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As of 16 January 2026, more than 5.3 million Ukrainian refugees remain in Europe. Four years into displacement, most working-age Ukrainians have entered the labor market, yet underemployment, housing insecurity, and reduced access to social protection remain widespread. Prolonged uncertainty, family separation, and trauma continue to affect refugees’ ability to build stable lives abroad.
At the same time, support mechanisms in host countries are being gradually scaled back. Social benefits and free accommodation are increasingly limited or made conditional on employment, while sanctions for unemployment are tightening. Access to housing has become one of the most acute challenges, particularly for vulnerable households, increasing risks of exploitation and forcing some refugees to consider premature return to Ukraine despite the ongoing war and limited reintegration capacity.
A decisive shift will occur after 4 March 2027, when the EU’s Temporary Protection mechanism expires. Following this date, Ukrainians will no longer have an automatic right of residence and will need either to secure a national residence permit under domestic rules or return to Ukraine. Legalization conditions will vary by country and depend on employment, income, housing, and level of integration, making stable housing a key prerequisite for remaining in the EU.
Both the EU and Ukrainian authorities increasingly frame return as a gradual and voluntary process. European leaders have stressed that Ukraine’s recovery is a long-term priority; as Italian Prime Minister Giorgia Meloni stated, rebuilding Ukraine is “an investment in a resilient nation.” At the same time, Council of the European Union recommendations underline the need for orderly, humane returns, supported by voluntary return programs after temporary protection ends.
In this context, housing emerges as a central policy challenge for Ukraine. Without affordable, secure housing solutions within the country, large-scale return will remain unrealistic. Addressing housing is therefore not only a social issue but a strategic precondition for sustainable reintegration, labor market recovery, and national reconstruction.
In order for people to want to and actually return to Ukraine, they need to understand what awaits them. And one of the most pressing issues that concerns everyone is housing. The situation in Ukraine's housing sector is critical. According to the Fifth Rapid Damage and Needs Assessment (RNDA5), released on 23 February 2026 by the Government of Ukraine, the World Bank Group, the European Commission, and the United Nations:
Direct losses to the housing sector are estimated at $61.1 billion. About $90 billion is needed to fully restore the housing sector over the next 10 years (RDNA5).
However, what solutions can the Ukrainian government offer to the housing crisis? The Ukrainian government is trying to alleviate this crisis, including in the 2026 state budget, which has allocated:
The $90 billion need is over 40% of Ukraine’s pre-war GDP. No country in history has rebuilt such a volume of housing on its own during an ongoing war.
The Ukrainian government realizes that without the return of millions of people, neither economic recovery nor a solution to the demographic crisis is possible.
The demographic crisis is a very acute issue. According to the UN strategy and estimates (UNFPA) for 2025, Ukraine is among the top 30 oldest countries, the fertility rate is ~0.7 - 1.0 (critically below the reproduction level of 2.1), and in the demographic pyramid there is a “hole” at the age of 20-30 - this is the generation born in the late 90s, which is now the basis for creating families, but there are physically few of them.
One of the biggest obstacles to the return of Ukrainians, particularly young people, is the lack of affordable housing.
On January 21, 2026, the Ministry of Social Policy, Family and Unity held a strategic session to discuss the "Strategy for Maintaining Contact with Ukrainians Abroad and Promoting Their Voluntary Return". Key areas of the strategy:
For low-income Ukrainians, international organizations (UNHCR, IOM) are preparing programs – "reintegration payments" of up to UAH 5,400 per person for several months. For Ukrainian youth receiving education abroad, they plan to simplify procedures for recognizing foreign diplomas and grades earned in European schools, and are also considering introducing compensatory classes in the Ukrainian language and history. For this critically needed population group, e-Work grants (up to UAH 250,000-500,000) are being developed to help them start their own businesses, as well as the Create Ukraine program for young professionals (22-35 years old) with experience working abroad.
