How to buy flat or house in Russia

There is a short history of a real estate market in Russia. In the Soviet Union the state owned all the apartments. Therefore, moving was restricted. But after the fall of the Soviet Union the people from Moscow started privatize and sell and buy properties.

This guide is tailored for you to how to buy home in Russia:

• Is now a good time to buy property in Russia?
• Property prices in Russia
• Where to buy in Moscow?
• Central Moscow property
• Moscow outer districts
• Russian real estate agents
• How to buy Russian real estate
• Checking a property’s history
• Costs of buying Russian real estate
• Bank fees
• Depositary agreements
• Notarization
• The closing procedure on Russian real estate

Is now a good time to buy property in Russia?

There were a lot of factors that influenced houses prices across the country and put the country into a recession:

• The economic and political climate in Russia;
• economic trade embargos after their invasions in Crimea;
• invasions in Crimea;
• invasions in Ukraine;
• the crash of the Russian currency;
• high inflation rates;
• high interest rates.

On the surface, without inflation adjustments, Russia’s property market still appears to be growing, but with inflation we see a decline.

The Russian housing market has slowed down.

Property prices in Russia

Moscow is a densely populated capital with over 12 million residents. The city is circular surrounded by four rings spanning from the Kremlin in the center to the Moscow Ring Road or MKAD that defines the city’s limit, with the exception of a few annexed territories.

Inside the rings, the city is divided into ten administrative divisions called okrugs, which in turn are subdivided into 123 districts.

Property prices for buying in Moscow are usually listed with a price per square meter in Roubles, and sometimes with a total property price. Recent figures from Numbeo put average prices for buying an apartment in Moscow at around 308,500 Roubles per square meter in the city center and 147,000 Rubbles outside of the city center.

If you’re buying property in Moscow, like most cities, location, size, and type of property will dictate the price and what you can afford. City center apartments in Moscow come at a premium price. Although, there are a number of areas outside of the city center that also demand a high price in wealthy districts near the Garden Ring.

Moreover, some modern complexes oriented on the luxury markets and foreign investors will be more expensive. For instance, when it comes to the Central Administrative Okrug like Presnenskky District and Sokol luxury apartments cost millions of roubles.

Where to buy in Moscow?

Because of the ongoing traffic jams you should consider where to buy a home in Moscow and how long it takes to commute from work to home or school etc.

It is not difficult to find district with a good transportation because the Moscow Metro is one of the longest in the world with 340 km along and 203 stations.

Many foreigners like to buy a Moscow apartment in the center to have a short way of transportation.

Central Moscow property

Surrounding the Kremlin are a number of districts within the Central Administrative Okrug. Prices per square meter will be some of the highest in Moscow like here:

• around Tverskaya Street;

• Arbat, Kropotkinskaya, Smolenskaya;

• Patriarchy Ponds;

• Chistye Prudy.

Moscow outer districts

When it comes to budget and types of property it is better for you to but a flat outside the Central District. Such districts like Sokol, Shchukina, Voykovskaya, and Filakovsky are considered to be the best with a plenty of green spaces.

If you want to live near the city center and have fresh air and quite area you need to buy a flat around Sadovoye Koltso or Garden Ring Road and the Boulevard Ring Road.

Tagansky district on the eastern side of the Garden Ring is an up-and-coming area.

The next one Kuntsevo/Krylatskoye district is also a good option with good access to the International School of Moscow and it is considered to be the most ecological area in the city. Leninsky Prospect is also a popular residential area for foreigners because of a number of excellent international and national schools.

When it comes to the east and south industrial districts the prices for flats should be low and these areas have a good transport connection to the city. We do really totally advise you to find a good reputable estate agent in Moscow to help you get a nice accommodation in Moscow.

Russian real estate agents

If you are going to buy property in Russia a lot of info on property for sale is available online in the Internet.

A good Russian real estate agent can help you to choose the property and organize a viewing and also provide the most complete and current information on the properties on the market including the unlisted in public. Moreover, they can help with carrying out due diligence on a property and structuring a safe transaction.

To represent your interests during buying the property you should deal with a real estate broker or a lawyer with Russian real estate experience.

How to buy Russian real estate

If you found the district and the flat to buy there you should think about the a lot of points of buying your property in Moscow.

Checking a property’s history

You should carefully research of the property history because the real estate laws are constantly changing. Please be careful of the risks like your ownership rights may be challenged by previous owners or people formally registered in the apartment. You need to avoid of them if you determine them before the real estate transaction.

Costs of buying Russian real estate

It is the norm in Moscow for a buyer to cover all closing expenses, including notary fees, state registration fees, and bank expenses. Besides, do not forget to pay brokerage fee if you use a real estate agent. It includes the following:

• property search;
• property and seller background check;
• review of the ownership documents history and the “rights of use” check;
• arranging the deal closing;
• the supervision of the final property transfer to the new buyer.

The brokerage fee is usually calculated as a percentage of the sale price ranging from 6 percent for cheaper properties to 3 percent for more expensive properties.

The seller’s brokerage fee includes the following:

• property evaluation and appraisal;
• property marketing and arranging property viewings;
• negotiating with potential clients;
• preparing the complete set of necessary documents for the transaction;
• arranging the deal closing;
• supervising the final property transfer.

Bank fees

The majority of real estate transactions are made in cash and sale-purchase transactions always take place in a Russian bank to guarantee buyers and sellers the payment is made upon the final ownership transfer. Full funds are deposited and only released to the seller when the complete package of registered documents under the buyer’s name is presented.

Depositary agreements

Most Russian real estate deals extend over a period of five weeks to several months, requiring collection of various documents from state institutions and the buyer may need to secure finances or the seller may need to find an alternative residence. For this reason, a preliminary or depository agreement is made between the buyer and the seller detailing the terms and conditions of the future sale and what necessary from both parties.

Upon signing the preliminary agreement, which can be an advance payment (Avans) or property deposit (Zadatok), buyers pay a deposit to take the property off the market while the required documents are assembled and the close of sale is made. The deposit amount isn’t a set percentage, but usually a round figure agreed by both parties. Always ensure you use an experienced and reliable agent or an experienced Russian real estate lawyer to draft a depositary or preliminary agreement and perform the due diligence on the property.

Notarization

Notarization of a sale-purchase isn’t required by law, but it is advised as it is the equivalent of buying title insurance. Notary fees vary depending on the sale price of the property, ranging from 0.7% for more expensive properties to 1.5% for less expensive ones.

The closing procedure on Russian real estate

Once due diligence and paperwork is complete, the closing procedure begins, where funds are deposited in the bank and both parties sign the sale-purchase agreement. The sale agreement is then submitted for state registration (propiska).

On the property transfer date, the parties need to sign an Acceptance Act, usually at the bank, notary or real estate office. This certifies that the property is transferred to the buyer in the agreed condition.

Registration of the sale-purchase agreement with the Federal Registration Service for Moscow makes the transfer of property rights official. This usually takes 30 calendar days to complete, but this can be expedited if you’re using a mortgage to finance the property.