Real estate abroad: what you can buy at the price of a Kyiv apartment

Buying real estate abroad is becoming an increasingly topical issue today for every fifth Ukrainian. This increased interest in overseas real estate is primarily due to the country’s unstable political and economic situation since 2014. Therefore, more and more Ukraine citizens, in search of an alternative place of residence, want to move to a more prosperous and comfortable Europe, so that, if necessary, the whole family can quickly shift. Secondly, a Ukrainian’s desire to have his real estate as a dream “paradise” corner for life and recreation in one of the resort regions of Europe remains unchanged. Such an acquisition can be a good investment not only for a personal residence but also for use to make a profit – for rent.

Proposals on the capital’s real estate market have become less attractive for people who wish to acquire their own living space. Especially since it will not be challenging to find suitable real estate at “Ukrainian prices” in almost any European country.

But is this so, and what alternative can Europe offer for the same money?

Real estate in Kyiv is called one of the most expensive among European cities. And this, not to mention the quality and convenience of the proposed housing. For example, consider a budget option. The average cost of a one-room apartment in one of the most problematic areas of the capital – Troyeshchina – is about 50 thousand dollars or about 40 thousand euros. It turned out that it is almost impossible to find housing for such a price in the capitals of European states – even in the cheaper countries of Eastern Europe, prices start from 50 thousand euros. But in remote regions, including resort regions, it is quite possible to find a small apartment, or even a separate house, while keeping within the given budget. And in many European cities, you can find very decent offers of suitable budget apartments, much cheaper than the indicated amount.

When choosing a country for the purchase of the real estate, it is necessary to take into account the conditions, peculiarities of residence, laws, and principles of doing business, as well as other factors and nuances to which you should pay attention.

First of all, it is necessary to analyze the state of the market as a whole, the general condition of the country’s economy, region, assessment of market equilibrium, indicators of demand, decrease or increase in prices, etc. Then carefully monitor all aspects of a specific market segment, a particular property, consideration, and determination of the most profitable type of use, corresponding to the real estate’s optimal use, etc.

Couple admiring the view from the living room of their house.

Bulgaria: A lease agreement is sufficient for retirees

Bulgaria’s most significant demand is now used by analogs of hotels – apartments, which can be rented out. In Varna, you can find a studio in a populated complex from 15 thousand euros, in Sunny Beach – from 25 thousand euros. New buildings are slightly more expensive: from 27 thousand euros, since they offer more infrastructure (for example, an indoor pool).

The transaction will take from 2 to 4 thousand euros. When buying, you will have to pay another three percent of the cadastral value.

“These are two taxes – on the purchase/sale and garbage disposal,” explained Sergey Karshaev, Sun Real sales manager. Renovation and improvement will cost another two to three thousand euros. Maintenance – 8-12 euros per year per square meter.

The annual property tax is paid from the cadastral value – on average, 50–70 euros per year. That is, after the purchase, the cost of maintaining the apartment (taxes plus maintenance) will be within 400 euros, plus you will have to pay for water/electricity.

“In summer, water plus electricity in my 120 square meter apartment cost 40 euros per month, in winter it is more expensive since there is no centralized heating here,” Karshaev explained.

You can buy an apartment in the cities of Bulgaria for the same funds as in resorts, but the rental price here is much lower, and if you intend not to live, but put it up for rent, it will bring income even less than an apartment by the sea for a year-round lease.

If you intend to use the property alone, you can also keep within 40 thousand euros. “Just the other day, I sold a house in 100 square meters for 35 thousand euros to our compatriot,” said Karshaev.

By the way, he claims that Bulgaria is an ideal place for our pensioners. “To obtain a residence permit for a pensioner, a certificate from social security is enough. You don’t even need to own real estate in Bulgaria; a long-term lease agreement is enough. “

Hungary: you can get a residence permit with your apartment

Hungary is the only European country where the residence permit does not depend on the amount invested in real estate. For 40 thousand euros, you can find a studio on the outskirts of cities. “In Miskolc – from 15 thousand euros, for example. The thermal spas (Hajduszoboszlo) are good; they can be rented out all year round, ”explains Jaroslava Chapko.

The deal is done with a local lawyer, not a notary, as in most EU countries. He must get permission for it from the local authorities.

“This is, in fact, a formality, but it takes 1–1.5 months,” explained Nadezhda Voronitskaya-Gaidak, the general director of Themida South Ossetia. After choosing a property, you need to sign a sales contract and make an advance payment.

Then the lawyer receives the authorization documents for the purchase from the mayor’s office, you pay the rest of the amount, and the property is registered with the new owner. After that, you have to pay a state fee upon purchase – about 2 thousand euros (four percent of the cadastral value). The maintenance of housing will cost 30-40 euros/month. There is no annual property tax in Hungary yet, except for resort areas (Balaton / Heviz).

