Situation of Real Estate Market in Ukraine
Main difficulties on ukrainian market:
- Securitization of property rights (risks to lose the real estate property rights)
Overview: Unfortunately, property rights do not well secure in Ukraine. You as investor may lose your own property rights on real estate. It can be cause by frauding during the phase of preparation property rights. Frequently it happens on secondary market because investors try to minimize the price of real estate and they will catch by unfair brokers or sellers.
Solving by LeaxCoin: The LeaxCoin can increase securitization of property rights by integration to public accessible list of real estate. The investors can check their future real estate correspond all legal and normative norms. Firstly, it follows to openness of ukrainian real estate market and also benefits foreign investors to invest to local real estate market without high risks. Moreover, it increases turnover on the real estate’s market and investors will not worry about securing their rights.
- High bank loan’s interest rates
Overview: The main restriction of developing ukrainian real estate market is imperfect loan’s market with unfair interest rates. There are many potential investors on the market but they can not become real investors due to low income and no possibility to get the loan with low interest rate. Banks propose only high annual interests rates to earn extra profit in the end of the year.
Solving by LeaxCoin: The LeaxCoin foundation can solve these problems in easy way. The fundraising of LeaxCoin foundation could be used as micro financing for building and purchasing real estate. Low interest rates from global company compared with western experience and low borrowing costs can push credibility on ukrainian real estate market.
- High additional transaction costs of purchasing real estate property rights ( money and time consuming)
Overview: During the phase of purchasing property rights on real estate investors facing with additional costs for notary services, government fees, payments for brokerage services and financial expenditures. Many of these costs do not regulate by government authorities therefore investors cover extra costs. Moreover, financial expenditures are not only the one kind of costs the more critical are time expenditures. Investors spend a lot of time fighting with bureaucracy and bribing.
Solving by LeaxCoin: New technologies that LeaxCoin foundation promotes might be valuable in solving problems mentioned above. Following the blockchain technology can help simplify the routine of getting property rights for free without shadow costs. Only that investor need to do for making right decision to pay price agreed previously and transfer it to the seller.
- Fraud with property rights
Overview: Investors which do not familiar with specific features of local market or who faces with it firstly might be frauded. Mostly it happens on the secondary market when investor can not check complete information about particular building or apartment. It caused by digitizing the database of real estate’s property rights. Intruders using forged documents show the fake proprietor. After some time when new owner wants sell the real estate and going to government authority he figure out the real owner of property rights on his real estate.
Solving by LeaxCoin: To protect themself from being frauded with property rights they need use in near future blockchain technology. Each block has information about property rights on every real estate as the list. The advantage of this technology that nobody can change information inside the node so investors might be sure about safety and completeness of providing information.
- Dangeries to pay for real estate by cash
Overview: The new Police reform broke down and the crime level rose at the same time. Providing payments by cach that are common in Ukraine now it is dangerous. There are many criminal elements operated in large cities especially in Kyiv — capital city. The police specialists were fired that collapsed investigation of crimes. Also banks involved in crime they share information about huge amount of cash on hand to criminal elements.
Solving by LeaxCoin: Nowadays, it is creating new middle class in Ukraine people who work in IT as freelancers. They earn foreign currency because they make job as the freelancers for U.S., the U.K., Israel and other developing countries.They get money to own accounts in the form as filat money and also they get paid by cryptocurrencies. The LeaxCoin foundation can benefit from this group of people. The main goal to create platform when these investors can convert their digital money to real estate in Ukraine or somewhere else. There is instrument which helps invest money in the real estate all over the world.
- Real estate prices influenced by exchange rate of foreign currency
Overview: In Ukraine construction of real estate has stronger connection to the U.S. dollar. It is owing to import materials and machines involved in this process. All elements itemized before are trending in U.S. dollars or euros. The main thing that all licensing from government authorities are not free. The developers should pay bribes for commissioning. If they ignore this not common rule they may lose future revenues and even their buildings or ground.
