Who can I trust?
The first problem is just related to the choice of a company that will help in the search for real estate and the implementation of the transaction. Unfortunately, now, when the Russian foreign real estate market is on the rise, many "extra people" rushed there, including from the tourism business.
There are two sure ways not to make a mistake with the choice of a company. The first is to use the recommendation of friends who have already bought real estate and were satisfied with the work of the company. The second is to ask questions about the legislation of the country and the scheme of the transaction. If the realtor "floats" or worse – begins to reassure you that there are no problems and there can't be, it's better to look for someone else. A competent professional will always tell you about the realities of the market and tell you how to protect yourself from legal risks, taking into account the legislation of a particular country.
A good advice is to check the package of documents from an independent expert when buying foreign real estate. However, in Russia, everyone who has sufficient competence is engaged in the real estate business. "Talking about finding an independent expert in Russia is just ridiculous," says Yulia Titova, head of the Foreign real estate department at BEST-Real Estate Corporation. – If a person does not conduct transactions himself, then he will never know all the nuances. To conduct a qualified examination, you need a lawyer in the country where the property is purchased." However, even in this case, it should be borne in mind that a foreign lawyer will check only the title of the object, that is, the history of the transfer of ownership rights, but he does not know the nuances of Russian legislation and the banking system. Therefore, in the end, you can rely only on those who have practical skills in conducting transactions with Russian citizens.
Ours or foreigners?
Which companies are better to deal with when buying – Russian or foreign? Another question to which there is no definite answer. A good knowledge of the market by local firms, unfortunately, does not guarantee decency.
Yulia Titova, told a case that happened to her friends who were picking up apartments in the Czech Republic. At first they wanted to buy with the help of "BEST Real Estate" an apartment in Prague, but at the last moment they decided to go to Karlovy Vary. There, through a local agency, they chose an apartment, made an advance payment for it and returned to Russia. As you know, in the Czech Republic, as in some other countries, real estate is registered as a legal entity. The Czech agency created a company for them, and put its own person as the manager, because according to the law, the manager must be a Czech citizen or a person with a residence permit.
The problems started when Russian buyers wanted to sell their property. They contacted several companies and quickly found a buyer. But then it turned out that the Czech agency, with the help of its manager, was holding the apartment in order to sell it to its clients. When the owners arrived, the locks were replaced in the apartment. The story continues to this day – the Czech agency cannot find a buyer in any way, and the owners cannot conduct the transaction independently without the participation of the manager.
It is much safer to choose a country where you do not need to create a company to buy real estate. For example, in Montenegro, this is necessary only in the case of building a plot of land on which there are no buildings, and you can buy a house or apartment for an individual. Do not take on faith the assurances that the creation of a company is fast and inexpensive. For example, in Croatia, the annual maintenance of the company will cost about 5,000 euros. If you add utility costs and an annual tax here, it becomes clear that this country is not for low–budget buyers. Oddly enough, it is more profitable to buy an inexpensive object in Italy or in Spain, where the property is registered to an individual.
Looking for money
However, before looking for a realtor, it would be nice to find money. Many people believe that the threshold for entering the foreign real estate market is quite high, but this is not the case. "Today, it is quite possible to think about buying with an amount of 50,000 euros," says Yulia Titova. – The amount may be less, but in this case the search circle is significantly narrowed." For 50,000 euros, you can buy a one-bedroom apartment near the sea, for example, in Bulgaria or Turkey. About the same price is a studio apartment on the outskirts of Prague or Karlovy Vary in the Czech Republic. And the minimum is 20,000 -30,000 euros, but such options are rare.
If there is not enough money or you want to buy something more expensive, there is a mortgage. The loan allows you to buy an object three times more expensive than the amount available on hand allows, because the minimum initial payment is usually 30%. However, not every country has such an opportunity. Mortgages are poorly developed in the countries of the former socialist camp – in Bulgaria, the Czech Republic, Montenegro. Bulgarian developers who come to our exhibitions often assure that Russians can easily take out a mortgage loan in Bulgaria, but in real life there are no such cases yet. In Germany, France and Italy, mortgages are well developed, but there are very strict requirements for credit history, which Russians usually do not have. And the easiest way is to take out a loan in Spain, Cyprus and Portugal.
Let's say that in Spain the cheapest objects cost 100,000-120,000 euros. For example, it can be an apartment in resort towns located in the south of the Costa Blanca. "Taking into account the mortgage, having 50,000 euros on hand, you can safely look for real estate in Spain, instead of buying a cheap object without a loan in Turkey or in one of the Eastern European countries," says Natalia Parfenova, CEO of Greenmar Corporation.