Today, rebuilding Ukraine is a race between large-scale destruction and digital solutions. As part of its response to the housing crisis, Ukraine has already launched the eVidnovlennia program [eRestoration], which provides housing compensation to people whose homes were damaged or destroyed. This support is being delivered now because many people simply have no place to live. The program is financed largely by international donors.
As of December 2025, 153,477 families have received compensation, and the total number of applications submitted for all time is over 185,111. Comprehensive reconstruction projects are being implemented in Irpin, Bucha, Kharkiv, and Mykolaiv. This means that instead of one broken-down high-rise building, an entire neighborhood is being rebuilt with new communications, bomb shelters, and energy-efficient facades. However, at the same time, residents of Mariupol, Bakhmut, and other highly populated occupied eastern territories remain in a legal trap: they cannot receive compensation because the commission cannot physically access the ruins to assess the damage.
Observers, including World Bank experts, note the unprecedented transparency of the system through the “Diia” application, but also emphasize the acute shortage of construction personnel. Recipients of certificates recognize that the program is a real chance for a new life, although, due to rising real estate prices, the compensation is often only enough for a more modest home than the one lost. The main challenge remains finding a payment mechanism for those whose homes are still behind the front line, based on satellite images.
Ukraine has also introduced the eOselia [home] mortgage program, a recent preferential lending initiative aimed at specific groups of the population, helping them access affordable housing. In parallel, the government is converting abandoned dormitories, hospitals, and administrative buildings into fully functional apartments. A striking example of such transformation was the project in Zhytomyr, where, during 2024–2025, an abandoned municipal building was repurposed into modern social housing with the support of the German government and the GIZ fund. As part of this revitalization, the old administrative building, covering over 3,000 m², was transformed into 45 autonomous apartments, fully equipped with plumbing and individual heating systems, providing housing for over 150 displaced people, including large families from Bakhmut and Mariupol. The project became exemplary for its adherence to the principles of inclusivity (installation of elevators and ramps in accordance with EU standards) and safety, as the building's basement was modernized into a certified radiation shelter with an autonomous ventilation system.
These measures are important and necessary, but they remain temporary solutions to Ukraine’s broader housing challenge. Despite the importance of such initiatives, experts emphasize that transforming old administrative buildings and dormitories into residential spaces is only a strategic "band-aid" and not a final solution to the housing crisis. These measures are critically important for the rapid resettlement of people here and now, but they remain temporary solutions against the background of the global challenges facing Ukraine. The reconstruction of existing structures has its natural limits: the physical wear and tear of old foundations and load-bearing walls do not allow such buildings to serve for decades without future capital investments.
According to GIZ and Cedos research (end of 2024), Ukraine remains one of the countries with the highest rates of home ownership in Europe, but the war and economic factors have rapidly developed the rental sector.
In January 2026, the Verkhovna Rada finally passed the new Law "On the Basic Principles of Housing Policy", aimed at burying the 1983 Soviet-era code once and for all. The President signed, and it de jure introduces a European housing classification: replacing endless queues for "free" apartments with specific funds for temporary, service, affordable, and social housing.
A large working group, under the auspices of the Ministry of Reconstruction and the relevant Verkhovna Rada committee, headed by Olena Shulyak, worked on the law’s text. The process included dozens of rounds of public consultations with communities so that the new model would not remain “cabinet-like” but would meet the real needs of destroyed cities. The main change is the transition to a clear European classification: instead of a single general queue, four target funds are now available. Social housing for vulnerable groups, affordable housing for youth through mortgages, service apartments for critical professionals, and a temporary fund for those whose homes were destroyed by war.
[1] Important clarification: This includes not only sole owners, but also those who live in apartments of parents or relatives without paying rent.
The central innovation is social rental, in which tenants pay based on their income while the state covers the market difference for owners through subsidies. To manage this, specialized operators and a “revolving fund” will be established, with capital strictly locked for construction and maintenance.
In practice, however, most of these changes remain an ambitious plan on paper. The creation of a unified digital system integrated with “Diia” to track every apartment and citizen’s needs is only just beginning, and mass privatization is scheduled to end one year after the war concludes.
