Defence City residents will be able to lease state and municipal property without auctions

Defence enterprises holding Defence City resident status will be able to lease state-owned property without an auction, according to the Ministry of Defence. The option to lease property without an auction has also been extended to municipal assets.

The Ministry of Defence explained that the changes are intended to simplify manufacturers’ access to premises and other assets required to establish production and expand capacity.

“Simplified access to state-owned property is another practical tool for achieving this. The less time a manufacturer spends finding and securing the necessary infrastructure, the sooner it can direct resources towards scaling up production,” Deputy Minister of Defence Hanna Hvozdiar said.

Who will be able to lease property without an auction

The Government has expanded the list of defence companies eligible to use this mechanism. It now includes manufacturers of:

• unmanned systems;
• active countermeasures against technical intelligence, including electronic warfare equipment;
• passive countermeasures against technical intelligence.

The mechanism also covers enterprises designated as critical to the defence sector, participants in and contractors under state contracts, serial manufacturers of missile systems, developers of new or modernised missile weapons, and manufacturers of military-grade explosives.

Defence City resident status now constitutes a separate basis for leasing property without an auction.

How the requirements for companies have changed

Previously, a company had to meet all three established criteria simultaneously. Following the changes, it is sufficient to meet one of four criteria:

• be designated by the Ministry of Defence as a critical enterprise in the defence-industrial sector or as critical to meeting the requirements of the Armed Forces of Ukraine and other military formations;
• be included in the electronic register of participants in procurement selection procedures and contractors under state contracts;
• belong to one of the designated categories of defence product manufacturers or developers;
• hold Defence City resident status.

Local authorities have been advised to set annual rent for municipal property at 8% of its appraised value.

How to lease property

To lease state or municipal property without an auction, a company must submit a written application to the lessor requesting that the required asset be added to the list of property eligible for lease without an auction.

The application must include information confirming that the company meets at least one of the criteria. This may include a reference to a Ministry of Defence decision granting critical-enterprise status, a decision adding the company to the register of participants in procurement selection procedures and contractors under state contracts, a Ministry of Defence letter confirming compliance with the manufacturing criterion, or information confirming Defence City resident status.

Within five working days of receiving the application, the Ministry must send the lessor confirmation that the applicant meets at least one criterion or notify them that the applicant does not meet any of the criteria.