How to Buy Apartment in Ukraine? Legal Aspects and Regulations - CLC (2024)

How to buy an apartment in Ukraine?

Foreign citizens have the right to buy and own any type of apartment in Ukraine. There are no restrictions on buying any property in Ukraine except agricultural land. Also, the number and size of apartments that a foreigner can own are unlimited. You can acquire an apartment in Ukraine for personal use, as an investment, or for rent. Foreigners in Ukraine do have the same rights in buying apartments as Ukrainian citizens. In this article, we will inform you about the particulars of the Ukrainian apartment acquisition process. Generally, there are two legal ways to buy a flat in Ukraine:

• Acquire already registered real estate from an owner (so-called secondary real estate);
• Buy an unfinished apartment from a developer company (so-called primary real estate);

Now you’re probably wondering, why buy an unfinished apartment when it is inconvenient to have to wait some time before moving in? Well, Ukrainian tax law heavily favors the purchase of “primary” (unfinished) apartments. When you buy an unfinished property, you pay a fixed tax of 0.5-2%. When you buy a secondary (move-in ready) property, you must pay between 3.5% and 8.5% in tax and notary fees. So, a real tax incentive exists to buy an unfinished apartment in Ukraine.

In most developed countries, investing in a construction project entails some waiting, but at the end of the process, you can expect to receive a finished apartment. However, in Ukraine, an apartment is considered finished once the bare walls have been put up and the building has been officially approved by the State Architecture and Building Inspectors of Ukraine. This means that after you have made the full payment for your property, you will still need to hire a contractor to finish the interior of your flat. If you do decide to purchase a primary property in Kyiv, we at Capital Law Consulting will assist you with finding a reputable and reliable contractor for this end.

If you are not a citizen of Ukraine and you do not have a residence permit, first of all, you need to transfer funds to Ukraine. It is common practice to acquire property via purchase from a private investment account. We can assist you in opening an investment account at a Ukrainian bank. You can not buy any property in Ukraine from a non-Ukrainian bank account. Consider that money transfers (including account opening) can take more than two days. So please consider this before you start the apartment purchase process in Ukraine.

Another important thing is that the only official currency for conducting real estate transfers in Ukraine is the Ukrainian hryvnia (UAH). Official transfers are non-negotiable if you acquire an apartment from a developer or construction company. Even if the cost of property is mentioned in US dollars or Euro, still the payment must be in Ukrainian hryvnia. And always remember that within Ukraine, I mean between two accounts opened in a Ukrainian bank, money transfer is possible only in Ukrainian national currency. Another very important thing is that all foreigners for property acquisition must have a Ukrainian tax id number and a certified passport translation. Anyway, it is strongly recommended that the procedure of buying property in Ukraine is conducted by a qualified solicitor (legal adviser).

Please refer to this table to compare the main features of purchasing primary and secondary residences in Ukraine.

How to buy an apartment from an owner in Ukraine?

This is the case when you have found an apartment that already belongs to an individual or to a company. The real first step is to visit an independent notary office. You need to find a good one because the notary will be the one to register the property rights with your name at the end. Consider also that to minimize risks, an independent notary should be used to represent the buyer’s interests fairly. Capital Law Consulting will help you decide on a trustworthy notary for this purpose. It is essential during the process of Ukrainina property purchase because the notary bears all responsibility in the case of an incorrect apartment purchase. Consider also that the notary must verify all the documents when buying property in Ukraine at every stage.Usually, the notary fee, including property rights registration, is 1-2% of the apartment’s assessed valuation. A legal entity can also acquire the property, butyou will need a company formation in Ukraine to be able to conduct the transaction in such a way.

Firstly, an apartment shall be registered in the Ukrainian digital register of property rights. Consider that this real estate register was only introduced in 2012 in Ukraine. So there is a chance that ifthe apartment you intend to buy in Ukraine was constructed before 2012, it might not be listed in that register. In such a situation, it is not a problem, and the current flat owner shall take care of this. Registration can be done in just a few days.

If the flat is registered, the next stage is real estate appraisal. It is always made for tax purposes. Property valuation shall be done by a certified company or appraiser. It is made to determine the official value of the flat because such a type of acquisition is taxable from 3,5% to 7,5%. The assessed value of a Ukrainian apartment may differ from the real cost of the property. The seller and buyer usually negotiate the amount of taxes that each party has to pay.

The next stage of real estate acquisition is signing the contract. This is to be done directly at the notary’s office. At this stage also, full payment for the apartment and payment of all the taxes shall be made. That is because under the Ukrainian civil code, the new owner’s property rights can be registered only after the full payment has been made. If the official evaluated cost of the flat is less than the real cost of the property then cash payment of the difference in cost to the seller is possible. But all the official amount of payment to the vendor shall be made by cashless money transfer. If there is more than one owner of the apartment, the contract shall be signed by all of them. If the owner is married so his/her spouse shall give permission for the sale of Ukrainian property. The notary is responsible for conducting due diligence as it pertains to checking whether any third parties have rights to the property.

The preliminary agreement is to be signed if the seller of Ukrainian real estate is ready to give you the option of deferred payment. But you will not receive your property rights under such a preliminary Ukraine contract of apartment acquisition.

