Ukraine has annual real estate turnover of $3 billion
The Ukrainian real estate market remains uncontrolled, so that the huge sums in cash circulating there are a strong lure for smart operators and plain criminals, concluded a round table discussing the legal regulation of that market.
Not a single insurance company will underwrite policies in it. The state remains neutral and does not interfere in or with real estate transactions. And the victims are in most cases ordinary citizens, says Vitaly Marhulys, general director of the Ukrainian Consulting Association. He knows of what he speaks, for the real estate business has had a most direct bearing on the association’s economic security.
A large part of the population has to place its problems in the hands of various business corporations and private businessmen whose professional status is unknown. In Kyiv alone, Master Consulting, the most capacious real estate information storage and retrieval system, has located some 10,000 intermediaries involved with real estate operations, including more than 500 firms and agencies. The market’s spreading shadow sector is a catalyst of rampant fraud. People are robbed of their property, taxes evaded, and a host of other wrongs perpetrated.
Ukraine’s wildcat real estate market, however, is gradually becoming tamed, believes Oleh Kapliy, president of the Ukrainian Realtors’ Association. In the last decade more than 80% of the Ukrainian population have purchased various kinds of immovable property and the market’s annual turnover exceeds $3 billion, with over 500,000 sale agreements made, involving approximately 3 million citizens.
In view of the need to establish strict rules of the game on the market, the association initiated voluntary certification of realty agents. According to Mr. Kapliy, this certification envisions certain professional qualifications and the setting up of a public registry of certified realty agents and real estate agencies. In his opinion, this will help make real estate transactions more transparent and relieve the market of incompetents and crooks. “It’s very important that the association already has its own code of professional ethics,” stresses Mr. Morhulys, “and we must legally seal it now, so the certificates are recognized by all executive authorities and no deals are made with those that don’t have certificates.”
Liudmyla Samsonova, deputy chair of the Ukrainian Appraisers’ Society, broached another nonetheless important issue at the round table. “Land ownership is registered with the Land Department and the Technical Information Bureau deals with improvements. This means two agreements have to be made when buying real estate. This is very hard to explain to prospective investors. It is the old Soviet system of land ownership, distinguishing between the plot and improvements, and it is slowing down the real estate market because it complicates the procedures of approval and title transfer.” Ms. Samsonova believes that land and improvements ought to be considered as a single whole.
Lack of legislative regulation is also a major obstacle in the way of market operators. The bills On the Realtor’s Business and On Real Estate Transactions are still in limbo in Verkhovna Rada. Yet the realty intermediaries will not wait for lawmakers to pass the bills. Mr. Kapliy says the association has proposed developing a basic concept of the Ukrainian real estate market.
