A guide to Moscow's residential property market (part 2)

Continuing its guide for international assignees seeking a residential property in Moscow, Intermark Relocation, itself based in the Russian capital, considers the homesearch process and how leasehold agreements work.

A.Savin [CC-BY-SA-3.0-2.5-2.0-1.0 (http://creativecommons.org/licenses/by-sa/3.0) or FAL], via Wikimedia Commons

Continuing its guide for international assignees seeking a residential property in Moscow, Intermark Relocation, itself based in the Russian capital, considers the homesearch process and how leasehold agreements work.Your Intermark Relocation consultant will offer you options from the databases of all Moscow real-estate agencies, private brokers and developers. This will save you the trouble of contacting numerous real-estate agencies, most likely complicating and duplicating the process and thus consuming more time.The price which you see in the description of the apartment is the asking price set by the landlord. We always advise landlords on the fair market price of their apartment. Some take our advice, while others prefer to start with a higher rate and negotiate.Your Intermark Relocation consultant will be able to advise you on how fair the price is and what potential there is for negotiation.The main key rent differentiators are:
  • Size/fit-out quality of the property
  • Location
  • Security features
  • Standard of communal areas (entrances, lifts, stairs, etc)
  • The building&#x;s technical specification, utility networks
  • Secure parking
  • Infrastructure and amenities
Also, please keep in mind that apartments in Moscow belong to, and are offered by, individual private&#x; landlords, who very often decide for themselves what they want to get out of the rent. Unfortunately, it does happen that, if the landlord demands a ridiculous price, no reasoning will persuade him to change it. It is not about the market, it is about his ego.Most landlords come to show their apartments themselves, so the logistics of the homesearch itinerary depend a lot on that. We recommended that you do not plan your look-see/home-finding trips for national holidays, as most landlords will not be available. Summer weekends are also not the best time, as this is when many landlords go to their dachas (country houses).According to Russian law, landlords have to pay 13% income tax (6% if they are registered as private entrepreneurs). Whilst with some agencies the asking price includes this tax as previously agreed with the owner, other agencies advertise the net price, without specifying that the tax is not included. In this case, your Intermark consultant will assist you.The asking price for apartments also usually includes utilities (building maintenance fee, security/concierge charge, heating). In many cases, it also includes cold and hot water. However, this is changing, owing to the installation of water meters in many apartments &#x; in which case the landlord will expect the tenant to cover the cost. Electricity, satellite TV, and internet usage are also covered by the tenant.The system of payment of bills is becoming more and more convenient, and, in many cases, it can be arranged that these payments are automatically taken from your credit card. Some landlords also agree to pay the bills themselves and be reimbursed by the tenant on a monthly/quarterly basis.The current Moscow market favours the landlord. Apartments with the right quality and price combination are rented out fast. In such cases, landlords usually give priority to tenants who are offering a higher price, earlier contract start date, or more flexible contract terms.In Moscow, one landlord often works with several agencies. Until the contract is signed and the first payment is made, the apartment cannot be considered secured. Even if the offer was made to the landlord, he accepted it, and you are in the process of negotiations, some landlords may rent their apartment to a client with a higher budget or more flexible contract terms.The majority of the apartments on the market are owned by private landlords. The personality of the landlord is an important factor to consider. Intermark Relocation keeps a record of many landlords, and your consultant will be able to advise you in many cases whether this landlord is easy to work with or not.Once you have chosen the property, your consultant will start negotiations. We strongly advise you to have at least two fallback options, in case the negotiations for the preferred property do not succeed.Your consultant will do the legal check on the landlord&#x;s ownership documents and provide you with a comprehensive report.The following legal difficulties exist in Russia:
  • If the building is new, a landlord may still not have received the ownership documents for an apartment. In this case, the deal may not legally be concluded, which makes a company lease impossible. If you are planning to sign the lease as a private person and are really keen on this particular apartment, you may sign an agreement with the landlord. However, it cannot be used in a legal dispute, and so does present a risk
  • If the apartment is owned by a child, permission has to be requested from the city council for renting the property. In some cases, it can be a long process, so there are landlords who are not prepared to do it
Lease agreements
  • Most lease agreements (both company and private) are for one year
  • The tenant has the preferred right of renewal, but the price may be reviewed by the landlord at renewal time
  • As a rule, the tenant has the termination option in the contract (by law, it is three months). The landlord does not have a termination option unless the tenant breaks his contract
  • The landlord is responsible for maintaining the apartment and equipment in safe condition throughout the term of the lease
For further information, go to www.intermarkrelocation.ru