Selling or renting out property in Ukraine

[Wayne]

My wife owns several properties in Ukraine. A house together with her Mother; a flat and a dacha.

When she comes to USA, her Mother will continue to live in the house. We will keep the dacha for our use when we go back to Ukraine, and perhaps rent it out at other times. (it is walking distance to the Black Sea.)

The flat could be sold or rented out short term or on a one year lease, etc.

1.  Does anyone have experience selling property, especially if there is a mortage on it?
2.  How do real estate agents work in Ukraine?
3.  Could you trust an agent to rent out your property and send you the money?
4.  What kind of taxes would you have to pay if you sold or rented out property?
5.  What laws or procedures are involved, lawyer, notary, etc.?
6.  How do you pay taxes, utilities, mortage etc if you are not in Ukraine?
7.  Are property values in Ukraine going up, down or staying about the same?

[mendeleyev]

My experience is limited to Russia but I've served on the board of a charity that owns several apartments in Kyiv.

The market in general is down but did not plunge as rapidly as the USA because property in the region and especially in Ukraine was already performing poorly prior to the worldwide economic collapse. But in some cities it has been bouncing back. In parts of Kyiv and Kharkiv prices have risen rapidly. You just have to be in the right area.

The problem with dachas are myriad. First, they are so available and affordable that unless it is of a kind that local officials will steal it the moment you leave, the resale value usually remains low. I could have purchased two decent dachas within walking distance of ours for $4K for the first and $5k for the second roughly 2 years ago. Both were comfortable and in good repair, on the water, with modern facilities but neither were they palaces to attract the new elite.

The more immediate problem with dachas, aside from dishonest local officials, are winter squatters. For several summers we would arrive in early spring and immediately remodel after the squatters had ripped out everything over the winter. Lately we've become more portable by using a truck to take things like the fridge, etc, out in spring and then we haul those valuable essentials back to a storage garage at the end of autumn. Everything else is boarded up. It doesn't stop the vandals and squatters but makes our dacha less attractive than others while abandoned for the winter.

As to the Black Sea location, we purchased an apartment with a car garage for future retirement on the Black Sea in a lovely coastal Bulgarian city for about half the price of a typical new midsize Toyota car in the USA. Location has little bearing on price during times of severe political and economic uncertaintly.

As for the apartment, we rent out in Moscow but as we also have a home there it's easier to monitor and control how apartments are treated than from afar. We like to rent long term to Western corporations or NGO's. Those folks sign long term contracts, pay like clockwork, never damage the interior systems, and are worry-free. This takes a little more footwork and networking in getting started but once you're in that circle, you're "in" as long as you're honest and responsive. That can't be done from a great distance. We don't rent to tourists or short term renters because of the handholding needed and in reality the profit from a short term rental can disappear in a flash if some sort of damage is caused by the renter.

The kind of agents you can trust will be the most expensive--but if you are an absentee owner you need to go that route. Advantage: have the agent handle the tax payments too and get complete documentation afterward. The downside is that a good agency only wants to deal with premium properties.

Documents: depends on your level of committment to being a landlord. The less paperwork the easier it is for you to be screwed in absentia. Then again, tons of paperwork is no guarantee of protecting a foreign landowner. You should ask yourselves how you will respond to a midnight call regarding a problem if you're in Kansas and the renter in Ukraine.

Mortgages are still not as common and usually for shorter terms. The only reason for holding on to a home, given the current market values, is if you have plans to return to that home someday. Right now you can purchase a replacement without fear of missing the market.

While in fact prices have risen in certain FSU areas and in parts of selected cities, beware of websites and those who say that current prices are "going thru the roof" and so forth. At the same time, bad news should be tempered with the realization that as societies begin to stabilize, as will Ukraine, prices in cities like Kyiv will continue to rise calling to mind the old adage of a rising tide floats all boats.


For taxes, documents and laws here are a couple of helpful links:
http://www.ukrchicago.com/tem/Business/property.htm

http://www.apartments.kiev.ua/sale/buying_property_in_ukraine.htm

[Nat]

I missed that post, I'd have answered earlier if I'd seen it. If you still need that info, here we go

1.  Does anyone have experience selling property, especially if there is a mortage on it?

Yes, it's possible, if the price is reasonable.

2.  How do real estate agents work in Ukraine?

Very badly in most cases.

3.  Could you trust an agent to rent out your property and send you the money?

It depends on the agent. It's better to sign an agreement, according to which the agent will have to send you a certain amount of money every month. But it's only possible if your flat is very good for renting out and the agent is able to have extra profit from it. Otherwise nobody will agree on such terms.

4.  What kind of taxes would you have to pay if you sold or rented out property?

If you sell the fist flat in a year, and you've owned it for more than 3 years, you don't pay anything. Otherwise - 5% tax. If you rent it out, you pay tax on profit, I guess it's 15%.

5.  What laws or procedures are involved, lawyer, notary, etc.?

If you want to sell a flat, you and your buyer should go to a notary and enclose an agreement. If you rent it out, you can enclose an agreement yourself, if its term is not longer than a certain period of time, I guess, a year.

6.  How do you pay taxes, utilities, mortage etc if you are not in Ukraine?

I don't know, I guess via bank transfer.

7.  Are property values in Ukraine going up, down or staying about the same?

It depends on the property, but mostly staying the same.

[Wayne]

Thanks for the answers and information. 

It is interesting the part that says if you openly possess real estate for 10 years, it becomes you property!  I guess that is why you see people building on property that they do not own, perhaps government property, then moving in.

 

[mendeleyev]

I guess that is why you see people building on property that they do not own, perhaps government property, then moving in.

Nowhere in Eastern Europe are property rights the same as you may have in the West. It is yours, paid for or not, until the government decides they want it worse than you. Then it is theirs.

This factor is a prime reason why some dachas and country homes can look very plain or even rundown on the outside, yet be pristine and very modernly appointed on the inside. The expression of "out of sight, out of mind" certainly fits.

[tfcrew]

Some FYI here...

http://www.ukrchicago.com/tem/Business/property.htm

My wife also has a flat left in Odessa. Her in-laws run it.

If you wish... PM for details.

Karl