Ukrainians massively “fool” sellers smart apartments: how to protect yourself from fraud

Ukrainians sell real estate under the guise of smart apartments. This format of housing came to the country a few years ago, in the Wake of lower income citizens and fashion for compact apartments. Spinning smart objects, developers focus just on small square footage and the opportunity to save money both on the purchase and repair and utilities, writes UBR.

“Now the share of smart apartments built among the objects of the primary market does not exceed 5-7%, and the share of demand for such housing is estimated to 10%. To purchase smart apartment in Kiev at a price of 10 to 27 thousand dollars, the average cost per square meter – about 17-20 thousand UAH”, — said an analyst at NAI Ukraine Marina Gurevich.

But due to the fact that according to the construction standards of residential flat may not be for area less than 30 square meters, documented smart-object are executed as apartments or studios, although this terminology in legislation.

There are cases of sale of flats, which is legally in commercial real estate. This means that you can register them in unreal, and communal will to count on higher rates than for conventional housing.

“Smart-house is a marketing, not a construction term. Seeing the demand for compact housing, some developers converted their old facilities were often problematic, smart – doing, for example, the three-room apartments redevelopment, dividing them into flatlets. More than 50% of smart apartments in Kiev- with problem documents,” — said the head of the division of real estate Law and real estate enterprises of Ukraine Georgy Valiev.

Buying a smart apartment, you must act according to the scheme, as with conventional housing:

  • it is necessary to ensure the legality of construction (to check permissions);
  • -to check the documents of land (the ownership rights or the right to use the land plot, issued on the customer’s building);
  • to check the reliability of the developer (the absence of litigation, the registration data on the availability of data on liquidation, etc.);
  • check the documents that draws the developer in the sale of the apartment: can they guarantee the buyer’s right to the property and further entitled to the registration of property rights.

Customers of smart apartments are at risk, mainly those that bought their housing will be non-residential premises. But the danger of waiting and buyers of conventional apartments, particularly studios or apartments, which documents may be registered as non-residential premises.

“The apartment scheme is often used when you can’t change the purpose of land (for example, it provides for the construction of a nonresidential facility). In a situation with smart apartments is another problem – the area is so small that according to the norms of DBN, these areas cannot be attributed to the apartments. Therefore, I recommend in the contract with the developer to prescribe that the buyer after completion will get an apartment, and specify the planned total is also the living area. In non-residential premises the residential area is missing,” — said the lawyer of YUKK De jure” Ivan Axe.

You can also check the approved design documents, the whole house, but you need to understand it, and developers are very reluctant to demonstrate it.

According to Valiyev, if at the stage of construction of the complex had problems with the documents, the buyer may face serious difficulties when he will get a ready apartment. And the lack of postal addresses is just one of them. “You can not be registered, in such a house may not be hot water and heating – only electric heaters and boilers. And cold water and light can be periodically turned off. With such developers, even to sue, but the contract is written in such a way that the court is forced to become the side of the investor”, — said Georgy Valiev.

There are nuances and footage. According to the State construction norms of Ukraine (DBN V. 2.2-15-2005), the minimum area of a Studio apartment is 30 sqm – paragraph 2.22 DBN V. 2.2-15-2005. As practice shows, the state architectural and construction inspection often turn a blind eye on the square apartments, which are lower than the requirements.

But the risk for investors is that even after receiving the construction permit or registering a Declaration of start of construction, state architecture and construction Inspectorate may refuse to accept the house in operation referring to the violation of DBC. The developers claim that the area of the flats is less than the allowable 30 sq m legal: because the square footage of individual rooms of the apartment totally corresponds to the provisions of the DBC.

Thus, the area of a living room in a Studio apartment should be not less than 15 sq m, kitchen area – 7 sq m, the area of combined bathroom – 3,8 sq. m. comes to 25.8 sq. m. in addition, the rules state you can only use the kitchenette is a space in the structure of the living room or hallway to accommodate kitchen equipment. Thus, from 25.8 per sqm deduct another 7 sq. m, is obtained 18,8 sq. m.

“But developers are silent, that in any case, applying the above scheme for handling the area of individual rooms in the apartment, they must eventually reach a total area of not less than 30 square meters”, — said Ivan Axe.

What’s the benefit

Another disadvantage of smart apartments – the highest percentage of their rental owners. “Strange” neighbors can often make noise and create discomfort for other tenants. After all, you can’t always rent an apartment to a quiet student or young decent families – they are in most cases interested in complexes with a developed infrastructure (metro, hospitals, stores), the proximity of universities and schools. And many smart homes are located far from the center of the city, and in the former industrial areas on the outskirts.

Accordingly, the price tag of these apartments available to many segments of the population. “Small-sized housing is not profitable for the developer, but allows you to reach more segments of buyers– young people buying first homes and investors buying apartments for resale or rental. Qualitative characteristics of smart housing (the degree of readiness during the commissioning of the infrastructure and transport accessibility, planning decisions, quality of materials, etc.) varies from complex to complex, as in any other segment of housing”, — said Marina Gurevich.

The percentage of purchase of smart housing for the investments ranges from 20 to 50% of all deals in this segment, depending on the complex, the rest are buying for yourself. Smart apartment with a good repair shall be at the price from 6 thousand to 12 thousand UAH per month depending on location, availability of infrastructure and quality of repair.

At the current average price for a square is 20 thousand UAH – the apartment is 20 sq. m will cost 400 thousand UAH. When you rent 8 thousand UAH/month., annual income will be $ 96 thousand UAH, which pays back the investment after 5 years, without taking into account the initial capital costs for repairs and subsequent expenditures on the maintenance state of the object.

“The exposition of the object in the resale will take at least 1-2 years, at a total cost increase by 10-20%. Taking into account the risks on the primary housing market and fairly moderate level of profitability, the appropriateness of this investment in question,” said Gurevich.

However, in Ukraine, in the conditions of crisis of the banking system for people who have even a small savings, investment in smart-homes is becoming interesting. “Now the market is saturated with smart apartments. Demand from buyers is stable And that the interest of tenants may be reduced because of the fact that many complexes are located “off the beaten path”. Consequently, prices for such housing could fall”, — said Georgy Valiev.