Spain: a lot of taxes and little income

In Spain, up to 40 thousand euros you can find an apartment in large cities in the secondary market. This, for example, can be a small one-bedroom apartment in the center of Alicante or Torrevieja. “Besides, local banks are now selling mortgaged real estate so that you can find something exciting,” Yaroslava Chapko assured. But experts warn: don’t expect this investment to pay off quickly.

Another 5 percent should be added to the transaction amount – the costs of registration through an agent (otherwise not provided). Plus, a transfer tax – seven percent of the value declared in the main contract, and a municipal one (it is affected by the property’s age, the number of years of ownership by the previous owner, etc.). Maintenance of real estate is quite expensive – 800-1000 euros per year, plus repairing the secondary housing.

When buying real estate in the primary market, you need to be prepared for additional costs. New owners pay registration. “If the cost of real estate is from 50 to 100 thousand euros, then entering the name into the Register of Owners will cost about 200 euros, if the purchase amount is higher, then the registration price will be higher,” Nadezhda Voronitskaya-Gaidak explained.

Plus taxes: for apartments and residential buildings – seven percent, for commercial real estate and land without facilities – 16 percent of the cost. And another 0.5 percent of the price is the documentary tax. You can rent it through a local agency, which will charge up to 20 percent for its services. “As a result, profitability is a maximum of four percent,” Chapko notes.

Turkey: Popular for holidaymakers even in winter

Resort real estate for 40 thousand euros in Turkey can be found at 600 meters from the sea line. It will be a studio or even a one-bedroom and living room apartment.

North Cyprus: most extended season and pools

Cyprus has the most extended holiday season in Europe – up to 10 months. Up to 40 thousand euros, you can find a studio in resort towns. Moreover, developers are now fighting for an investor with infrastructure: the complex may include, for example, five swimming pools, several water slides, and a kindergarten.

Registration of the transaction will cost up to nine percent of the purchase. Annual tax – up to EUR 100 per apartment. Maintenance – 800-900 euros per year. The developers themselves offer guaranteed rent (5-7 percent yield), but they promise even 12-15 percent per year in some cases.

The Czech Republic gives mortgage loans to foreigners at six percent.

In the Czech Republic, you can buy comfortable housing even from 10 thousand euros. “In the north of the Czech Republic, in small resort towns, you can find a kopeck piece in restored panels for 10-13 thousand euros. In Prague itself, you can find from 40 thousand euros,” Trade Estate manager Anastasia Kipenskaya told Vesti.

According to her, there is a reasonably high demand among Ukrainian pensioners for real estate in the Czech Republic. And more often – for a more expensive one. “We have recently completed the sale of a villa of 350 square meters in Prague for 1.5 million euros,” said Kipenskaya.

The seller/buyer pays four percent of the transaction value (cadastral value). The annual tax is approximately 10 CZK / square meter/year, that is, 60 square meters – 600 CZK per year. This is about 600 UAH.

Czech new buildings are peculiar: it doesn’t matter when you enter a project, at the initial stage or the end, the price is the same. However, it is difficult to call it cheap – the cost from the developer is one and a half to two times higher than in Kyiv.

On the plus side, they lend on an equal footing with local foreigners in the Czech Republic: if 50 percent of the cost is paid – from 2.7-6 percent per annum. Rent in Prague – from 400 euros per month.

What foreign squares give: from multiple entry visa to citizenship

One of the main reasons why Ukrainians are interested in real estate in the EU is the opportunity for the owner (and in some cases, his family members) to obtain a multi visa, that is, a visa that gives the right to multiple entries into the states of the Schengen Agreement. However, their duration is different.

The right to an annual multi visa is granted, for example, by the Czech Republic, Spain, Finland, Germany. And in Bulgaria, a yearly visa is also given to children and spouses. In Cyprus, investors and relatives receive a multi visa for up to three years.

More attractive conditions can be found in other parts of the world. “The paper confirming the ownership of the real estate in China is the basis for obtaining a residence permit. When buying real estate in Brazil, a foreigner is issued a permanent visa for five years,” Yuri Bashtovoy, a consultant on taxes and fees of Vdovichen and Partners, cited examples to Vesti.

Buying real estate in some of the EU countries gives you the right to obtain a residence permit with the possibility of further registration of permanent residence and citizenship. But you need to spend money seriously, and 40 thousand euros, in this case, will not be enough.

Moreover, one must understand that the process of obtaining citizenship will not take less than five years. The receiving party sets special conditions: the number of days of stay in the country, knowledge of the language, a stable income or a bank account, the absence of a criminal record, etc.

