New rules for evaluating real estate in Ukraine – opinions of lawyers
In Ukraine, the rules for evaluating real estate are changing. On November 12, the Verkhovna Rada adopted bill No. 2047-d, “On Amendments to the Tax Code of Ukraine regarding the Elimination of the Corruption Scheme in the Field of Registration of Information from Real Estate Appraisal Reports and Transparency of Property Sales”, as the basis.
From January 1, 2020, the assessment will be automatic and much cheaper for owners of square meters. What are the advantages and pitfalls of innovations metropolitan real estate portal 100realty.ua learned from lawyers.
Automatic valuation will be carried out according to general parameters and they do not always reflect the real market value of the object
Lawyer Yana PioroYana Pioro, lawyer JN Legal: “With the entry into force of Bill 2047-d for sellers and buyers, as well as appraisers and notaries, new property valuation mechanisms are planned.
Of course, a positive aspect is the elimination of electronic platforms that acted as intermediaries. These sites were subject to constant criticism as soon as they had the right to enter information into the Unified Database of reports on property valuation, without the right to enter data by the appraiser independently. For services, the appraiser made a report on the valuation of property in the Unified Base, a fee was established by electronic platforms. For the real estate market, this means that with almost any sale of property and, accordingly, its evaluation, this amount will be included in the price of the appraiser.
The bill offers a solution to this problem. A completely new approach to creating property valuation reports is proposed. The owner of the property will be able to use the service of electronic determination of the estimated value of the property using the service of the Unified Database of Property Valuation Reports. As a result of such an assessment, a certificate will be generated about the estimated value of the object, and the price of the property is set automatically by the system (using the automatic property valuation algorithm). This approach will make the assessment more comfortable, mobile and faster. In addition, this will reduce the cost of the seller of property, since he will not need to first contact the appraiser and pay for his services.
Related article: New rules for assessing real estate in Ukraine – what changes the new law of the Rada
But it is worth noting that the proposed electronic method of valuing property (independently by the subject), although it has many advantages and conveniences for the owner, still has some suspicions that some sellers of property will still have to contact the subjects of valuation activities (appraisers), since the proposed automatic property valuation module, in the form that is proposed at this time, requires improvements. Automatic assessment is carried out according to general parameters and indicators approved by the State Property Fund, and they do not always reflect the real market value of an object.
So, as of 2018, in the central part of Kiev, an average market indicator of 33,207.00 UAH / sq.m for residential real estate was installed. For Khrushchev’s, this indicator will be excessive and, accordingly, the tax amount increases and will be deducted from income from the sale of such property (5%). In turn, for new buildings, the price per square meter of which may exceed 50 thousand, this indicator, on the contrary, will be underestimated.
An important role in determining the fair price is played by the norm, which allows, in case of disagreement with the results of the automatic evaluation, to contact the evaluator, who will draw up the report and register it in the Unified Database. In order to resolve possible speculation on the part of appraisers, the reform establishes a strict rule – the amount called by the appraiser should not differ from the automatically determined amount by no more than 25%. Otherwise, registration of the report will be denied. This refusal can be challenged, the procedure is called “peer review”.
Related article: What will happen to the prices of apartments and new buildings in Kiev in 2020: forecast from market experts
The good news is the introduction of clearly defined deadlines for reviewing a property appraisal report (appeal against a refusal to register a report). This will avoid delaying transactions, and the parties will be able to expect that the transaction will be carried out in an adequate time frame.
Another innovation that should positively affect the convenience and cost reduction of transaction participants is free access to a single database for notaries. Today, for notaries for the use of the Unified Database in order to verify the availability and validity of the property valuation report, a fee is set, which, therefore, is included in the cost of the service when concluding a transaction with a notary.
Globally, the bill creates the prerequisites for simplifying and accelerating the sale of property and abolishes the existing