In Ukraine, there is a proposal to completely ban the activities of real estate agents and agencies: what are the arguments?
12 August 18:12
In Ukraine, there is a proposal to completely ban the activities of real estate agents and agencies through legislation. The author of the petition believes that brokerage in the real estate market does not provide any real legal benefit to the parties to a transaction, but rather may create additional costs for citizens, contribute to shadow schemes, and hinder direct interaction between sellers and buyers, as well as landlords and tenants, writes "Komersant Ukrainian".
Among the arguments in favor of the ban are the unofficial activities of some brokers, the imposition of commissions, the lack of transaction security guarantees, and the impact of real estate brokerage services on the final cost of housing.
It is worth noting that this is currently only a petition, not an enacted law or a draft bill. For the Cabinet of Ministers to consider it, the petition must gather 25,000 signatures from citizens.
Why There Is a Proposal to Ban Real Estate Agents in Ukraine
The author of Petition No. 41/010590-26ep to the Cabinet of Ministers is asking it to consider a complete ban on the activities of real estate agents and agencies in Ukraine as a form of economic activity.
He justifies his proposal by arguing that such activities, in his opinion, pose significant risks to citizens, facilitate the use of shadow schemes, and do not provide any real legal benefit to participants in real estate transactions.
The author cites the situation involving unofficial activities in the real estate services market as one of the main arguments.
“In the real estate brokerage sector, unofficial and semi-legal real estate transactions, the concealment of actual income, tax evasion, and the imposition of services that have no legal value are widespread,” the petition states.
The author also claims that a significant portion of real estate agents operate without official registration and proper government oversight, which, in his view, creates conditions for fraud and manipulation.
Contracts with Real Estate Agencies: What’s Wrong Here
Special attention is given to the legal significance of the documents that citizens enter into with real estate agents and agencies.
The author argues that real estate agency contracts do not provide adequate legal protection for the parties and are not decisive for the legal consequences of real estate transactions.
“All actual legal consequences arise only after notarization, and real estate agent documents are irrelevant in the event of conflicts between a landlord, tenant, seller, or buyer,” notes the author of the petition.
It is precisely the lack of sufficient legal validity of such services, in his view, that serves as one of the arguments in favor of their legislative prohibition.
Who Verifies Documents During Real Estate Transactions
Another argument concerns the role of a real estate agent during the purchase, sale, or rental of real estate.
The author of the petition emphasizes that a legally binding verification of documents, ownership rights, the existence of encumbrances and debts, and the legality of the transaction is carried out by a notary, not a real estate agent.
At the same time, as stated in the petition, a real estate agent does not guarantee the security of the transaction and does not determine its legality.
“A real estate agent bears no legal liability, does not guarantee the security of the transaction, has no influence on the legality of the transaction, and in fact does not perform functions that justify the collection of substantial commissions,” the petition’s author argues.
Imposition of Commissions and Brokerage Services
The author identifies the imposition of brokerage services on citizens who wish to conduct real estate transactions independently as a separate issue.
In his view, real estate agents interfere in transactions even when the seller and buyer—or the landlord and tenant—can reach an agreement without the involvement of an intermediary.
The author of the petition believes that this practice creates barriers to direct contact between the parties and results in the need to pay additional commissions.
“This leads to artificially inflated prices, market monopolization, the creation of barriers to direct contact between the seller and the buyer, and the imposition of commissions that do not correspond to the amount of work performed,” the petition states.
How Real Estate Agents’ Activities Affect Housing Prices
Another set of arguments concerns real estate prices and rental costs.
The author of the petition is convinced that the activities of a large number of intermediaries influence pricing and force citizens to pay extra when renting or purchasing real estate.
According to the petitioner, this makes the actual market value of properties less transparent.
“Due to real estate agents’ activities, real estate prices are rising unnaturally, an unregulated market of intermediaries is forming, citizens are forced to overpay for rent and home purchases, and the actual market value of properties becomes opaque,” the petition states.
The author believes that a complete ban on real estate brokerage could make the real estate market more transparent and pricing more fair.
Proposed Legislative Changes
Ultimately, the author of the petition proposes considering a complete legislative ban on real estate brokerage in Ukraine, rather than merely tightening regulations on brokers.
He explains the need for such a step by citing the range of problems mentioned in the petition—from shadow economy activities and tax evasion to the forced sale of services, commissions, and the potential influence of intermediaries on housing prices.
“Given the lack of legal benefit from real estate brokerage services, widespread shadow economy schemes, massive tax evasion, the imposition of services, and artificial interference in the real estate market, as well as the negative impact on housing prices, I ask that you consider banning real estate brokerage activities at the legislative level,” the author notes.
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