Although the law has been passed, real-world tools will only start functioning after the Cabinet of Ministers drafts dozens of bylaws. The most important of the bylaws is the creation of a “roadmap” for turning the law into a real service: the Cabinet of Ministers must approve a mathematical formula for calculating rent depending on family income, implement a transparent priority point system for automatic selection of residents through the DREAM system, and clearly regulate the work of “revolving funds” so that rent funds are specifically directed to the maintenance and construction of new housing. Without these technical instructions, municipalities do not have the legal right to settle people or collect payments, which turns modern reconstructed facilities into “frozen” assets waiting for the final government visa to launch a full-fledged social housing market.
Ukraine is effectively in a transition period: the old rules are gone, but the new social rental mechanisms and digital queues are still being prepared for launch, leaving the system currently dependent on international donor pilot projects.
In the meantime modular (prefabricated) housing offers several clear advantages for addressing urgent housing needs. Its greatest strength is speed: entire communities can be built and occupied within a single construction season, a crucial advantage in crisis situations. Factory-based production also ensures consistent quality, as standardized processes reduce the risk of on-site construction mistakes. In addition, these homes are typically energy-efficient, with low heating costs, which makes them more affordable for residents in the long term. A major argument in favor is that factory production minimizes on-site construction waste (up to 70% less than traditional construction). This fully complies with the EU's requirements for sustainable development (the Green Deal), which are critical for obtaining grants.
Also, the construction of social housing has a multiplier effect on the economy, i.e., it stimulates the construction and building materials market, creates jobs, etc. For example, the Affordable Housing initiatives in New York created about 330 thousand new jobs in 2011-2015.
At the same time, modular housing has important limitations. If such homes are provided without a rental or public ownership model, they quickly become private property. Once an owner decides to sell, the state loses control over this housing stock and with it an important instrument for managing the housing crisis. As a result, a solution designed to be social and strategic can gradually turn into a purely private asset, reducing its long-term impact on housing affordability and availability.
For residents, the disadvantage is that prefabricated structures wear out much faster than traditional ones. After 3–5 years of intensive living, problems with ventilation, mold, and tightness begin to appear. People become hostages to premises that quickly become unfit for human habitation, but the state may simply not offer another option in time.
There is also a risk of segregation. If modular housing is concentrated in separate areas, it may hinder social integration and lead to a division of cities into neighborhoods of homeowners and renters. This spatial separation can increase social distance and raise the risk of conflict.
Another alternative – social rental housing, or affordable municipal housing – is a model in which homes are owned by the community rather than individuals. It is widely used across Europe and is considered part of the EU’s policy standards, making it relevant for Ukraine’s path toward EU accession. Historically, mass social housing emerged in Europe in the late 19th century to address pressing social problems. The construction boom occurred at the end of World War II as a response to the global housing crisis.
This approach is especially important in large cities like Kyiv, Lviv, and Dnipro, where land is expensive, and workforce mobility is crucial. It allows young people and internally displaced persons to move between cities for work by transferring between municipal apartments. Rents can be kept low and stable by municipalities or the State Youth Housing Agency, and because this housing cannot be privatized, it remains a public asset serving the community for 50+ years.
The main drawback is bureaucracy: traditional municipal construction can take years, limiting the model’s ability to address urgent housing needs in the short term.
Municipal modular housing represents an ideal technological and economic combination as a true win-win solution for Ukraine. Modular construction allows high-quality, capital-standard housing to be delivered within months, while the social rental model keeps living costs affordable. Instead of temporary trailers, communities receive permanent housing with full infrastructure that can quickly pay for itself through rental income and be easily scaled to each city’s needs.
By adopting this approach, Ukraine not only moves closer to European Union standards and policies but also begins to address its long-standing structural problems with the housing stock. Most importantly, this model makes it possible to act fast – not just managing short-term crises, but systematically solving the housing challenge within 3–5 years.
