuild and move forward. The first steps to retrieve peoples’ lives through the restoration of their homes have already been taken. At USAID, we recognize the critical role that reconstruction and development play in restoring stability and promoting economic growth of the country. We are committed to working in partnership with the government and communities to ensure that those affected by the conflict receive the assistance they need to rebuild their lives. The legislative mechanisms for compensating real estate damage caused by Russian military aggression are a critical component of this reconstruction.”

Nataliya Hnydiuk, Deputy Chief of Party of the USAID HOVERLA Activity:

“The USAID HOVERLA Activity team will continue to support partner regions and municipalities in responding to emergencies, providing additional civil protection, and working with local governments to restore municipalities. We are very interested in the discussion that is being launched under the patronage of the Ministry and is aimed at bringing up legislative changes to compensation for destroyed and damaged property. Local governments will bear the  significant share of responsibility, as citizens will turn to them for support, clarification, and assistance in solving problems. The USAID HOVERLA Activity will be a partner of the Ministry to ensure that local governments become as effective as possible in the reconstruction process and ensure the exercise of their authority to compensate for destroyed or damaged property.”

The Parliament of Ukraine has adopted draft law No. 7198, which regulates the mechanisms of compensation for property destroyed because of the war. The mechanism covers owners of apartments and private households, who will be able to receive the housing certificates for the housing in any region in Ukraine. Owners of the damaged property can apply for funds for targeted reconstruction needs.

Olena Shuliak, Head of the Parliamentary Committee on the Organization of State Power, Local Government, Regional Development, and Urban Planning, noted that after the President signs the draft law, the the Government will have two months to develop the relevant resolutions. According to Olena Shuliak, this time should also be rationally used to fill in the register of damaged and destroyed property so that it contains up-to-date information. The Ministry is already receiving requests for compensation, but the mechanism will not be able to start working until May.

“As of today, about 350 thousand applications have been submitted through Diia application. This is more than 23.5 million square meters of damaged and destroyed housing. We understand that these are not the final figures – they will increase. Reports through Diia were the only way to submit information, and draft law #7198 allows notaries and administrative service sentres to be involved in collecting and recording information. The draft law also provides for the creation of a commission that will verify information on compensation for destroyed real estate, as well as provide maximum service support to citizens. These 350,000 reports will become applications for compensation and will be the first to be verified. We already have the first money that can be used to make the compensation mechanism work. We hope that once the efficient and transparent mechanism is in place, our international partners will join in and help people,” says Olena Shuliak, Head of the Parliamentary Committee on the Organization of State Power, Local Government, Regional Development, and Urban Planning. 

Local authorities will play a key role in the quality implementation of the draft law, as the tools will work on the ground. Oleksandra Azarkhina, Deputy Minister of Community Development, Territories, and Infrastructure of Ukraine, emphasized this.

“In most countries, when it comes to such significant destruction, they rarely rely on local authorities. In our case, it is the opposite. We understand that due to the decentralization reform, proper institutions have already been formed. Our task is to support them. It would be much harder if decisions were made at the central level. After all, it is impossible to assess the actual extent of the destruction at the central level. Only local authorities can truly be empowered to examine and record all assessments. Therefore, we want to ensure the effective interaction with municipalities. In particular, we want to work with our international partners to develop tools for proper communication, services, and expertise. We are negotiating to strengthen the institutional capacity of the municipalities that will form the relevant commissions on the ground. And while we are negotiating, the Ministry will also offer relevant online training.”

The key rule for all compensation is to include the object in the register of damaged and destroyed property. 

According to Nataliia Kozlovska, Deputy Minister of Communities, Territories and Infrastructure Development of Ukraine, the first mechanism to be launched is the compensation mechanism for minor damage to residential properties that can be repaired by refurbushment. Local governments will be responsible for inspecting the property and filling out a checklist with the average amount of compensation. The information received should be entered into a register, which will be used to form a priority for reimbursement.

“People will be able to spend the compensation they receive under two Merchant Category Codes: to purchase construction materials or to pay for construction and installation work. It will not be possible to purchase any other services or materials with these funds,” noted Nataliia Kozlovska. “Compensation for the destroyed property will also be paid after the report of the relevant commission of the local government body, which will decide whether it is possible to restore the object. The reimbursement will be made according to the formula and will be calculated by generating a certificate., The person will be able to purchase any residential property in the countryfor the amount specified in the certificate . Simultaneously with the conclusion of the sale and purchase agreement for this property, the owner automatically waives the country’s application of reparations for this amount of money that was assigned to him.”

“Our key goal is to open up as much data on the reconstruction as possible to the public and donors. We want everyone to be able to access information about the destruction, the recovery process, and its results online. At the same time, we realize that the enemy can use some data for its purposes. That is why we are going to disclose data only on social infrastructure facilities. These are schools, kindergartens, and residential facilities,” said Anatolii Komirnyi, Deputy Minister of Community Development, Territorial and Infrastructure Development of Ukraine for Digital Development, Digital Transformation, and Digitalization.

To learn more about the mechanisms of compensation for damage and destruction of real estate because of the military aggression of the Russian Federation, please watch the full recording of the coordination meeting.

This event is organized by Ukraine Crisis Media Center within the project “Communication support to Ukraine’s territorial communities for better coordination and outreach” that is made possible by the United States Agency for International Development (USAID) and the generous support of the American people through USAID HOVERLA Activity. The contents of this event do not necessarily reflect the views of USAID or the United States Government.