Ukraine’s residential property market continues to attract investors looking for alternatives to saturated markets in Europe.
In Kyiv, for instance, the housing price index for the primary market has maintained a steady rise since 2017, according to the National Bank of Ukraine (NBU).
Construction activity also expanded with the construction price index’s continual increase from 2015 to 2021.
More construction projects indicate a greater demand for housing among locals and foreigners. While higher costs and demand imply more expensive property prices, it isn’t too late to capitalize on a seemingly booming housing market.
The real estate market in Ukraine remains overlooked among investors in favor of other Western European markets. A recent price creep, however, indicates that the area may be one of the most up-and-coming markets in 2022.
Foreigners Can Buy Most Types Of Properties
In general, Ukraine has been an open market for foreign property buyers because of investment-friendly rules.
Foreigners enjoy almost the same rights as citizens when the former pursues property ownership. The government allows them to acquire all kinds of real estate, except agricultural land.
Most first-time luxury property buyers focus on real estate in major cities:
- Kharkiv
- Kyiv
- Lviv
- Odessa
As the country’s capital, Kyiv remains the most popular destination for property buyers.
The NBU cited data from the Ministry of Justice, real estate agencies and the State Statistics Service of Ukraine. It showed that since 2017, Kyiv’s primary housing index stayed at or above 100%.
If you’re already keen on buying properties in Kyiv, an ideal (and legitimate) transaction requires the help of a lawyer. It isn’t advisable for foreigners and non-residents to deal directly with sellers.
An Attorney Can Handle Most Transactions
While Ukraine relaxed its rules for non-agricultural property transactions in recent years, the industry still needs tighter regulations for real estate brokerage.
Many agents and brokers remain unlicensed and unregulated, according to legal experts. Prime property buyers could prevent a costly investment mistake by securing a power of attorney.
In general, individual luxury property buyers need to accomplish up to four documents:
- Duly notarized passport translated in Ukrainian
- Taxpayer number registration
- Temporary or permanent residence permit (if applicable)
- The foreigner’s original passport with a record of entry in Ukraine
The State Fiscal Service of Ukraine issues taxpayer registration numbers to foreigners and non-residents. Most applicants wait for a week to complete the process.
It may be easier to notarize your passport and legalize other documents with the help of an attorney. You may decide to do this by yourself, but it’s wise to delegate more important tasks to a lawyer.
For example, legal counsel becomes useful when opening a personal investment account in Ukraine to pay for a property deal.
Take note that you can only use a certain amount of cash for payments to individuals.
The NBU enforced a rule in 2013 that restricts individuals from paying more than UAH 150,000 (US $5,410) in cash. By 2016, the NBU proposed to lower the limit to UAH 50,000.
Ukraine Imposes Limits On Cash Payments
The NBU enforced a rule in 2013 that restricts individuals from paying more than UAH 150,000 (US $5,410) in cash. By 2016, the NBU proposed to lower the limit to UAH 50,000.
The proposed limits on cash payments involve settlements with businesses and individuals within the same day.
As rules seem vague, it’s best to choose a cashless method for real estate transactions. Foreigners don’t have to worry about limits if they use cashless payments.
HG.org recommends three options to settle luxury property purchases:
- Establishing a limited liability company
- Personal investment accounts
- Direct payment via foreign national’s bank account
The first two options require more time because foreigners need to stay longer in Ukraine. If a buyer pays directly using an overseas bank account, the seller must have a foreign-currency bank account in the country.
Ukraine Collects A Standard 18% Income Tax
The standard income tax rate in Ukraine is 18%, according to the amended tax code. Once you sell an investment property, a limited liability company or an investment account makes it easier to acquire income from a sale.
Most sellers also ask for a prepayment, which typically represents 5% of the purchase price.
While some luxury properties in Ukraine cost less than US $1 million, the prepayment amount may exceed the limit on cash payments.
In Kyiv, it’s possible to buy a high-end apartment for US $500,000. The low price for entry-level luxury properties and steady median price growth have convinced some individuals to invest in the city.
Luxury property buyers often pay 1% of the purchase price as stamp duty. Recurring expenses such as annual property taxes depend on the locality.
Stamp Duty In Ukraine Costs At Least 1%
Luxury property buyers often pay 1% of the purchase price as stamp duty. Recurring expenses such as annual property taxes depend on the locality.
The tax code, however, requires local governments to charge up to 1.5% of the minimum wage per square meter.
Still undecided on a prime property purchase in Ukraine? Browse property listings in different countries to find your dream luxury home.