Ukraine hopes that the West will be a source of funds for recovery, and that the Ukrainian people will ensure quality and transparency. Currently, Ukraine receives grants from the World Bank (Project HOPE) to directly finance repairs for hundreds of thousands of households, and hundreds of millions of euros from the Council of Europe Development Bank (CEB) for housing certificates for those whose homes have been completely destroyed.
It is important to mention the Ukraine Facility (€50 billion), which is the main EU instrument until 2027. As of February 2026, the Ukraine Facility has become the backbone of the “Build Back Better” strategy. The principle of “Build Back Better” has become the official philosophy of Ukraine’s reconstruction, enshrined in the “Ukraine Plan” within the Ukraine Facility. This means that instead of simply copying Soviet structures that were destroyed, the country is creating infrastructure for modern European standards. New residential buildings and schools are being built using modern thermal insulation materials, heat pumps, and solar panels. The goal is to reduce energy consumption by 30–50% thanks to the old housing stock. Inclusivity and accessibility are also integral components, which have become critical due to the large number of people who have become disabled as a result of the war. In addition, according to the new building codes (DBN) adopted for 2023–2024, no residential building or school can be put into operation without a full-fledged protective structure. The main obstacles are that it is more expensive and takes longer, and Ukraine cannot afford 100% Build Back Better across the board right now, because it is still in the midst of an active war and emergency housing. But for strategic facilities and capital housing, this principle has become the unalternative standard.
Unlike previous project, this aid program is strictly monitored by the Audit Board, ensuring funds are used transparently. For Ukrainian citizens, this translates into more stable housing compensation (e-Recovery) and the modernization of local energy grids, which are prioritized under the current 2026 recovery phase.
In addition to direct assistance, the Investment Fund is also operating: it acts as a guarantor for European banks, making them more willing to issue loans to Ukrainian municipalities and developers for reconstruction projects. This fund provides guarantees to European banks against war risks, allowing Ukrainian communities and developers to obtain cheap loans for reconstruction. The EU has allocated €6.97 billion to cover risks, and these guarantees are expected to attract up to €20 billion in private and public investments from European banks. Because the fund assumes up to 70-90% of war risks, Ukrainian municipalities can obtain loans at rates close to European levels (3-5% per annum), whereas without guarantees, market rates in Ukraine could exceed 20% due to the risk of war.
There are fears that war with Russia could resume, in which case the best thing the West can do to attract private investment after the war is to provide insurance. Agencies such as MIGA та DFC provide guarantees to foreign companies that their construction investments in Ukraine will be protected even in the event of escalation or new shelling. In January 2026, the Prosperity Plan or Prosperity Framework was first discussed. This document was developed jointly by the US and the European Commission as part of a 10-year economic recovery strategy for Ukraine through 2040.
Ursula von der Leyen (President of the European Commission, who was one of the main speakers who officially presented this “Prosperity Plan” at an informal meeting of the members of the European Council) stated that this document is “a collective vision of Ukrainians, Americans and Europe for the post-war future of Ukraine”. She also noted that the EU and the US are close to finalizing this plan. This plan initially envisages raising huge sums (up to $800 billion) from frozen Russian assets and private capital. The housing sector ranks first in this plan, along with the energy sector.
A key element in implementing this plan is the launch of a powerful war-risk insurance market, which allows large Western corporations to enter the Ukrainian construction sector without fear of losing capital. This turns housing reconstruction into a driver of economic growth, because each unit invested in construction creates new jobs and stimulates local production of building materials. Thus, the “Prosperity Plan” becomes not just an aid program, but a strategy for transforming Ukraine into the largest infrastructure platform in Europe for the next decade.
The main challenge for Ukrainians returning home is the time factor itself: the war, which has been going on for five years, is gradually transforming temporary shelter abroad into a new, permanent life. The longer the uncertainty about peace persists, the deeper social integration takes root: children get used to foreign schools, adults find stable jobs, and the emotional connection to home, despite all the pain of separation, objectively weakens. Each subsequent month of waiting makes the prospect of returning more and more distant, because a person cannot remain in “waiting mode” indefinitely; he must build a future that is safe now.
