Archive: Kyiv Real Estate tips

Introduction

            Kyiv is the capital and the largest city of Ukraine, located in the north central part of the country on the Dnieper River. The population in July 2014 was 2,847,200 (though higher estimated numbers have been cited in the press), making Kiev the 8th largest city in Europe.

           Kyiv is an important industrial, scientific, educational, and cultural centre of Eastern Europe. It is home to many high-tech industries, higher education institutions and world-famous historical landmarks. The city has an extensive infrastructure and highly developed system of public transport, including the Kiev Metro.

            Geographically, Kyiv belongs to the Polesia ecological zone (a part of the European mixed woods). However, the city's unique landscape distinguishes it from the surrounding region.

            Kyiv is located on both sides of the Dnieper River, which flows south through the city towards the Black Sea. The older right-bank (western) part of the city is represented by numerous woody hills, ravines and small rivers. It is a part of the larger Dnieper Upland adjoining the western bank of the Dnieper in its mid-flow. Kiev expanded to the Dnieper's lowland left bank (to the east) only in the 20th century. Significant areas of the left-bank Dnieper valley were artificially sand-deposited, and are protected by dams.

            Kyiv has a humid continental climate (Köppen Dfb). The warmest months are June, July, and August, with mean temperatures of 13.8 to 24.8 °C (56.8 to 76.6 °F). The coldest are December, January, and February, with mean temperatures of −4.6 to −1.1 °C (23.7 to 30.0 °F). The highest ever temperature recorded in the city was 39.4 °C (102.9 °F) on 31 July 1936. The coldest temperature ever recorded in the city was −32.2 °C (−26.0 °F) on 7 & 9 February 1929. Snow cover usually lies from mid-November to the end of March, with the frost-free period lasting 180 days on average, but surpassing 200 days in recent years.

            The municipality of the city of Kyiv has a special legal status within Ukraine compared to the other administrative subdivisions of the country. The current Mayor of Kiev is Vitali Klitschko who was sworn in on 5 June 2014; Since 25 June 2014 Klitschko is also Head of Kiev City Administration.

The dynamics of real estate prices

Legality

Legitimate grounds for ownership of real estate by foreigners in Ukraine can be determined based on the provisions of the relevant articles of the Constitution of Ukraine and the Civil Code of Ukraine.

Thus, according to Article 26 of the Constitution of Ukraine foreigners (americans in particular) staying in Ukraine on legal grounds shall enjoy the same rights and freedoms and bear the same duties as citizens of Ukraine.

In accordance with Article 41 of the Constitution of Ukraine everyone shall have the right to own, use, or dispose of his property and the results of his intellectual or creative activities. No one shall be unlawfully deprived of the right for property. The right for private property shall be inviolable. Confiscation of property may be applied only pursuant to a court decision, in the cases, to the extent, and in compliance with the procedure established by law. 

In Articles 317-321 of the Civil Code of Ukraine stated that: 
1) The owner shall possess, use and dispose of his/her property at his/her own discretion;
2) The content of the ownership right shall not be affected by the owner’s place of residence
and the location of the property;
3) All owners shall be given equal conditions for implementing their rights.

Thus, in connection with above, there is strong legal foundation for foreign citizens in real estate in Ukraine.

Hence, foreigners can legally buy and own Ukrainian residential property (examples):

1. Business center "Eurasia" 
City: Kyiv 
Location: Golosiivskyi rrayon / street ZHilyanskaya, 73-79 
Format: Business Center Class A 
Stage: Fully commissioned 
Total area: 39,095 sq.m. 
Phone: +380 (44) 391-11-93, +380 (44) 220-30-60 (for rent) 
Management: management of the facility are carried out by 
CB Richard Ellis
Owner: Kazakh investment and industrial group "Eurasia" through its subsidiary "Eurasia-Ukraine".
The source:http://ukrarenda.net/ofc/eurasia_iceberg_business_centre.html?isDetailes=1

2.2. Business center "Hem Plaza"
City: Kyiv 
Location: Caves area / street Mechnikov, 2 
Format: Business Center Class A 
Stage: Fully commissioned 
Total area: 69,020 sq.m. 
Phone: +380 (44) 496 0812 (office rental in BC "Sail") 
Management Company and Owner: Management by owner 
Mandarin Plaza (controlled by Swiss Heritage Properties International and businessman Dmitry Firtash).

The source: http://ukrarenda.net/ofc/parus_business_centre.html?isDetailes=1

2.3. Business center "Hem Plaza"
City: Kyiv 
Location: Podolsk district / street Spasskaya, 30 
Format: Business Center Class A 
Total area: 25,000 sq.m.
Owner: British investment fund "London & Regional"

The source: http://ukrarenda.net/ofc/bof_105.html?isDetailes=1

Mortgage Availability

            In accordance with article 18 of  Law of Ukraine on Hypothecation a mortgage agreement shall be concluded between one or more mortgagors and a mortgagee in writing and shall be subject to notarization. A mortgage agreement shall contain the following essences:

1) for the mortgagor and the mortgagee – legal entities – information on:

for the residents - name, location, and identification code in the Unified State Registry of Enterprises and Organizations of Ukraine;

2) for nonresidents - name, location, and the country in which the entity is registered;

3) for the mortgagor and the mortgagee – individuals - information about:

for citizens of Ukraine - surname, name, patronymic, permanent resident address, and the identification number in the State Registry of Individual Taxpayers;

4) for foreigners, persons without citizenship – surname, name, patronymic, (if any), permanent resident address outside Ukraine;

Thus, foreigner having a residence permit along with a taxpayer identification number is able to be issued mortgages to buy apartments in Kyiv. 

