How to buy an apartment in Georgia? Stages of purchase

Why Georgia?

Russians did not choose this beautiful southern country by chance: the favorable climate, magnificent landscape, sea and mountains, but at the same time the relatively low cost of living, low taxes for businesses, easy procedures for interaction with government agencies and, of course, the hospitality of locals, most of whom speak Russian or English. Against the background of the armed conflict with Ukraine, there is a negative attitude towards Russians, however, the majority of Georgians treat Russians kindly.

Russian citizens do not need a visa to stay in Georgia for 365 days. Next, you need to leave the country, and upon re-entry, the deadline will reset to zero. There are still no direct flights between Russia and Georgia (since July 2019). You can fly from a connecting flight, for example, in Minsk, Yerevan or Istanbul. 

In Georgia, the certificate of vaccination with Sputnik V is valid (except for the one-component vaccine), which is a significant plus for many Russians. Confirmation of vaccination (or PCR test) is required when crossing the border. Within the country, covid restrictions are gradually being lifted. As of April 2022, everything has been canceled except for wearing masks indoors. 

It is also necessary to note the attractive value of real estate in Georgia. A 30-35 sq. m studio in a new modern residential complex in Batumi on the first or second coastline can be purchased for $35,000-50,000. For comparison, the minimum budget for the purchase of similar housing in the Greater Sochi area is from 8-9 million rubles. According to experts of the Georgian market, the lots of the economy segment have already scattered like pies. Prices have not yet responded to the growing demand, although the prerequisites for an increase in the cost of square meters are obvious.

Stage 1 - choosing a property. Apartment, house or apartment?

The most popular purchase positions in Georgia are apartments or apartments in a new building or on the secondary market. They are looking for apartments in high-rise buildings with gas heating for their own living. Apartments (usually without gas) are purchased for seasonal holidays or rental. For apartment maintenance&It is necessary to pay the management company (approximately $0.5-1.1 per sq. m.).During the season, from June to September, the cost of renting a studio with a minimum area (30-35 sq. m. m) in a new complex on the first or second coastline is approximately $100-120 per day. It should be borne in mind that when receiving income from renting out real estate, owners are required to pay income tax in the amount of 5%.

When looking for an apartment or apartments in a house that has not yet been commissioned, carefully consider the choice of the developer. It is advisable to listen to the advice of an experienced realtor who knows the local market well. Cases of long-term construction or double sales are extremely rare here. Nevertheless, new buildings are often commissioned with a delay of up to 5-6 months. It is common for some apartments in a house that has not yet been rented to be occupied until the work is fully completed.

If you are considering buying an apartment on the secondary market, it is necessary to carry out a standard procedure for checking for legal purity, that is, to make sure that the property is not secured, not under arrest, and there are no persons who can potentially challenge the transaction. Usually, a realtor takes over this function (or you need to involve a lawyer). In Georgia, there is a practice according to which the seller pays for the agent's services in full.The exception is situations where the buyer wants to consider an expanded number of lots or it is a question of purchasing an expensive object.

When buying a house in Georgia, it must be borne in mind that foreigners are prohibited from purchasing agricultural land. Perhaps this is the only restriction that applies to non-residents. However, in some cases, this issue can also be resolved by changing the type of permitted land use. Such a procedure, if it is fundamentally possible, will take additional time, about 2-3 months.

The 2nd stage is the discussion with the seller of the terms of the transaction. Installments and mortgages

An important point that needs to be negotiated with the real estate seller is the settlement procedure. When buying a house in a new building, an advance payment of 30% of the total amount is most often made first, and the rest is paid in stages. Many developers offer interest-free installments until the end of construction, and often further, for a year or even more. Such conditions can be called more than attractive.  

But taking out a mortgage to buy an apartment in Georgia has become more difficult for Russians today.After the outbreak of the armed conflict between Russia and Ukraine and the subsequent sanctions, most Georgian banks suspended opening accounts and issuing housing loans to Russian citizens. However, according to information from the end of March to the beginning of April 2022, it is still possible to open an account in some banks in Georgia. Mortgages are also issued, but the review period has increased, among other things, due to the large number of applications. Those who purchase an apartment in a ready-made house are more likely to get a loan. The rate is 7% per annum in dollars.