Until recently, Latvia was the most loyal. The purchase of the real estate for 150 thousand euros gave the right to obtain a residence permit, but lately, it raised the qualification to 250 thousand euros.

When buying real estate worth 250 thousand euros, Greece issues a residence permit, Bulgaria – from 300 thousand euros, Spain and Portugal – from 500 thousand euros.

But in Ireland, you need to invest a million euros. Any foreigner can buy real estate in Turkey while he receives a multi visa, and a year later – a residence permit with the possibility of subsequent citizenship.

In some EU countries, buying a home does not directly guarantee to obtain a residence permit. “However, it is the presence of your real estate that can become a decisive factor in getting a residence permit. A few years later, the residence permit can be exchanged for citizenship.

How to buy and register the property in Europe

The procedure for buying real estate in different countries does not differ much and is based on the following main stages:

· Selection of an object;
· preliminary agreement;
· main contract;
· Registration of the real estate purchase and sale agreement.

Sellers of overseas real estate admit that the “non-cash plus cash” scheme is highly welcomed. But the legislation of most countries provides for cashless payments when making a deal.

There are no problems with opening accounts for our citizens; however, in most countries, the origin of funds is being checked.

The Ukraine legislation requires a citizen, after opening a foreign account, to contact the territorial administration of our National Bank with a notification of this action and obtain an individual NBU license. “Placement of money is understood as a transfer of money by the resident himself and by third parties”, – stressed the consultant on taxes and fees of JSC “Vdovichen and Partners” Yuri Bashtovoy.

However, there is also an alternative. The expert recalls that there are legal ways to withdraw money abroad.

· You can go abroad with a Ukrainian bank card and pay with it. Disadvantages of this method: there are countries where they can ask about the sources of origin of money, and a significant banking commission (up to five percent).

· Moving cash. According to the instruction, “On the movement of cash across the customs border,” a Ukrainian is allowed to carry 10 thousand euros per person. That is, a large family may well withdraw an amount equal to the cost of a small apartment in a Central European country.

· Purchase traveler’s checks (American Express or Thomas Cook) and withdraw funds into them. Their disadvantage: the value of reviews is equal to the amount of cash they were bought with. Another drawback: bills have daily spending limits, mostly two thousand dollars a day. And their main advantage is the possibility of recovery in case of loss (theft). Commission for the purchase of traveler’s checks – one percent.

· Transfer of money by international payment systems (Western Union, MoneyGram, Migom). The advantage is the speed of transfers; the disadvantages are the limit on the transfer amount per day and the commission’s size.

All these options are in high demand among Ukrainians, since, according to lawyers, there is now a deadlock situation with the receipt of individual NBU licenses.

“Restricting the outflow of currency from the country, the National Bank has banned such payments. And if the license is not obtained, then a fine is provided equal to the value of the acquired real estate, ”warned Alexey Demyanenko, partner of the law firm Asters.

However, I noticed that people often bypass federal banking restrictions. “Thinking that their apartments will never be found, many Ukrainians ignore the requirement for a license. Some people buy real estate for a dummy – a foreigner acting under a trust agreement. The third, more advanced option: buying real estate in Virginia, Seychelles, or another island offshore, ”- said Demyanenko.

Under the “offshore scheme,” when money is not kept by an individual (on the accounts of a non-resident company, which is the buyer of real estate), transactions are not subject to our legislation’s requirements.

The advantages of offshore are the ability to preserve the confidentiality of the owner, as well as the complexity of tracking the movement of money

Yuri Bashtovoy
Yuri Bashtovoy

In countries where it is prohibited to pay for real estate directly from offshore accounts, its acquisition is carried out through a subsidiary established by such a non-resident in the country of real estate.

For example, in France, Monaco, and Montenegro, payment from an offshore company can be accepted by a notary, who acts as the guarantor of the transaction and registered property rights to the person in whose favor the payment was made.

“If we idealize the structure entirely, SCI can be established in France and Monaco – a civil real estate holding company, where the actual owners will own the rights to the company through their offshore companies, and information about them can be disclosed only if there are international conventions between the countries, which gives additional guarantees in confidentiality, “Elena Kalinina, partner of the Fama Prof Consult consulting company, explained to Vesti.

It turns out that it is quite possible to buy adequate budget housing instead of a Kyiv apartment in almost any European country. It is only a matter of “taste” (who chooses Bulgaria and the Czech Republic, which are closer in mentality, which prefers more commercial Turkey and Cyprus), as well as how ready you are to fulfill the requirements and go through certain stages to obtain the right to own your real estate …

In any case, the ownership of real estate abroad gives preferential rights, certain privileges, to its owner. Therefore, it can be argued that the work is worth the work.