Rental management companies

There are a such companies but not in pure form. Usually companies provide a range of services in real estate. Here are two such companies:

1. Park Lane.

Park Lane real estate agency provides a full range of services related to buying, selling, renting of residential and commercial real estate in Kiev.

Contact: +380 (44) 392 22 22

 +380 (95) 262 62 22

The website: http://parklane.ua

2. “Compass FM”

Providing professional property management services and technical consulting services, we are raising overall level of facility management’s standards.

Contact: +380 44 593 13 39

The website: http://compass-fm.com.ua

An accompanying expenses

Сosts buyer

1. The payment for service a real estate agency 5% of the purchase price;

2. The government duty – 1% of the purchase price;

2. The services of notary - $200-300;

3. The lawyer - $200-300.

Cost owner

1. Maintenance costs are for the tenant of apartments only. It is not for owner.  Maintenance costs are about $ 50-100 per month. Up to 120 square meters of real estate tax is not present.

2. At the same time, there is a question about profit-making.  The apartment owner pays tax of 15 -17% of the rent  (by the Law – art. 160 Tax code of Ukraine). In practice, no one pays almost. But if the person want to withdraw money it is necessary to pay this tax. In connection with this there is a question about the business activity. One of the indications of the business is getting regular income. The rent is just the regular income. Thus, may need to register as an entrepreneur.  This entrepreneur must pay the simplified tax - $25 per month (or 5% of income). But for this the vital interests of the entrepreneur must be in Ukraine or the entrepreneur should be in the Ukraine during the 183 days of the year.

3. In practice, usually paid on a bank card of owner or someone takes payments from tenants.

Cost seller

1. Tax on income of individuals – 15-17%.

Ability to evict a tenant who is not paying rent

1. There is Ability to evict a tenant who is not paying rent in Ukraine.

Article 826 of Civil code of Ukraine A tenancy agreement may be cancelled by the court decision at the request of the lessor in

case:

1) the tenant failed to remit rent for six months, unless the agreement specified a longer period, and for a short-term rent - failed to remit the rent more than twice;

Article 826 of Civil code of Ukraine - In the event of a tenancy agreement cancellation, a tenant and other persons permanently

residing with such tenant shall be evicted on the basis of a court decision; other premises shall not be provided to them.

Thus, the housing evictions without providing other housing is possible by court. Here is the a such court decision: http://www.reyestr.court.gov.ua/Review/38842698

           

2. In practice, to evict a tenant who is not paying rent will take 6 (six) months and will cost $800-1200 (consultation with advocate Burkatskyy Valery: http://www.1p.ru/user/lawyerCart/id/85139).

Road map:

Step 1. Choosing apartments with representative of Agency.

Step 2. Preliminary contract - between the buyer and the seller or between buyer and real estate the agency or between the buyer and the seller and real estate the agency.

Stepp 3. Checking the property, the owner of the property and verification of documents.

Step 4. Notarization of the Sales Contract of an apartment.

Step 5. Transfer money from the buyer to the seller (cash or through bank).

Step. 6. Entry in the state register by notary.

Step7.  Payment of the government duty – 1% of the purchase price.

Step 8. The extract from the state register for new owner (notary doing it).

Nota Bene:

1. The Case Shiller index is not possible.

2. The transaction data is not available from government registry.

3. For all purchase and sale of real estate the value was underestimated for the purpose of tax evasion (to 2010 inclusive). For example, a flat $ 100 000 000 dollars could be sold for 60 000 thousand hryvnia (25.07.2014 - $1 = 11,65 hryvnia).

4. Prices from home’s builders.  The cost of one-bedroom apartment in ordinary housing (not downtown) is $ 38,000.

Rent this apartment will cost 300-600 dollars a month

The source:  http://bulgakova.fn.ua

5. No special government permission is required.

6. The registration Number of taxpayer's card (an identification code).

The non-resident of Ukraine (foreigners) who do not have permanent residence in Ukraine, but according to the law are required to pay taxes in Ukraine must obtain the registration Number of taxpayer's card.          

The registration Number of taxpayer's card used by state and local governments , particularly in the following cases:

a) the contract has the object of taxation (real estate);

b) the registration of real estate that is subject to tax;

c) an individual pays taxes

Procedure for obtaining and using regulated by the Tax Code of Ukraine and the special provision on State register of individual persons – taxpayers.

The non-resident personally or through a legal representative submits the  individual's registration card to the State Tax Administration in Kyiv (Address: Str. Sholudenka, 33/19; Tel.: +380 44 461-77-00). The Registration card is an application for registration in the State Register. The Card contains the following information: first name, middle name (if any), date of birth, place of birth, residence, citizenship. The non-resident must have: the copy of passport, notarized translation passport into Ukrainian (if wish, notarized power of attorney to represent the identification number for registration). The registration is carried out within five business days. The registration is free. The services the notary and the translator is $30.

7.Services and prices all companies are determined by negotiation.

Notice: Ukrainian legislation is constantly changing. The Information contained in this post may changed by the time you read. An actual information: 

ukrainianlawblog@gmail.com