The 3rd stage is the conclusion of the deal

Suppose an apartment has been selected, all conditions have been discussed, and the parties are ready for a deal. If we are talking about a new building, a preliminary purchase and sale agreement is first concluded between the buyer and the developer, according to which the former receives a preliminary ownership right. After the completion of the construction and delivery of the house, the parties sign the main contract.

In both cases, the buyer and the seller are involved in the transaction - a representative of the developer, and according to the law, an interpreter must be present and sign the contract. This may be a relative or acquaintance who speaks Georgian and is a citizen of the host country. However, it is safer to invite a translator from a translation agency - the service will cost only $ 10. The agreement is drawn up in Georgian in lari at the exchange rate of the national bank at the time of its signing.

To conclude the transaction, the buyer (or his authorized representative), the seller and the translator come to the House of Justice, where they sign the contract in the presence of a justice officer. The procedure takes about 15 minutes. The buyer needs to have a single document with him - a passport. In the case of a remote transaction, you will also need a notarized power of attorney for someone who will represent your interests. The practice of choosing an apartment online and concluding a deal without personal presence has become popular during the pandemic.

Note that no taxes are provided for the purchase of real estate. You only need to pay the fee for registration of ownership rights. It is 50 lari (about 1,500 rubles) for registration within the standard time frame (3 days) or about 200 lari (about 6,000 rubles) in case of urgent registration (on the same day).

Thus, the procedure for buying an apartment is simplified as much as possible - the buyer only needs a passport, the amount specified in the contract and payment of a small fee.

When buying an apartment on the secondary market, the algorithm of actions is similar, with the difference that you do not need a preliminary agreement.

Stage 4 -settlements between buyer and seller

Until recently, several Russian banks (Sovcombank, Tinkoff Bank, Alfa Bank, and some others) could make payments from individuals' accounts to legal entities in Georgia. However, today this path is impossible or difficult due to sanctions. The alternatives are either unusual, inconvenient, or unsafe. Nevertheless, buyers are forced to resort to them. Payment via cryptocurrency is becoming widespread. In Russia, for example, you can purchase USDT and cancel it in dollars with a commission in Tbilisi. Some developers already accept payments in cryptocurrency (with a 2-4% commission for each transaction) or rubles, but at a discounted rate. Some part of the amount (and in the case of a small apartment, a significant one) can be brought in cash. The limit is $10,000 per person.

The 5th stage of obtaining ownership

Information about the occurrence of ownership rights, including preliminary ones, is displayed in the electronic register. You can verify that the apartment has become the property of the buyer by registering on the website. No paper supporting documents are provided.

Homeowners in Georgia, both citizens and foreigners, pay an annual real estate tax in the amount of 0.05% to 1% of the cost of an apartment or house. The rate depends on the location of the facility and the family's income.    

To summarize, real estate in Georgia is not overpriced yet and certainly has investment potential. The additional costs of buying a home are minimal. The transaction processing procedure is sufficientsimple. All this speaks in favor of choosing a country that is the birthplace of fine dishes and wines, both for moving and for investing in square meters. In the first case, it should be noted that in order to obtain a residence permit, the value of the purchased property must be above $100,000.

The negative factors influencing the final decision on the purchase of real estate include difficulties in settling accounts with the seller. There are also risks associated with the unstable geopolitical situation in the world. One of them is the restriction or complication of travel between our countries, the introduction of a visa regime. In addition, new waves of the pandemic may hit the tourism business again, and, consequently, the profitability of renting apartments. The latter should be taken into account by potential investors.

Thank you for the help in preparing the material from market experts in Georgia:

Arkady Mineva, company JoinGeorgia

Arthur Loginov, companyAtlas

Dina Pozharskaya, company DB Number Group