Solving by LeaxCoin: LeaxCoin technology may solve this problem not directly. Creating mechanism of providing loan for ordinary people with publicity accessible list of property rights on real estate can give investors chance to protect their own rights and decrease costs of borrowing. The developers lose part of their revenues will be forced to set up fair prices.
- Many buildings of real estate are illegal and do not have licensing from government authorities
Overview: Many new constructions now do not achieve licensing for commissioning and someone also for building from government authorities. The key problem that ukrainian real estate market do not have open database of developers with bad reputation. It exist only spontaneous blogs and civil organizations providing by volunteers.
Solving by LeaxCoin: Creating publicity database of developers’ reputation decreases risk of lose investments and property rights for real estate. Investors who want invest in real estate have possibility check the list of developers’ reliability directly on the site.
- Migration from Ukraine to Poland influences real estate market’s prices
Overview: Today high-skilled workers and young people going to near country — Poland. There is huge diaspora in polish cities near border of Ukraine. In this case, people transfer their money directly using banking accounts. People transfer also earned money from Poland to their relatives in Ukraine. They need to rent or buy real estate in Poland or other countries where they migrate. The main reason to migration is worse job opportunities compared with developing countries.
Solving by LeaxCoin: People have a demand to convert their savings to real estate in Eastern/Western Europe or Canada. The LeaxCoin foundation can help investors purchase real estate’s property rights or help find best renting choice. Moreover, in long term the LeaxCoin foundation might help transfer money from these regions to Ukraine. Investors find this way more safety then transferring their savings by cash or directly on relatives’ accounts.
- People from East part of Ukraine buy real estate in surroundings around the Kyiv
Overview: The inner migration is the key challenge for ukrainian business and Ukraine too. People running away from war in east part of Ukraine and going to large cities. The majority coming to Kyiv and it is building boom exist near Kyiv. In this case benefit small developers in cities-satellites.
Solving by LeaxCoin: The LeaxCoin foundation can benefit on accompanying services from migration processes in Ukraine. The key source is open database for developers’ reliability and also counterparty for purchasing real estate’s property rights in Ukraine and abroad.
How a Real Estate Transaction Works, Buying or Selling and Renting (payment methods)
The developers build three different types of real estate to sell: budget, business and primary. The first and second type targeted to middle-class and the third one focuses on luxury real estate. Developers propose offen new apartments or houses in stronger connection to U.S. dollar to minimize their currencies risks. Nevertheless, the main developers to secure their market share propose their consumers long-term loan programs in national currency with low interest rates. Although many of market leaders have still remain strong connection to U.S. dollar on business and luxury real estate.
The process of purchasing property rights on real estate starts from issuing bonds on your future apartment or ground. Further you open in depositary own account and buy these bonds. Next step that your bonds convert automatically to square meters of your future apartment. Finally, it takes some time that you receive own property rights on real estate.
Frequently, in Ukraine people try purchase property rights by cash to minimise tax base. Especially, people prefer provide transactions in U.S. dollars rather than in national currency — ukrainian Hryvnia. They register part of the real estate’s price for government authority and pays the taxes based on it. Most of the cases, it is minimum sum that written down in government authorities’ instructions and should be paid in the case of buying/selling real estate. The rest of the sum they pay by cash or bartering on another real estate.
Unfortunately, this practise caused by high taxes on real estate from government authorities and imperfect publicly accessible real estate property right’s list.
The process of renting is similar to many of the developing countries like Russian Federation, Belarus, Kazakhstan and some of Kavkaz region’ countries. The lessee pays lessor the deposit equal two times month payment. This deposit can be used as last payment to lessor if the lessee follows all requirement under the contract. In ukrainian practice, the lessee pays frequently by cash or directly to lessor’s account without registration in taxation office. The bills for utilities have to be paid by lessee. By the way, the contract could be written directly between lessor and lessee or with third party as broker who signs the contract according to the law. According to ukrainian realities all rental payments influenced by actual US. dollar exchange rate.
Ambassador for LeaxCoin