UKRAINIAN REAL ESTATE

Kyiv Tenants vs Landlords

Top tips for anyone thinking of renting, letting and investing in property in the Ukrainian capital city

Kyiv Tenants vs Landlords
Ancient Ukrainian ruler Yaroslav the Wise offers up a Kyiv palace design for consideration. Today’s real estate options in the Ukrainian capital are considerably less palatial but it is still possible to uncover treasures
Tim Louzonis
Monday, 23 April 2018 22:14

If you are unfamiliar with Ukraine, renting an apartment for the first time in Kyiv or buying an investment property in the country can seem risky. Does reality match this perception? Tenant rights can be a key concern for foreign investors from EU countries or US states where these rights can be quite strong and fraught with risk for landlords. This article discusses tenant and landlord rights in Ukraine and provides real world broker tips for renting, letting and investing in Ukrainian property as well as an overview of legal issues connected to these rights.

 

Tenants Should Be Practical

Unlike most Western countries, Ukraine does not have a strong legal system where plaintiffs and defendants can reliably expect swift and expeditious justice. With this reality in mind, in many cases using Ukraine’s court system to resolve disputes between tenants and landlords is not a particularly  practical solution that can be worth the time and expense involved.

When it comes to rental agreements between tenants and landlords, it is best to think of these documents as a “gentleman’s agreement on paper” for a personality-based transaction. For example, if you are a tenant looking to rent a flat in Kyiv, instead of approaching this transaction with a legalistic mindset based on your tenant rights according to Ukrainian legislation, it may be more pragmatic to rely on your intuition and a solid pre-rental checklist. Firstly, go with your gut. Do you like the owner or does he or she leave you with a funny feeling? If you are a little unsure about the owner and think that he or she could become a problem, it might be best to consider the owner as an additional expense if you think you are otherwise getting a good deal.

Secondly, before signing a rental agreement, make sure that you or your broker checks the online registry for scans of the apartment’s ownership documents to make sure that the owner’s info matches that of your potential landlord. These checks can be done online for a nominal fee. Just keep in mind that brokers in Ukraine are not legally bound to perform these checks and not all Kyiv brokers are overly concerned with their reputation and will not always go through the trouble of checking ownership documents, even if they tell their client that they did. If ownership documents for the flat of your potential landlord are unavailable online, this could be a potential red flag, so be careful.

Thirdly, sometimes landlords will engage a representative to act on their behalf. In this situation, check that the owner’s representative has a valid power of attorney, that this individual is included in the rental agreement, and that the owner’s representative provides his or her passport for inspection. Note that if you or your organization plan on renting an expensive flat in Kyiv (and perhaps paying several months’ rent in advance), then it is also a good idea to check whether the apartment you are considering is pledged as collateral, has any liens against it, or is subject to any court decisions in Ukraine’s legal system. Your broker can check whether a flat is pledged as collateral in the online property registry. A notary can check whether a property has any liens against it, while verifying whether a property is subject to court decisions can be a bit trickier to check but can be done by a capable lawyer.

 

Guard Against Scammers

If you are renting an apartment in Kyiv, you must watch out for potential scam artists. It may seem obvious, but do not ever pay for an apartment before viewing it. Do not accept copies (instead of originals) of ownership documents from someone claiming to be an apartment’s owner. Insist that the owner bring his or her passport to a lease signing. You do not want the actual owner of an apartment to show up after you have already paid the first and last month’s rental fees. Oftentimes, disreputable brokers and owners can even collude in such scams. In such cases, “Ivan Ivanovich” the broker then disappears across the Dnipro to Kyiv’s Left Bank and is never heard of again.

The scene is ripe for scammers. A majority of brokers in Ukraine use emails without their first name and surname, while “disposable mobile phone numbers” are cheap and easily obtained. Sometimes scams of tenants are so convoluted that they can be hard to imagine. One acquaintance of mine shared his experience of renting a flat in Obolon. After signing an agreement, he moved into the property only to discover that all of the household appliances (refrigerator, TV, etc.) had been replaced with much cheaper versions. It is worth mentioning that your risk of becoming the victim of a tenant scam drastically increases as your budget decreases and as you move further outside of Kyiv’s center, but everyone should be careful. 

 

Rental Contract Tips for Tenants

As outlined above, it is sensible for tenants in Kyiv to consider their rental agreement as a written expression of their verbal agreement with their landlord. However, in order to avoid misunderstandings in the future, certain areas should be specifically defined in your rental agreement, which should also be a dual language agreement. For example, it can be a good idea to include a clause stating something like, “upon mutual agreement the tenant’s deposit can be used as the last month’s rent.” In Ukraine, there is no legal requirement for landlords to put your security deposit in escrow, and often a landlord may not have the money available to return your deposit when you move out. Many rental agreements allow tenants to move out by giving 30 days of notice before leaving, but it is also worth seeing if you can include a clause that obliges the landlord to return any pro-rated, unused rent.

Some landlords may try to include clauses that require tenants to pay for deep cleaning and repainting their apartments. Make sure that you or your broker resist the inclusion of such unreasonable terms. It is also a good idea to get a signed receipt from your landlord each time you pay the rent (if you are paying in cash), since there have been numerous cases when unscrupulous owners demanded repayment of the rent because they knew that the tenant did not receive a receipt. If your landlord requires any payments other than rent (damages, increase of fees), then contact a lawyer for advice.

 

Tenant Rights and Obligations

Tenant rights in Ukraine are pretty standard. These rights include the right to lodge others for permanent residence with the consent of the landlord. Tenants also have the right to lodge others for temporary residence, with prior notification of the landlord. Consent by the landlord is not stipulated but Ukraine’s Civil Code contains provisions that require the tenant to evict those persons permanently residing with him from the premises within seven days from a demand for eviction by the landlord. A tenant has the preferential right to sign or extend the lease agreement for a new term, and he has the right to sublease the property (with the landlord’s consent).

