- 1 Development of Georgian real estate value over the years
- 2 Why buying real estate is profitable in Georgia now/always?
- 3 The lowest taxes, due to several facts are mainly indispensable things to consider
- 4 Problems of balancing the interests of the parties(Seller/Buyer)
- 5 The need for legal analysis of the purchase contract and the apartment/project
Real estate is the most solid and profitable investment sector in Georgia. Especially now, when latest social and world political movements influenced several occasions, owning real estate property, is without a doubt, one of the most successful sources of income in the world.
This article is for you to get more information about most important points of purchasing real estate and in particular, specific details about getting future ownership of real estate in Georgia.
Out team got several direct questions and inquiries about this issue and this is what you should know when buying an apartment in Georgia, especially with an installment (basis of future ownership while purchasing apartment from developer).
Development of Georgian real estate value over the years
It is internationally acclaimed that in the beginning of 2015, the real estate market in Georgia was effected by some blows for the many reasons: Depreciation of the GEL (National Currency) – while more than 60% of transactions in the market ware completed in the dollar equivalent and the dollar had become weaker – this fact was directly reflected in the increased real value of real estate.
Loosening visa regulations, which had significantly increased foreign direct investment and investor interests in Georgia.
Interest Rates – In Georgia, now and then, most banks lend/lent in dollars. However, most real estate transactions ware/are either completed by a foreign investor or with a mortgage from a bank – this also affected the reassessment of the expectations of the population and the high risk associated with obtaining a mortgage from the bank.
After so many years, especially given the development of a market economy and the recent influx of large amounts of dollars into the country, the Georgian market no longer has a similar problem.
When considering buying real estate property in Georgia, you do not have to think about other problems, rather just search for an apartment, review its legal status, check it up and make a contract with an installment.
While having the perfect choices here, you can sign contract remotely and get real estate property with future ownership while this one is still being under construction or already finished and furniture.
Why buying real estate is profitable in Georgia now/always?
Buying real estate in Georgia is entirely up to you. Is there a growing demand for commercial space? You will opt for a stained glass high-income commercial space.
Or buy a house – for short or long term rent. As for land, owning land in a strategically selected location can be incredibly profitable, as investors are constantly willing to invest their capital in such lands. In short, it is an asset whose management is absolutely up to you and in any case you can sell and withdraw the initial investment.
As for the market, there is a constant demand for real estate and with effectively chosen tactical moves high yields are actually achievable in a short time.
The lowest taxes, due to several facts are mainly indispensable things to consider
Investing is associated with a variety of costs (purchase costs, repairs, utilities, transportation, and documentation).
We can define depreciation Expenses – Deducting high real estate depreciation costs can help you save a considerable amount of money.
All this will help you to get real estate benefits without taxes and calmly wait for the capital gain from its realization. Similarly, getting an apartment with an installment in Georgia is without some taxes or commissions, developer company in most of the times, offers clients installments with duration from 1 to 2 years without any additional taxes.
What is most important and profitable with this kind of purchase is that, regardless of the installment purchase, this form of ownership gives the owner the right to use it, rent it and use it as needed. Contraindications are specified in individual contracts and require verification by a lawyer.
While there is no financial securities and in Georgia, properties investment can be considered as one of the long-term investments associated with the lowest risks.
The value of real estate is constantly rising and the benefits can be obtained both through short-term sales and reinvestment in larger value properties, as well as long-term rent, which is one of the most attractive methods for diversifying an investor’s portfolio and additional risk-free income.
And the most unique thing – real estate after a certain period of time will withdraw its own value fee and it will remain in your possession.
Problems of balancing the interests of the parties(Seller/Buyer)
In the conditions of market economy, while buying and selling real estate it is more and more important to protect the interests of the buyer or the seller.
To consider these indispensable and critical issues, some things needs to be discussed. The first and foremost basis on which the transfer of ownership of real estate is carried out is the purchase agreement.
The Public Registry is a registering body for the registration, changes and origin of property rights, regardless of whether amount of a written contract has been paid or not, if the contract is not registered in the National Agency of Public Registry no one has right on property.
When the property is bought with an installment, the buyer is registered as a future owner in the Public Registry of Ministry of Justice of Georgia, and only after full payment will become an official registered sole owner of a property.
In the case of a contract of sale of real estate, of course, the principle of freedom of contract applies, but the contract means the mutual will/agreement of the parties and not the provision to accept the offer of the “strong” party as a valid and/or legally justified contract.
This is why, each purchase agreement requires an individual approach and review.
The need for legal analysis of the purchase contract and the apartment/project
The purchase agreement itself as a data is better to be drawn up by a lawyer, because if you use the outline of the public registry purchase agreement, it is possible to include in the mentioned draft the article on which you may have a dispute later.
This type of dispute is when the buyer is unaware and does not detail the material condition of the object of purchase (for example: actually different in condition, etc.).
In some cases (mostly, in general agreements connected to direct purchasing), the draft already states that the amount has been paid in advance and in fact the payment is made after its registration, but the unnamed reality in the contract already returns the burden of proof to the parties (depending on a details of a case).
However, while talking about future ownership situations, every individual should know that future owners have several crucial rights and important obligations. Let’s start with this last one:
- The general obligation of the buyer (Future ownership subject) is to pay the cost of the subject in due time;
- Next obligation for Purchaser is to follow the technical works and fire safety rules developed by the Seller;
To protect yourself, you need to know your indispensable rights as well:
- First, Future owners have right to receive the materially and legally flawless real estate. This means that everyone need to make sure that the subject of future ownership is not disputable, someone does not have any rights on it, is not the subject of mortgage/lease.
- Another right is to sell and/or donate the future ownership right on the subject to third parties by separated agreement, but with one condition: taking into consideration future ownership right owner’s obligations towards the Seller. The Client reserves this right during construction process as well as after completion
We can mention additional key rights regarding construction issues. These rights are usually regulated in Pre Purchase Agreements with common wishes. But if it is not mentioned in contracts, you should request to:
- If the Developer has stopped the construction process for some period, the Client is entitled to impose the fine of the payable sum for each overdue day, hereby the Client reserves the right to terminate agreement and request to pay back the amount paid by him, plus additional compensation for the damage.
- If the Developer initiates termination of the agreement without honorable reason, the Client reserves the right to receive back the amount paid by him and impose the fine on the Developer as well.
In practice, there are also frequent cases when the purchase of a real estate item is not checked for its extract (legal status check), which means that the party is not interested in checking the legal status of the real estate before the purchase agreement.
Checking the legal status refers to the existence of a loan or/and a tax lien/mortgage.
This leads to a situation where it is possible for the buyer to pay the amount, with the parties applying for a joint application with the Public Registry, although the registration of the property right cannot be carried out because there is a restriction on real estate.
It should be noted that similar problems are relatively rare during the registration of future property, although it still needs to be verified. To be secured and feel safe, customers need to figure out if the developer company has obligations or not. If yes, are these obligations government taxes or cause of private law, bank loans etc.
This is the key principles and details you should know while purchasing real estate with future ownership in Georgia.
We hope you benefited from this article and will invest in Georgia to flourish your future prospects. If you have any questions or if there is a specific topic that interests, then leave a comment below and we’ll make articles about most requested topics for you.