Real estate market control: government prepares tighter rules

Ukraine’s real estate market is bracing for new changes intended to make housing transactions more transparent and subject to tighter state oversight. The government and tax authorities are stepping up monitoring of property sales and rental deals, citing the need to combat tax evasion, shadow income and money laundering. For businesses, real‑estate agents and ordinary citizens this will mean more reporting and greater administrative burdens, while the state expects higher budget revenues and better control over illegal income.

Fiscal motives: why control is tightening
The main driver of these reforms is the need to shrink the shadow rental market, where a large share of contracts are informal and only a fraction of landlords pay tax. In wartime and reconstruction conditions this translates into billions in annual losses, so real estate has become a key target for enhanced oversight. The logic is straightforward: anyone earning income from owning housing should pay tax on it just like any other taxpayer.

New control tools
Authorities plan to expand data exchange between state registers, giving the tax service direct access to the register of property rights, notarial registers and bank transaction databases, allowing deals to be tracked in real time. An electronic register of residential lease agreements will be created, into which all written contracts must be entered with details of the parties, rent amount and term. For sale‑purchase transactions, identification of parties via BankID or qualified e‑signature will be strengthened, and notaries will be obliged to notify the tax service of every transfer of real estate ownership simultaneously with entering the record into the State Register of Rights.

Impact on the rental market
The rental segment is traditionally viewed as the “greyest” part of the real‑estate market: many owners rent out properties without contracts or use sham short‑term agreements to avoid taxation. The new mechanisms are meant to bring this segment out of the shadows. Once electronic registration of leases and stricter bank monitoring are introduced, cash circulation in rentals is expected to decline, making it harder for landlords to hide income and giving tenants stronger legal protection: a formal contract will help prove lawful occupancy, recover deposits and resist unjustified evictions. Experts, however, warn that some owners may temporarily withdraw their properties from the rental market to avoid higher tax burdens, which could reduce supply and push up rents, especially in major cities.

How sales will be monitored
For purchase and sale of housing, income declaration becomes central. The tax service is developing an algorithm to automatically compare the contract price with market values for similar properties in the region; if the price is significantly lower, the transaction will be flagged as high‑risk. Banks will also take on a larger role, as they must report suspicious transactions involving large sums or regular activity on individuals’ accounts. In the longer term the state plans to restrict all‑cash payments, so transactions above a certain threshold (likely 200–300 thousand UAH) can be settled only via bank accounts, making money flows more transparent and reducing the risk of laundering funds through real estate.

Market and professional reaction
Real‑estate agents, developers and notaries react ambivalently: greater transparency strengthens legal certainty, but extra bureaucracy may slow paperwork and increase service costs. Market participants warn that excessive fiscal pressure could push some owners toward off‑the‑books schemes, yet most experts agree that, in the long run, a transparent market reduces legal risks and boosts confidence in housing investment.

International experience
Ukraine is moving closer to European practice, where tax control in real estate is standard. In Poland all rental contracts must be registered and tax of about 8.5–12.5% is paid automatically via an online return. Italy uses the “Cedolare secca” regime, which offers simplified taxation of rental income provided the lease is officially registered. For Ukraine such an approach could serve as a transitional step if the state introduces preferential tax rates for those who declare rental income officially for the first time, encouraging legalisation without excessive fiscal shock.

Legal risks and future trends
Tighter control may lead to more court disputes, especially where tax authorities assess additional liabilities based on indirect income indicators or market values, so lawyers recommend careful contract drafting, keeping payment records and avoiding “grey” cash settlements. Policymakers are also discussing electronic real‑estate declarations for individuals, which would allow automatic detection of discrepancies between tax returns and register data. Economists expect that greater transparency in the property market will strengthen macro‑financial stability, while legalising the rental segment could add more than 10 billion UAH to the budget annually.

Conclusion
Strengthening state control over housing sales and rental transactions is an inevitable stage in Ukraine’s economic development. Despite short‑term difficulties for market participants, it should ultimately reinforce the rule of law, shrink the shadow sector and increase trust between citizens and public institutions. If you face questions or issues related to taxation, rental contracts or legalising real‑estate income, it is advisable to consult tax and legal professionals to find the best solution for your situation.

Author – Svitlana Krutorohova, attorney at the law firm “WINNER”.