How can property owners abroad deal with current issues?

Problems of foreign property owners

Wondering how to overcome the challenges of your beachfront villa that has become burdensome? If you have property abroad, it is important to understand the challenges that Russians face in the current international environment. This is especially true for countries such as Spain, Turkey, Cyprus, Montenegro and Bulgaria. You may have to make a choice between selling your property and waiting for more favorable circumstances.

Financial difficulties

After the sanctions that began on February 24, 2022, Russians who own foreign real estate have faced various difficulties. The main problem is the inability to transfer funds to their bank accounts abroad, especially in so-called "unfriendly" countries. This creates serious financial challenges for many owners:

• Difficulties with repaying mortgage loans.
• Issues with paying utility bills.

At the same time, those who were able to obtain residency or citizenship in another country have been exempted from these restrictions.

Air travel restrictions

Additionally, the restriction of air service to multiple countries is a serious problem. Many direct flights have been canceled, and those that continue to operate offer only a few destinations, such as Serbia, Turkey, Armenia, UAE and Uzbekistan. Thus, Russian citizens often have to find connecting flights to travel to other countries, which increases the cost of tickets.

For example, the cost of a flight from Moscow to Barcelona, which used to be around 500 euros, can now be at least twice that, which hits families hard, especially those with children.

Difficulties with obtaining a residence permit

Moreover, property owners often face challenges when obtaining residency permits, even if they own property abroad. In several countries, such as Greece, the programs for issuing "golden visas" have been temporarily suspended. Portugal has also restricted the possibility of obtaining a D7 visa for digital nomads and passive income owners due to banks refusing to open accounts for Russians. In Spain, there is an option to apply for such residency, but only on-site. Other options, such as applying at Russian consulates, are also unavailable.

Problems with tourist visas

It is also necessary to note the difficulties in issuing tourist visas. For example, Russians are unable to travel to Germany for tourism purposes. In May, there were temporary failures in the reception committee of visa centers in Italy, but this problem was quickly resolved, and the process returned to normal.

Risks for property owners

Moreover, property owners should consider the risks that may push them to sell their property. Some are beginning to realize that the unpredictability of new sanctions against Russia could negatively impact the real estate market and their personal finances. Therefore, if you own a villa on the coast and are contemplating selling it, it is crucial to carefully weigh all the risks and potential benefits before making a final decision.

Permission for real estate transactions for Russians in the EU

The recent introduction of the sixth package of sanctions measures considered the possibility of banning Russian citizens from real estate in European Union states. However, after a detailed discussion, it was decided not to impose such restrictions. Thus, Russians can still purchase and sell real estate in EU countries. Nevertheless, the process has become much more complicated.

As for the risk of property loss, experts are confident that such concerns are unfounded. Even citizens who are subject to sanctions have not faced the loss of their property — such matters are resolved only through the courts. Ordinary property owners also have no reason to worry, specialists emphasize.

Changes in conditions due to the pandemic

The experience of the pandemic and the imposed restrictions have changed the perception of many people, exacerbating the crisis. Apartment owners are facing difficulties when trying to visit the countries where their properties are located, creating a sense of inaccessibility to foreign real estate. It was significantly easier before, and now many feel that managing their property abroad has become more complicated than ever.

Expert opinion on selling real estate abroad

We talked to experts to find out how advisable it is to sell real estate abroad and what factors may influence such decisions, as well as to study the specifics of transactions in the current environment.

The situation in Spain

Spain serves as a vivid example of the current situation. The issues mentioned earlier are also relevant to this country. Experts recommend avoiding hasty decisions. With limited access to banking services, Russians in Spain may face difficulties in servicing their mortgage loans. This raises concerns about financial resources, which could affect their ability to pay for utilities and, most critically, mortgage loans.

If the borrower fails to make a payment after the due date, the bank notifies them and demands repayment of the debt. If there is no response from the client and the debt is not settled within the specified time, the lending institution has the right to manage the collateral, which is the property.