Tenant obligations in Ukraine are also straightforward. These include not renovating the flat without the landlord’s consent. The tenant is obliged to make timely rental payments and payments for utilities/communal charges (unless otherwise specified in the rental agreement). The tenant is expected to specify in the agreement those persons who will be living with the tenant (such persons have similar tenant’s rights and obligations regarding use of the property). The tenant should carry out maintenance of the housing (unless otherwise stipulated in the agreement).

One tenant obligation in Ukraine that can have tricky real world consequences is that tenants are obliged protect the housing and maintain it in good condition. In practice, this means keeping it in the same condition that is was at the time the rental agreement began. Kyiv landlords are not always reasonable when it comes to taking into account the effects of normal “wear and tear” on their apartment and may try to aggressively overcharge you for “damage” that did not result from your negligence. As a tenant, the best way to mitigate this and other possible risks is to use your intuition before you sign a rental agreement with a landlord. Ask yourself, “does this person seem reasonable?”  

If a conflict with your landlord does arise, it is always better to negotiate with him or her to resolve it. Negotiations with your landlord can be based on the non-disclosure of your dispute (in order not to damage your landlord’s reputation) and not reporting your dispute to the tax authorities (it is not a secret that Ukrainian landlords often do not pay taxes on their rental income). If your dispute with your landlord goes to court, then it won’t be cheap. It is necessary to pay the court fee (at least 1% of the amount of the claim) and for the work of your lawyer. Additionally, the court process will take a lot of time. This could mean at least half a year.

 

Tips for Landlords and Would-Be Owners

In everyday conversation, most landlords generally get about as much sympathy as bosses and just a touch more than politicians. But consider this - in Kyiv a nicely-renovated small flat in the center that rents for USD 600 per month can be worth USD 100,000 to USD 150,000. Meanwhile, in Ukraine it is rare that a tenant pays first and last month rent fees as well as a security deposit. In this situation, a negligent tenant could potentially cause far more damage and lost income to a landlord than could be covered by the prepaid last month’s rent. Negligent expat tenants are an even bigger gamble. Expats can just leave Ukraine, leaving landlords with zero legal recourse to recover their losses. Ukraine’s expat scene abounds with tales of such rogue renters who left without paying considerable debts.

Often landlords will insist that tenants are not allowed to smoke in their apartments or live with people who are not listed in the rental agreement, but these things and other tenant behavior can be hard to control. On paper, landlords in Ukraine do have certain rights. For example, a rental agreement may be terminated by a court if a tenant fails to pay the rent for six months, unless the lease sets out a longer period. In the case of short-term rentals, termination can occur if the tenant fails to pay more than twice. Terminations are also possible in case of destruction or damage to the property by the tenant or other person for whose actions he is responsible. In such cases, eviction from the housing in the event of termination of the lease agreement can only be by a court decision. As a practical matter, in Ukraine there’s a greater risk of a tenant not paying or damaging a property and disappearing than there is of him or her continuing to live at the property while acting in bad faith.

Background checks of potential tenants that include proof of employment and employer information can be a good idea for landlords. In Kyiv, one way to filter out potentially unsavory tenants can be to insist on rental payment via bank wire transfer. Many Kyiv landlords do not declare their rental income for tax purposes, while many international organizations are required to pay for housing by bank transfer for their employees. With this in mind, Kyiv landlords with nice flats in the downtown area who insist on payment by bank transfer can often demand a 5% to 10% premium over market rental rates, which could be more profitable for them depending on their tax structure. 

 

Registration Issues

If you plan to rent your property in Ukraine to a foreign citizen who will be registering in your apartment for his/her residence permit, then always include a clause in the rental agreement that provides for the right to cancel the tenant’s registration upon termination of the lease agreement. In the agreement, it should also be noted that in the event that the tenant’s residence permit is cancelled, he or she must immediately notify the landlord and the landlord may then terminate the lease. Otherwise, a landlord may be accused of assisting a foreigner who is illegally staying in Ukraine. Additionally, as sponsor for your tenant’s place of residence, you can demand a power of attorney from your tenant’s employer to unregister them from the place of registration. Having implemented these simple steps, the owner of an apartment can safely register a foreign citizen as a tenant and there are no negative consequences for doing so.

 

The Bottom Line for Tenants, Landlords, and Investors

For investors who are considering buying investment properties in Kyiv, you should be aware that while rental agreements in Ukraine can be moderately “tenant-friendly,” most risks can be mitigated by carefully screening your tenants. It is also important to note that tenant rights in Ukraine do not resemble the strongly tenant-friendly rights found many EU countries and US states. Like most things in Ukraine, whether you are a tenant who is considering signing a rental agreement with a Kyiv landlord or an owner who is considering letting out his or her property, never forget to take into account the “human factor” and make this the chief basis for your decision-making.

 

Special thanks to attorneys Vasyl Cherednichenko and Tetiana Yashchenko at the law firm ExpatPro for their contributions to this article. Please note that this article is not intended to replace qualified legal advice. You should also bear in mind that your specific circumstances may differ from the assumptions used here.

 

About the author: Tim Louzonis (This email address is being protected from spambots. You need JavaScript enabled to view it.) is a co-founder of AIM Realty Kiev, a real estate agency that specializes in real estate for foreign investors and expats. Tim is a long-time expat with Ukrainian roots; he first came to Ukraine as an exchange student in 1993 and returned in 2008.

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