Payment in US Dollars for Real-estate in Ukraine? Now possible!

Editorial Team Banking, Real Estate

As part of the ongoing currency reforms, the government of Ukraine has brought more good news for foreigners that wish to invest in Ukraine. The government will now allow foreigners to handle their real-estate transactions in Ukraine in foreign currency. They will no longer have to go through the ineffective, cumbersome, and costly process of converting funds in and out of Ukraine’s national currency Hryvnia (UAH). The new regulation will greatly simply the process of buying and selling real-estate property in Ukraine for foreigners.

It’s important to note that the new ruling applies only to non-resident foreigners. A non-resident for this purpose is a foreigner who is living abroad or living in Ukraine on a temporary basis. Foreigners that have permanent residence permit or are registered as private enterpreneurs in Ukraine do not qualify as non-residents.

Ukrainian property owners, in general, prefer to receive payment in US Dollars when selling their property. Given the instability of Hryvnia, its devaluation in the past and constant fears of further decline in the future, most Ukrainians do not want to take the risk of receiving any large payment in Hryvnia.

Can you make such payment in cash? Not legally. Ukrainian law requires all payment above UAH 50,000 to be made only through bank transfer. In addition, as a general rule, all payments within Ukraine must be made only in national currency of Hryvnia. It’s interesting to note that this regulation still does not stop many of the real-estate transactions in Ukraine to be taking place in US cash dollars although it poses a certain number of risk especially for foreigners.

To pay for real-estate in Ukraine in foreign currency, as a foreigner you will need to:

Step # 1. Open a special type of bank account with one of Ukrainian banks – investment bank account;

Step # 2. Transfer funds from your own account overseas to your investment bank account in Ukraine;

Step # 3. On the day of the deal (when real-estate sale-purchase agreement is signed with the seller) – transfer respective amount in foreign currency to the seller. Note: you should make sure that the seller has opened a personal bank account in the same currency.

The seller will get foreign currency to his personal account and can keep it there or withdraw in foreign currency without any limits. Note that according to current law there are no limitations for cash withdrawal from personal bank accounts as before.

Keep in mind that this change in Ukrainian law is quite recent. In our experience, bank officials do not know that this mode of payment is possible and most probably bank representative will tell you that you can pay in Hryvnas (UAH) only. You may need to convince the bank referring to the new law.

We have extensive experience with assisting foreigners in their real-estate investment in Ukraine. Should you have any questions or require legal assistance on real-estate matters in Ukraine, please contact us.