Agroschema “Your Circle”: exploitative contracts from Honchar and Usenko

The intermediary for buying and selling plots of agricultural land “Your Circle” (Andriy Usenko and Denys Honchar) was exposed for exploitative contract terms and unrealistically optimistic income promises, set against marketing efforts to create the appearance of rising land prices.

Founders of “Your Circle” regularly appear in the media with statements about constant expectations of land price growth at 15% – 20% per year, while the actual increase in land value since the market introduction has been only about 5% per year.

The core business of “Your Circle” (as is likely the case with many other intermediaries of this type) is the resale of cheaply purchased lots at inflated prices to inexperienced investors, plus service fees for handling transactions.

Among the complaints cited by analysts are exploitative contract terms, where unrealistic and de facto null and void from a legal standpoint termination provisions were written, allowing the contract to be terminated by giving the company 14 years’ notice. “In case of breach of contract or desire to sell land without the company’s consent, the investor could be forced to pay a penalty equal to 30% of the value of the entire land plus additional percentages (for example, 24% of the official rent).”

Land prices at “Your Circle” are significantly higher than the market. One of the analyses on the channel “The Last Capitalist” compared prices for identical plots across different services and found that “Your Circle” offers land at a price that could be 30–40% higher than in other companies.

For example, in Vinnytsia region land that cost 76 000 UAH/ha on other platforms was sold through “Your Circle” for 109 thousand UAH/ha. In Cherkasy region there were cases where other intermediaries offered plots for 160–170 thousand UAH, while “Your Circle” asked 201–202 thousand UAH for the same targets.

In addition to an official commission (about 8–12%), the company may embed its stake into the very price of the land that the investor buys. The company also takes 15% of the increase in rent and 15% of net profit from selling the plot. At the same time, analysts believe the official commission is unwarranted, since most “management” services are fictional: the land already has tenants, long-term contracts are in place, and a broker’s involvement is unnecessary.

Instead of the advertised 20–25% annual returns, the actual, tax- and notary-fee and commission-adjusted yield in a favorable scenario is about 11,5% in hryvnias. Earlier the company could also promise guaranteed rent (for example, no less than 14 thousand hryvnias), though under current agreements with farmers the actual payout can be much lower. This raised suspicions of artificial calculations or losses inherent to the model for the company itself.

The company enters into entrusted agreements with landowners (peasants), paying them a certain upfront sum that effectively deprives them of the right to sell the land to anyone else. Dozens of court cases exist where sellers seek to nullify these appointments, arguing they were paid an unfair (under)price, while the company pursues double payments or “unearned profits” through the courts.

Risks for REIT funds, where an investor buys not a specific plot but a share in a fund assembled from numerous plots across Ukraine. Fund investors do not control which land the fund buys or at what prices. There is a risk that the fund buys plots from related parties at inflated prices. Moreover, officially declared operating expenses for fund administration appear unrealistically small for the scale of work, which may indicate hidden costs or revenues. One expert explicitly calls the scheme a “pyramid,” where payments or indicators may be based on attracting new funds rather than on the real efficiency of the agribusiness.