The last stage of this process is the state registration of property rights on the name of the buyer. As it was mentioned above, the notary must make such a registration. Right after the agreement was signed and all the payments have been made, the new owner of the apartment is to be written in the governmental database. Both buyer and vendor shall receive the contract of sale and purchase of an apartment that is certified by the seal (stamp) of the notary. The purchaser will also receive the extract from the Ukrainian register of real estate rights in which the buyer is mentioned as the new owner.

How to buy an apartment from a development company in Ukraine?

The Ukrainian housing market is growing very fast. In Kyiv, the capital of Ukraine, you will find really various buildings that are being constructed. Dozens of developers in Ukraine offer you a variety of apartments in Kyiv. During this type of purchase, the buyer is named as an investor in a Ukrainian apartment. You are not buying the apartment itself at the very beginning because, from a legal point of view, there is no official real estate at the time when such property is under construction. So you will invest in a construction financial fund with the aim of getting the property rights after the commissioning (official government approval) of the property. The good thing is that you do not pay any taxes (except the $200 registration fee) when you buy a flat or a house from a construction company. The bad thing is that due to still murky construction law in Ukraine, not all of the development companies do have proper documents and needed permissions. These are some of the problems that we have discovered in some residential buildings:

• absence or cancellation or expiration of construction license;
• problems or absence of land ownership documents;
• stoppage of construction due to a court decision or under an act of the Ukrainian construction and architectural commission;
• high risk of failure or bankruptcy of the construction company or developer.

In Kyiv alone, there are more than 15 000 apartments in more than 50 residential buildings that cannot pass the process of commissioning due to the problems mentioned above. Some houses have been constructed with no land ownership documents, and investors can not get property rights for apartments in such cases. Anyway, please consider that it is a bit riskier to purchase a flat at the stage of construction in Ukraine. But does not mean at all that you should avoid such an option. So if you have decided to buy a flat in a building under construction, you need to check property documents first. Legal, due diligence of the construction company and of the needed permissions and available documents is strongly recommended. Consider also that when you visit the sales department of a Ukrainian developer or a construction company, the documents issued on the name of the house will be on the name of the company that is different from the name of the developer. It is normal in Ukraine. Our clients always pay attention to this because, in their opinion, it does not seem to be in the right way, and it looks suspicious. But the main thing is to check the following documents.

1. Construction license of the company.Check to make sure it is not expired or canceled. On the website of the Ukrainian State Building Authority, there is a list of issued and canceled licenses. The constructionlicense of a Ukrainian company is very important as permission is required to conduct a construction business in Ukraine.
2. Declaration about the beginning of building works.This is probably the main document. This also shall be checked on the website of the governmental construction authority. It shall also be reviewed on the website of Ukraine court cases because some litigations are potentially possible.
3. Construction company itself.You need to be sure that you will not invest in an apartment that is constructed by a corporation that is going to fail. You should find a company that has a lot of experience and many finished projects under its belts.
4. Documents of a financial investment company. This is the company that is acting as a financial construction fund and accumulating the money to pay for construction. Make sure that you are purchasing the flat in Ukraine through a strong financial investment company that has all the needed permissions. The financial investment company is the one whose name should appear on the contract you will sign to acquire the apartment.
5. Contract or agreement on apartment purchase through investment.Usually, most Ukrainian real estate development companies have the standard/typical agreement on apartment acquisition. But that does not mean that it can not be changed if some clauses or paragraphs are unacceptable. Consider that cash in Ukraine is the king, and as the buyer, you hold the cash, and therefore you can decide if some conditions of the agreement are not ok for you.In this contract, the price, apartment number, floor, dimensions, and terms of payment shall also be mentioned.

You should make a payment to the financial fund of construction only if all the documents are proper and the proposed Ukrainian apartment is acceptable to you. Don’t forget that you can ask for a discount if you will make a 100% payment for buying an apartment in Ukraine. The investment company shall issue a certificate about the full payment within 10 days after the full payment is made. This document will confirm that the buyer of the flat has fulfilled their obligation for this process. After the construction is completed, you need to wait for the commissioning process when the house is connected to water, electricity, gas, etc. It might take some time if the developer has some problems with documents. Keep in mind that developers are under no obligation to meet the deadlines they promise you. That is why in order to manage your expectations, you should check to ensure the company has all the proper documents before signing the contract. The ownership document in the name of the investor (you) can only be issued after commissioning. You will also receive some technical documentation of the flat issued by the Bureau of Technical Inventory of Ukraine. In this documentation will be mentioned the layout of the apartment, the size of each room, floor, etc.

Due to the war, what are the primary alterations in the property-buying procedure in Ukraine?

Since the beginning of the war Russian Federation in Ukraine in 2022, the rules for buying and selling real estate have undergone many restrictions. In particular, the technical procedure for drawing up documents has changed.

At the beginning of the war, the property purchase process in Ukraine was completely stopped for almost two months in all the regions. A full ban on buying, selling, and other types of sales was introduced. And the official register of real estate in Ukraine was blocked by the Ukrainian Government. But starting from April 2022 it was possible to make property transactions in the regions and provinces that are not considered a war zone. There is a list of cities or regions or provinces (which is frequently updated) where operations with the property are prohibited.

We hope that this article was helpful to you, and we always hope you will find a lot of prosperity and success in Ukraine.

Sincerely yours, Capital Law Consulting.

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