11 billion is used for nothing and 2 – for bribes. How much does it cost to register a land plot and who stands to gain from it?

11-09-2019

BRDO experts calculated how much money could be saved by changing the approach to land registration

Source: biz.liga.net

The complexity of any land-related procedures has already become a well-known case. As well as corruption costs necessary to accelerate them. The BRDO team calculated how much time and money was wasted due to the existing system and what corruption costs were incurred by the participants in the process. The results are impressive: it’s billions of hryvnias per year.

The ‘land service’ coverage

An ordinary Ukrainian is faced with the ‘land service’ for many reasons: land plot registration; correction of mistakes made in the cadastre at different times; coordination of land management documentation, registration of land transactions or obtaining information on coordinates of land plot boundaries. The list goes on. All this requires a lot of paper, time and money.

Taking into account that there are about 22 million owners of land plots and land users in Ukraine, you can only imagine how many aspects the ‘land service’ covers. Moreover, not only private owners, but also communities and the state are involved in land ownership.

What is the real size of the problem and who benefits from it?

What is the cost of land registration?

To estimate the losses, the Better Regulation Delivery Office analyzed in detail the procedure for re-registering land plots from state and municipal lands. It can serve as the most striking example of what additional costs are incurred by citizens, businesses and the state due to complicated administrative procedures. A lot of money and time can be saved only by transforming the procedure for registering a land plot from the paper format into the electronic one and optimizing certain administrative services.

For example, now the land plot registration will require 55 paper documents, 17 direct contacts with officials and 8.5 months for the procedure itself. According to our estimates, by converting documents into the electronic form and avoiding unnecessary actions, the number of documents can be reduced to 5, the number of contacts will not exceed 3 (this will significantly reduce corruption risks) and the registration time will be reduced to 2.5 months.

Due to these changes, the cost of registration of one land plot from state and municipal lands for private individuals will also decrease – from 6,622 UAH to 1,904 UAH for one plot (that is, by more than 3 times). The expenses of state and local self-government authorities on checking information about one land plot will decrease from 3,562 UAH to 1,497 UAH, that is, almost by 2.5 times.

The overall savings for citizens, businesses and the state are also impressive: for the private sector – 8,068 billion hryvnias per year, for the public sector – 3,565 billion hryvnias.

Calculations were made based on the total number of procedures with land plots during the year. The salary costs (man-hours needed to work with paper documents in accordance with the tariff), transportation costs, administrative fees and notary fees were included into this calculation.

But there is more to come. The volume of corruption costs in the registration of land plots taking into account land engineers involved into corruption schemes is 2.32 billion per year. This is the share of ‘informal costs’ included into the price of documentation when performing land survey works. In Ukrainian modern practice, such unscheduled costs can reach 80% (!) of the cost of such works.

In fact, these are funds used for bribes to accelerate procedures, but not to obtain a land plot. Most likely, obtaining a land plot will cost a lot more.

It is easier to understand the scale of land corruption just in this particular segment if we compare it with the amount provided for the maintenance of the State Geocadastre in the state budget-2018 – 1.9 billion hryvnias.

Who benefits?

Since there are those who “legally” lose the extra 11.6 billion hryvnias every year due to imperfect procedures, there are also those who receive these funds in the same legal way because of them.

As noted above, due to ‘additional costs’, citizens pay for: salaries of officials who work with documents, transportation costs, administrative fees and notary fees. So, these funds are used to finance the services of State Geocadastre’s territorial bodies, regional and district state administrations, executive committees of local self-government authorities and land surveyors.

As for the latter, they are largely hostages existing procedures themselves and, in fact, are forced to include 2.3 billion hryvnias of bribes in the price of their services. Subject to changes in procedures, the cost of land survey works will decrease significantly.

Other participants in the process get the opportunity to increase the number of their employees because of its complexity. First of all, it is the State Geocadastre, its territorial bodies, regional state administrations, district state administrations, executive committees of local self-government authorities.

And the more complicated the procedures, the larger number of employees. This is probably one of the reasons that the State Geocadastre (then the State Committee of Ukraine on Land Reform) included 70 people at the time of its creation in 1991. And now, taking into account its territorial bodies, it has become the fifth largest civilian agency in the country in terms of the staff number.

So, the more the process depends on the officials, the higher the corruption costs of citizens.

“On a turnkey basis” in 1.5 years

What is the result? With their own money, citizens want to receive a convenient service as soon as possible, but in reality they lose time and money. This procedure for registering land plots is unprofitable for citizens and unfavorable for the business climate.

The problem is not just about people who work in these government agencies (but since we are talking about bribes, probably in them too), but more in the system. What changes does it need? Some of the procedures in this long chain should be cancelled at all; some of them should be combined and others – transferred from paper to electronic form.

Changes “on a turnkey basis” can be implemented in 1.5 years. To do this, it is necessary to develop the appropriate software, try it on the territory of several united territorial communities, identify the pros and cons and draft a law based on the results and adopt it.

Scaling up the project throughout Ukraine implies that after the adoption of the law, a very large number of land managers will join the work in the new format.

Systemic changes aimed at simplification can be introduced also in another ‘land services’. The political situation now looks favorable for such changes.

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