Ukraine: Overview

RENTAL YIELDS

Last Updated: Jan 08, 2007

Yields in Ukraine are excellent

Yields in Kiev range from 7.50% - 10.2%, by Global Property Guide estimates. The average price per square metre (sq. m) of apartments is around €2,930.

Please note however that our yields data for Ukraine is now very old. They were last updated in January 2007, and the recent price rises mean that these figures may no longer be accurate.

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TAXES AND COSTS

Last Updated: Nov 21, 2008

Taxes in Ukraine are moderate to high

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	15%	15%	15%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Gross rental income of non-resident foreigners is taxed at a flat rate of 15%. Leasing a property is also subject to 20% VAT.

Capital Gains: Capital gains are taxed at a flat rate of 1%.

Inheritance: Inheritance tax is imposed at a flat rate of 30% if the successor is a non-resident and the benefactor of Ukrainian property is also a non-resident.

Residents: Residents are taxed on their worldwide income at a flat rate of 15%.

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BUYING GUIDE

Last Updated: Mar 23, 2007

Buying costs are low in Ukraine

Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 5% to 7% of the property value. The agent's commission is around 3% to 5% of the property value. Other costs include pension fund levy (1%), stamp duty and registration fees.

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LANDLORD AND TENANT

Last Updated: Oct 09, 2006

Ukraine's tenancy law is pro-landlord

Rent: Rent and rent increases can be freely negotiated. The parties may agree on the procedures for periodic rent increases (i.e. depending on inflation). This must be stipulated in the lease contract.

Tenant Eviction: A landlord can terminate a lease without prior notice and without application to the courts, if the tenant has failed to pay rent for three consecutive months.

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ECONOMIC GROWTH

Last Updated: Mar 21, 2009

Escalating economic and political mess

A former Soviet republic, Ukraine has a population of 45.8 million and GDP per capita of US$4,300 in 2008, one of the lowest in Europe. Political stability is still elusive with squabbling between pro-West groups while pro-Russian parties are generally more unified. Unless President Yushchenko consolidates the pro-West vote, he is likely to lose re-election to a Russia-friendly candidate in the January 2010 elections.

Troubles with Russia were highlighted with the January 2009 gas crisis that cut or reduced the supply of natural gas to Ukraine and several European countries. The crisis was resolved when the prime ministers of both countries signed a deal that provided a 20% discount for Ukraine in 2009.

Ukraine’s strong economic growth for the past eight years (average annual GDP growth of 7.3% from 2000 to 2008) is unlikely to be sustained. The economy is expected to contract by up to 6% - 7% in 2009. It will be the biggest economic contraction since 1996.

The main reason for the expected contraction is the dramatic drop in steel prices and exports, the main foreign exchange earner that accounts for more than 50% of exports. Ukraine’s most important export market for its steel and machine-building equipments is Russia, which is also expected to experience recession in 2009. The economy is expected to recover in 2010 with a GDP growth of around 2%.

Despite the economic downturn in 2009, inflation is expected to remain high at 16% - 18%, although, it is already an improvement from the 25% inflation in 2008.

Structural reform is occurring at a snail’s pace in Ukraine. This is still a state-dominated economy. Industries are ruled by oligarchies, and permits, connections and bribes rule.