How not to become a cheated depositor
Any buyer of "secondary" housing is most concerned about the legal risks associated with the transaction, as well as the likelihood of losing ownership if the purchased object was not "legally clean". There is another risk in the market of new buildings – the object may not be completed, or the rights to real estate cannot be registered. Scandals with defrauded depositors happen not only in Russia, although our country has surpassed everyone in terms of the scale of this problem.
The story on the topic of new buildings was told by Yulia Titova. It was in Bulgaria. Our compatriots bought an apartment in a complex under construction. The house was built, and the developer received the so-called "Act 15", which is issued when general construction works are carried out. But the "Act 16", indicating that the house was accepted by the State Commission, the developer could not be obtained, because urban planning norms were violated during construction. Now people already live in the house, but it is impossible to resell an apartment in it.
However, Irina Donskikh, CEO of Rosbolgarestate, assures that there are no serious problems in the primary market of Bulgaria today, because none of the buyers have lost their money. But this does not mean that you can completely relax. "Russians (unlike the British) often agree that an incomplete transaction amount is indicated in the contract," she says. – The balance in this case is paid to the developer in cash or transferred to the account of an affiliated company, usually registered offshore. The price at the same time turns out to be slightly lower, since the developer saves on taxes, but if the buyer wants to terminate the contract, he will be able to get back only the amount that was specified in the documents. There was a case when a buyer from Russia, dissatisfied with the quality of construction, demanded a refund and, to his surprise, received less than he paid."
Such native corruption
Very, very much depends on the country. If in Bulgaria the situation in the primary market has improved in many ways, then in Montenegro in the past and the year before, buyers often faced problems. Their main reason is the high level of corruption in the construction business. "80% of new buildings in Montenegro are built according to the following principle: the company receives a permit for the construction of certain areas, actually builds one and a half to two times more and, in order to settle the case, gives a bribe in the municipality," says Yulia Titova. – But corruption is a haphazard thing. If developers forget to share with someone, then the project freezes. Some houses are legalized, some are not. In some complexes, extra floors even have to be demolished. The hostage of this situation may well be a foreign buyer."
What is most surprising is that many of our compatriots, knowing that everything is not going smoothly with the object, still buy apartments in it. The seller, of course, claims that there is nothing terrible and the situation will settle down someday. But those who do not like to play Russian roulette in a foreign country should not forget that the price "below market" is fraught with trouble.
Fortunately, in most European countries, the risks of buying a new building are practically reduced to zero. For example, in Spain, a buyer can get a bank guaranteeon the deposited money. Either the buyer or the construction company pays for such a guarantee. In addition, in Spain it is possible to issue insurance that guarantees a refund to the buyer if it is impossible to complete the construction. "Developers finance construction with bank loans," says Natalia Parfenova. – The loan is issued in tranches, in accordance with the stages of construction. That is why, when buying at the construction stage, the first payment is no more than 20-30% of the total cost, the buyer pays the rest after completion of construction, or you can get a loan for it."
The West is not perfect either
The protection of property rights when buying real estate on the secondary market in Western Europe is much better carried out than in Eastern Europe. But there may be problems there, too. For example, according to Natalia Parfenova, Spain has very strict building regulations, including for individual households. They concern both the height of buildings and the maximum allowable area of housing. Sometimes the Spaniards go to the trick – they leave hidden rooms during construction, and after the acceptance of the house they make doors there. Buying such a house can become problematic – the authorities can force the new owner to bring the object into compliance with building regulations at their own expense.
Problems may also be related to the functional purpose of the site. One Russian bought a house on his own. He was very pleased with the low price, but then it turned out that this was agricultural land, which means that it was impossible to build on it at all. The story that happened on the island of Lanzarote is well known. After the eruption of the volcano in the XVIII century. many owners left the island. Then their land was sold to foreigners, and after many years the heirs returned, who claimed their rights to this land. Therefore, any real estate, and especially land, should be very seriously checked during the transaction.
If you don't understand, don't sign
Many people are concerned about the problem of not knowing the language. Fortunately, it is not difficult to master the minimum required for communication in a store or restaurant. If you know English, this is already half the battle. Besides, there are already enough Russians in many countries not to feel isolated.
However, when dealing with real estate, the lexical minimum is clearly not enough. Experts unanimously advise never to sign a document whose content is unclear. Irina Donskikh says that, for example, in Bulgaria it is necessary to require a preliminary agreement in two languages. But the main document is still drawn up only in Bulgarian, although the legislation requires that an interpreter be present at the signing procedure. Approximately the same practice is adopted in other States.
No matter how many "horrors" the experts of the foreign real estate market tell, these "horror stories" look somehow childish compared to those that relate to housing transactions in Russia. In addition, most stories have quite a happy ending. So is it worth being scared of foreign purchases? You just need to be careful and not let things take their course – this is the most reliable guarantee of success.
