European Investment Bank Allocates €400 Million for Social Housing in Ukraine: Where the First Apartments Will Be

Kropyvnytskyi, Kremenchuk, Lviv, Mykolaiv, and Zhytomyr will be the first cities to implement social housing construction projects. The funding will be provided by the European Investment Bank (EIB). In total, an agreement has been reached with the financial institution to allocate €400 million, of which Ukraine has already received the first €100 million.

This was reported by the Chair of the Committee of the Verkhovna Rada on State Power Organization, Local Self-Government, Regional Development, and Urban Planning, Yelena Shulyak.

According to her, the launch of construction will occur alongside the establishment of a legislative framework for the functioning of the social housing fund.

"The construction of the first social housing, which will be provided for social rent, will take place in parallel with the creation of relevant legislation -- a draft law on the fund for social housing," Shulyak noted.

She explained that European partners agreed to finance without waiting for the adoption of the corresponding law, as the need for social housing in Ukraine has significantly increased due to the consequences of the war and the large number of internally displaced persons.

"This is a pilot project with the European Investment Bank -- EIB, which allocates a total of €400 million for the construction of social housing. As of today, five finalist communities have passed several selection stages conducted by the EIB in cooperation with the relevant ministry," the committee chair said.

According to her, initially, 25 communities applied to participate in the project. After the first selection stage, eight applicants remained, and five cities -- Kropyvnytskyi, Kremenchuk, Lviv, Mykolaiv, and Zhytomyr -- made it to the finals.

Currently, the financial models of these communities are under evaluation by the Ministry of Finance. After confirming their financial viability, the EIB will begin financing construction.

The pilot model envisions the creation of a new housing fund that will remain in the ownership of the communities. At the same time, the final model for forming the social housing fund is still under discussion.

"Currently, the Committee and the relevant ministry are discussing what exactly will constitute the social housing fund -- a new housing fund, purchased apartments, or part of housing from developers. The pilot model being tested in five communities involves new construction that will belong to the community," Shulyak reported.

Decisions on who will be able to receive such housing, under what conditions, and at what price will be made by local communities. According to the deputy, this will happen publicly through voting at local council sessions.

Priority categories will include large families, people with disabilities, families of military personnel and fallen defenders, as well as orphans and children deprived of parental care.

At the same time, Yelena Shulyak emphasized that social housing is not synonymous with affordable housing.

According to her, the difference between these concepts is defined in the framework law "On the Basic Principles of Housing Policy" (No. 4751-IX) and primarily depends on the family's income level.

"If the income allows participation in other instruments provided by the new legislation -- several preferential mortgages, housing construction cooperatives, etc. -- then affordable housing will be provided for such citizens. If the income does not allow this, the family will be able to apply for social housing -- that is, housing for social purposes," Shulyak explained.

The rent for the housing will be determined individually for each family, but on average will not exceed 25-30% of the household income. For certain categories of citizens, social rent may be free.

According to Shulyak, the implementation of the pilot project in five cities will allow for the development of a model that is planned to be scaled in other communities in Ukraine.

It should be noted that the Ministry of Development presented the concept of the draft law "On Social Housing." The main idea of the reform is to transition from the outdated system of housing queues to a model of affordable long-term rental for people who cannot independently purchase or rent housing at market prices.