Housing Recovery in Ukraine: Reform and Investment Strategies

Article is published in the The Legal Industry Reviews: Ukraine

Author: Kateryna Oliinyk, Manager, Tax&Law practice, EY Ukraine

Russia’s full-scale invasion has caused an unprecedented housing crisis in Ukraine. According to the Housing Institute of Ukraine, over 236,000 buildings have been destroyed or damaged: 209,000 private houses, 27,000 apartment buildings, and around 600 dormitories. This represents about 9% of the country’s total housing stock, or 6.5% when adjusted for damage severity. Existing resources cover less than 10% of actual needs. Internally displaced persons and those who lost homes remain especially vulnerable.

This crisis is compounded by long-standing systemic issues. The mass historical privatization effectively dismantled Ukraine’s municipal housing stock, and the state has never established a functional institutional system for developing social or temporary housing.

Several structural challenges further complicate the reconstruction landscape:

• The state budget is severely limited in its ability to finance large-scale housing programs
• Donor and international assistance, while crucial, remains insufficient and unpredictable.
• Although private investment brings speed and innovation, profit-driven models often result in housing that is unaffordable for the majority of Ukrainians
• Municipalities, which are expected to play a leading role in reconstruction, frequently lack the technical, financial, and administrative capacity to do so effectively.

In this context, leveraging public-private partnership (PPP) instruments for housing development emerges as a strategically sound and pragmatic solution. Such a model enables the effective combination of public assets, particularly land plots and institutional support from local authorities, with private capital, ensuring both scale and implementation efficiency. Given fiscal constraints and limited donor resources, PPPs offer a viable framework for implementing large-scale housing initiatives in partnership with experienced private developers.

Ukraine has already demonstrated success in applying PPP mechanisms, in the form of port concessions. While PPPs have not previously been used in the housing sector, this is changing as legal frameworks evolve to accommodate such initiatives.

Draft Law No. 7508, which the Verkhovna Rada of Ukraine adopted in the second reading on 19 June 2025, proposes to modernize the legal foundations for PPPs in residential construction. The draft introduces simplified procedures for initiating and executing PPP housing projects, a standardized cost estimation methodology based on technical and economic documentation, and the use of electronic procurement systems for transparent project selection. It also includes specific provisions on the transfer of title to constructed units, helping to balance community interests with those of private investors.

In practice, such projects might function as follows: a municipality provides land, facilitates permitting, and ensures alignment with urban planning documentation. A reputable private developer constructs the housing, transferring a portion of units to the community for social use, while selling others under affordable mortgage programs (e.g., “єОселя”) or at market rates. Commercial spaces (e.g., stores, offices) may remain with the investor. This model aligns public benefit with private interest.

To scale such approaches effectively, Ukraine needs a clear national strategy: identifying priority regions, quantifying actual housing needs, and defining the roles of the state, local governments, and the private sector.