How to avoid negative consequences?

How can owners avoid negative consequences in this situation? Consultants of local agencies are sure that the described conditions are not catastrophic and owners should not rush to sell their property at a big discount, such as 15-20% of the market price.

• In most cases, banks in Spain are willing to compromise with their clients.
• Accounts can be unblocked for specific payments, but appropriate justification will be required.

Thus, the owner can plan their actions without finding themselves in a difficult financial situation while also preserving their property. The real estate market situation requires attentiveness and caution to adequately respond to potential challenges in the future.

Documents for real estate transactions

In most cases, real estate transactions require a number of documents, including a 2-NDFL certificate, a mortgage agreement and an extract from the register confirming ownership rights. This scheme ensures that all financial transactions are carried out.

For certain clients, banks offer options that allow them to make mortgage payments multiple times a month or receive regular payments from tenants, if applicable, by providing a rental agreement. It is also worth noting that different financial institutions may exhibit varying levels of flexibility in their approaches, with some operating more strictly.

Approaches of different banks

For example, a bankSabadellone of the key lenders to Russians, has lent 400 million euros as of 2021, has a strict policy and has been blocking receipts to the accounts of Russian residents for four months. In contrast,SantanderThe one that provided 80 million euros in loans to Russian citizens demonstrates a more liberal approach, but only on the condition that clients are not on sanctions lists and have provided documents confirming the legality of their income.

BankBBVAIt continues to open accounts for Russian citizens based solely on their passport; however, it is important to provide proof of legal sources of income in advance. Currently, banks are still interested in collaborating with owners of legitimate businesses and large entrepreneurs.

Real estate sales

When it comes to selling real estate, it's worth considering the situation where a homeowner in Spain decides to sell their asset. If they are a resident of the kingdom, the process of disposing of the property will be quite straightforward, as residents have the option to open a bank account.

However, if the owner of the apartment or villa does not have a residence permit, the optimal solution in the current conditions would be to look for a buyer among Russian citizens. In this case, payments can be made in rubles, and the tax obligations can be handled by the agencies representing the interests of the parties involved in the transaction.

The process of selling real estate

The process of selling real estate in Spain usually looks like this:

• The buyer, in the presence of a notary, hands over a check to the seller that was prepared in advance by the bank.
• A second check is also made for tax payment, which is handed over to the notary, along with a third check covering the notary's services.
• Upon completion of the sales contract signing ceremony, all participants in the process, including the seller, buyer, notary, and translator, sign the documents.
• The transaction information is then subject to registration.

Payment and notaries

If the payment was made in another country, for example, Russia, the notary in Spain must confirm the receipt of funds from the client to complete the transaction. In situations where payments are made through a third country, the need for supporting documents becomes particularly important, as the legality of the entire transaction depends on the notary's position.

Introduction

In this article, we will explore the aspects related to obtaining a bank statement from Russia in the context of real estate transactions in Spain, where one of the participants is a foreign citizen. There is an interesting point: even if the seller is not a resident of Spain, they still have the opportunity to sell their property.

Preliminary approvals

Before doing this, it is advisable to discuss in advance with the financial institution the possibility of receiving funds from the sale into the account. It is critically important to remember that if the transaction amount exceeds100 thousand eurosShe cannot keep it in a Spanish bank account. In such cases, it is necessary to arrange for the transfer of excess funds to accounts in other countries that are more favorable to capital from Russia. Good examples of such countries could beArmeniaorUnited Arab EmiratesIt is especially important to consider that when returning currency to Russia, there may be losses due to conversion into rubles.

Collaboration with realtors

Additionally, if the seller does not have resident status in Spain, another option could be to collaborate with a real estate agency. For example, in the case of a Spanish citizen purchasing an apartment, the funds can be transferred to the agency's account, which acts on behalf of the seller. In this situation, the buyer will need to pay the property transfer tax amounting to10%The seller, in turn, must give back.3%a tax that can later be refunded. One should not forget about the capital gains tax on the sale of real estate, which for non-residents is24%.

