If you’re a foreigner looking to buy property in Ukraine, now is the time.
Compared to most Western countries, houses and apartments are still affordable in Ukraine. In downtown Kyiv, one square meter is worth an average of $1,000 compared to $2,000 in Warsaw or $12,000 in Paris.
Foreigners willing to invest at least $100,000 and then renovate their new flat can easily find two-room apartments in the center of Kyiv.
Daniel Williams, a 44-year-old retired hedge fund manager who lived in the United States, is one of them. He bought a 94-square-meter apartment in Kyiv and doesn’t regret his choice.
“Before you hear ‘complicated’ and get afraid, consider the massive realtor fees (6%) and flimsy build quality of comparably priced U.S. properties,” Williams told the Kyiv Post.
However, the market is still developing. While the process of buying property is quick and straightforward, a foreigner should know a few things before buying.
Lawyer up
Williams bought his flat in May 2020 directly from its previous owners and it was as easy as in the U.S., where he used to live, he said.
They agreed on a price, Williams’ lawyer drafted the contract and both signed the sale; a notary handled everything from there.
“(It was) all very clean and straightforward,” Williams said.
However, there are rules.
The first one is simple yet critical: Always understand what you sign. The contract has to be translated to English or to the foreigner’s native language, and a translator has to be there when the buyers signs the contracts, according to the law.
As a Russian speaker, Nicholas O’Connell, a 30-year-old bar owner in Kyiv, didn’t have this problem. He found his 63-square-meter flat in the center of the capital for $50,000 and “signed a contract quickly through an agency.”
“The realtor’s price was very good and dealing with the owners was easy and nice,” O’Connell told the Kyiv Post.
Foreigners have to pay a 2% tax on the purchase and realtor’s fees, which can range from 2% to 5%, depending on the agency.
American Nicholas O’Connell speaks with the Kyiv Post on March 2 in front of his Vagabond Cafe. O’Connell bought a flat in Kyiv’s historical district Podil in October 2020. (Oleg Petrasiuk)
But first they have to get a Ukrainian tax identification number to pay taxes and complete the transaction.
This requires going to a tax office with a notarized copy of their passport and asking to be registered as a taxpayer in Ukraine. Many lawyers offer to do this for a few hundred dollars, but it’s better to do it in advance because it takes a week or two.
Getting a lawyer is crucial because a lot of property owners can still have claims on the property. The lawyer checks if there’s no other property owners such as family members who could cancel the sale or prove in court that they own part of the apartment.
Luis Ow, 23, who works in a financial company and assists Spanish speakers with legal procedures in Kyiv, insisted on that point.
“Do not buy property if there’s still someone registered there,” he told the Kyiv Post, adding that the owner or the agency should provide the proof that the apartment is “free.”
The flat has to be precisely documented. If there are errors in the so-called “technical certificate,” a document describing the flat changing hands, previous owners can claim a right to the flat and create endless legal problems, Ow said.
Only when everything is cleared and the paperwork is ready, is it time for the transaction.
Transaction
When it comes to signing, the Ukrainian Orthodox tradition stipulates that no business contract can be signed within 40 days after a death in the family, which is why it’s crucial to meet the owner first and decide on the date together.
Before the transaction, foreigners have to open a “foreign investment account” in a Ukrainian bank linked to the real estate agency and show the property purchase documents to the bank.
The money from abroad will go to that account and then be transferred to the owner’s account. This is done to prevent money laundering through real estate.
The vast majority of Ukrainian owners prefer cash because they don’t trust banks. If a foreigner agrees to pay in cash, one should have a notary and a lawyer because there is no guarantee of safety without both.
Yet, there is one occasion where the future buyer might need cash — the so-called “previous contract.” One month before the sale takes place, the buyer signs this document, promising to buy the flat and to pay the agency’s fees before an established date.
In exchange for a cash deposit, the agency and the seller promise not to sell the property to anyone else, leaving time for both parties to prepare the paperwork.
This deposit can range between $1,000 and $2,000, which is deducted from the final price. If the agency breaks the contract, it has to pay back the deposit.
“Make sure you bring an amount of money big enough to make them hesitate to break the contract,” Ow said.
Landlords can spend months doing noisy renovations in their new property before moving in, that’s why living in newly built flats can often be inconvenient.
Renovation
When the sale is done and one gets the keys to a flat, congratulations — the time has come to pour money into renovation.
Prices are more affordable in Kyiv’s secondary market because central buildings are often decades old. A buyer’s budget should include the future cost of the renovation, O’Connell said.
He expects to put in about $10,000 while doing the repairs himself, but his property’s value will increase when it’s done, he said.
“In the summer, I will knock down walls and change my three-bedroom flat into a two-bedroom and open kitchen place,” O’Connell said.
Williams invested more, but chose to renovate his place with the help of a local guy “who worked miracles,” he said. “We have invested around $30,000 in putting in new floors, a new bathroom and kitchen, completely new tiling in both and all the walls were skimmed and refinished.”
It was worth it, Williams believes.
“If you want to live or own (property) in Ukraine — just do it,” Williams said. “Accept that there will be setbacks and enjoy the fact you can live for less in an amazing and developing country.”