Against this background, the risk of international support running out is critically acute. Donor aid and the resources of Western partners are not bottomless; fatigue from the long-term conflict and shifting global political priorities may lead to a gradual reduction in funding. For Ukraine, whose resilience and recovery are currently critically dependent on external infusions, this creates a “narrow window of opportunity,” in which every year of delay in reconstruction makes the process more expensive and difficult.
At the same time, the reconstruction itself cannot be chaotic or hasty, because building quality housing is a game of “long-term”. It is important not to simply erect walls, but to strategically identify growth points. If new housing is built in isolation from economic centers and the labor market, we will end up with “bedroom ghettos” and logistical collapse. Ill-considered resettlement will inevitably lead to hours-long traffic jams, overloaded transport arteries, and additional costs for citizens, ultimately reducing the quality of life. Therefore, reconstruction should not be merely construction, but the careful planning of new urban ecosystems in which housing, work, and infrastructure form a single, viable organism.
Another challenge is institutional capacity. The new Law "On the Basic Principles of Housing Policy" introduces a European model of social and affordable rent managed through a digital “Diia” system. However, the reform faces a funding gap, as the “revolving fund” and rental subsidies currently lack clear funding in the 2026 budget, making the plan entirely dependent on foreign donors. There is also a major corruption risk if the new “housing operators” are allowed to distribute apartments manually without strict, automated oversight.
Furthermore, ending mass privatization is a political minefield that could spark backlash among veterans and IDPs who expected permanent ownership. Without a clear bridge to support people during this shift, the government risks replacing an outdated system with a dysfunctional bureaucratic vacuum.
An additional risk of Law No. 12377, adopted on January 13, 2026, is the authorization of private ownership in the social housing sector, which threatens a washout of the fund. Many experts insist that such housing should be owned exclusively by communities, as involving private owners could lead to mass evictions if the state withholds subsidies or to price manipulation after the lease term expires.
Cultural resistance is another important factor. Many Ukrainians traditionally view homeownership as the only acceptable form of housing security and are not accustomed to long-term renting, especially in publicly owned housing.
The reintegration of Ukrainians is a double-edged sword for European stability; while political rhetoric supports Ukraine’s recovery, the pragmatic reality is that many EU nations are currently benefiting from a vital influx of skilled and motivated labor. As host countries integrate these individuals into their tax systems and aging workforces, a quiet conflict of interest emerges between European domestic needs and Ukraine’s existential requirement for a returning population. Consequently, there is a significant risk that European policies may subtly shift toward long-term assimilation rather than repatriation, potentially starving the Ukrainian reconstruction effort of the human capital it so desperately needs to rebuild its future.
Finally, transparency and corruption risks remain critical. Without strong oversight, clear access criteria, and transparent procurement processes, even well-designed housing programs risk losing public trust and effectiveness.
Global experience demonstrates that municipal modular housing is an effective solution not only for crises but as a permanent, high-quality component of modern urban planning. For Ukraine, however, the key challenge is not merely the introduction of this technology, but the establishment of clear and consistent rules for its use, including the legal status of such housing, defined periods of residence, and mechanisms for the long-term integration of residents.
At the same time, Ukraine’s housing crisis requires decisive and systemic measures, especially given that a significant return of Ukrainian refugees may begin as early as 2027. If this process is poorly designed, it may not only discourage refugees from returning but also prompt those who remained in Ukraine to question whether staying is a viable option. Under these conditions, modular housing can support population return without increasing social tensions, while also contributing to social stability, alignment with European housing practices, and Ukraine’s broader path toward European integration.
If designed and governed properly, modular housing can become not only a tool for addressing Ukraine’s housing crisis, but also a driver of social cohesion, sustainable return, and alignment with European housing governance standards – reinforcing Ukraine’s broader path toward European integration.
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