FAQ for Landlords. Getting ready to conclude a rent agreement

Conclusion of a flat rent agreement is an issue of paramount interest not only for tenants but for flat owners, too. There are plenty of polar opinions and contradictory data pertaining to this topic. What are the ‘bullet points’ one needs to focus on?

Formalising Your Commercial Activities: The Procedure

If you wish to rent out your real property, you have two options to choose from: one with your commercial activities registered, and one without going through the said procedure. Your taxation will depend upon whether you are a FOP (‘Physical Person-Entrepreneur’, i.e. an Individual Proprietor under Ukrainian law) or you aren’t one.

If you have not registered as a FOP, you will have to calculate your income tax on your own and pay it accordingly. At the present time, income tax rate is 18% on total income. Cumulative tax amount paid shall be indicated in your annual tax returns. If you are renting out to another FOP or to a legal entity, they will pay this tax directly, acting on your behalf, as tax agent(s).

A private entrepreneur may rent out his or her property under a simplified taxation system. The best option is to pay the Harmonised Uniform Tax every month. Harmonised Uniform Tax rate is 20% of the amount of minimum national living wage. This option is far more convenient; there are, however, certain restrictions and exceptions. Simplified system does NOT cover:

• Land lots with area in excess of 0.2 hectares/0.49 acres;

• Residential premises with area in excess of 100m²/1,076 square feet;

• Non-residential premises with area in excess of 300m²/3,229 square feet.

If the area of your real property is larger than the values indicated above, the only option is going to be the general system of taxation.

Please keep in mind that if the flat owner is not a resident of Ukraine, you will only be able to rent it out as a FOP or through a legal entity.

Entering into State Register

Pursuant to acting legislation, the right of ownership to a flat must be verified by virtue of an entry duly made in the State Register. If such an entry does not exist (due to any reason whatsoever), address a notary or a state registrar with a request to correct this mistake.

Obtaining Consent from Co-Owners

You may only rent out a flat if and when you have obtained a written consent from all of its co-owners. This is why, if your residence is co-owned, you should take this issue into consideration in advance. Same thing applies to a marriage duly registered. For a mortgage, you are going to need consent from a mortgage holder.

Written Agreement

Oral agreement still remains the most popular option in the Ukrainian real estate market; a written contract, however, will always be a better option for you. It is a document that can truly protect the rights of both Parties in the event if any conflict, confusion, or discrepancy arises.

As you are putting together your rent agreement, avoid any generalised manner of wording: be concrete. Do write down all of the aspects you care about: how much is to be paid, what is the procedure of payment, what the current condition of the flat is and what it should be, which repair works and/or modifications can and which cannot be performed/made, how any enhancements (regardless of whether they are necessary or optional) should be paid for and by whom, what is the procedure for payment of the utility bills etc.

How can Comprehensive Legal Services help you?

Considering all aspects and nuances pertaining to a properly concluded agreement is a tricky challenge. This is why it is best to seek assistance from experienced lawyers. Legal specialists will be happy to help you take everything that matters into proper account and compose an agreement that would be most beneficial, safe, and practical for you.

This is why we, Comfort Realty Company, are here to offer you our services not only as your real estate agent but also comprehensive legal services, standing by you throughout the entire procedure of conclusion of the agreement. This means:

• Stability and Mutually Beneficial Conditions of the Contract;

• All of the most recent intricacies of acting legislation taken into due account;

• Advice and support provided for any issue you might have;

• A personalised agreement concluded both for long-term rent and per day rentals;

• Standing by you throughout the procedure, until you sign your agreement with your future tenant.

We are here to care about your comfort and safety!