In Ukraine, there are plans to introduce mandatory registration of rental agreements and significant fines for those who rent out apartments or houses without official registration. The head of the parliamentary Committee on State Governance, Olena Shulyak, shared the main details of the initiative.
This is reported by Finway
Objective of the Changes: Fighting the Shadow Rental Market
The legislative initiative aims to bring the rental market out of the shadows by forcing unscrupulous landlords to register agreements and pay taxes. According to Olena Shulyak, fines will be set at a level that makes property owners aware of the risks and encourages them to register all contracts. She emphasized that neighbors can report illegal rentals, and the tax service has the right to conduct inspections at any time. Officially registering agreements is also beneficial for landlords, as having legal income simplifies dealings with banks and protects against legal risks in case of conflicts with tenants.
“Shulyak noted that there are always neighbors around, and the tax service can conduct inspections at any moment. According to her, legal rentals are advantageous for the landlords themselves. Official income simplifies interactions with banks and other financial institutions and mitigates legal risks in case of conflicts with tenants.”
Fines and New Rules for Landlords and Realtors
Currently, the tax burden for owners renting out housing is 23% of their income. For the first instance of concealing rental income, the fine can reach 25% of the unpaid tax amount. If violations become systemic, the fine can increase to 51,000–85,000 hryvnias. These sanctions will apply to both owners of elite properties and those renting out just one room.
A key element of control will be a unified state system for recording rental agreements, where each contract must be officially registered. Additionally, realtors will be required to transmit information about their clients directly to the tax authorities, effectively making unofficial rentals impossible.
Among additional innovations, the establishment of a minimum term for long-term rentals — no less than three years — is being discussed. There are also plans to implement differentiated tax rates: the rate for short-term rentals will be higher, while for long-term rentals it will be lower. At the same time, lawmakers are considering the possibility of reducing the overall rate from 23% to 7% to encourage property owners to voluntarily come out of the shadows. An officially registered rental agreement will provide owners with the ability to protect their rights in court and seek compensation for damages if a tenant damages the property.