Real estate market dynamics

It is interesting to note that Russians generally buy more in Spain than they sell. Experts in the Spanish real estate market claim that the demand for housing in this country significantly exceeds the supply. For example, in 2022, an unprecedented level of transactions was recorded, despite some difficulties with the paperwork. Nevertheless, the process of buying an apartment or house remains quite accessible for those interested.

Financial transactions for residents

If a Russian buyer has a residence permit in Spain, they can conduct a financial transaction directly by transferring funds from their bank account in Russia to the seller's account. With residency and documents confirming the legality of their income, Spanish banks usually approve such transfers. It is not uncommon for Russians to choose the option of purchasing property from developers, which significantly simplifies the payment process and allows for the easy transfer of large sums. It is important to remember that if the seller is an individual, the amount transferred to their account should not exceed150,000 euros.

Commercial real estate

When it comes to commercial real estate transactions, experts note that they are carried out much more easily than residential ones, as the parties involved are usually legal entities. Currently, transfers to the accounts of commercial organizations in Spain from Russian banks that have not been sanctioned and continue to operate without being disconnected from the system are possible.SWIFT.

Conclusion

Overall, the real estate market in Spain continues to attract the attention of many buyers, creating appealing investment opportunities for both local and foreign clients.

Given the current financial situation in the world, there are certain difficulties with the use of correspondent banks in the United States. Transfers can sometimes experience significant delays or even be completely returned. Nevertheless, such methods remain practically the only way to withdraw funds from Russia without the need for conversion and conducting transactions through third countries.

However, there is a safer way to minimize all possible risks – entering into an agreement with a notary. The notary can take on the responsibility for the transaction by accepting payments into their own bank account and acting as a guarantor.

Recent case study

There is an interesting case that was shared by one of the local specialists. In early June, a notary in Spain was able to obtain funds amounting to 4.8 million euros directly from the buyer's bank account in a Russian bank.

Rise in the real estate market

The real estate market is experiencing a significant upswing, which is reflected in the increase in transaction volume and rising housing prices, while the number of available properties has sharply decreased. According to experts, one Russian woman bought an apartment for 70,000 euros and just a day later listed it for sale at 90,000 euros. It is not uncommon for property owners to initially set one price, but seeing high interest, they significantly raise it.

In addition, there are cases where deals fall through even after a deposit has been made, as sellers start considering the possibility of getting a higher amount or decide to wait for a more favorable offer.

Analysts' views on real estate sales

Analysts working in the Turkish real estate market note that selling apartments may not be profitable right now, as it is unclear how to best calculate future investments. There are also recommendations from experts regarding the relevance of selling real estate in order to invest in new properties.

• For example, they are offering to sell a one-bedroom apartment with an additional amount added.
• As a result, one can acquire a more spacious two-bedroom home.

The situation in Cyprus

Cyprus is also experiencing increased interest in the real estate market. Specialists report that there is a demand for purchases, but it is quite limited. Owners of housing on this island are confident that it will not be difficult to sell their property, but finding suitable housing for purchase has now become much more difficult.

Moreover, the range of offers in the market has decreased. In the context of the economic crisis, developers are not launching new projects, and the number of liquid properties in the secondary market is sharply declining. In such conditionsReal estate prices continue to rise..

Problems with the sale

Real estate experts believe that the main issue lies not in the sale itself, but in determining the feasibility of the transaction and how to properly manage the proceeds. When it comes to Cyprus, it is quite challenging to find more profitable assets for investment than those available here.

Sale of real estate by Russians

Nevertheless, if a Russian citizen decides to sell their property in Cyprus in any way, it can be done without much difficulty. The selling process here is significantly simpler than in other countries, such as Spain. Open accounts of Russians in Cyprus are not subject to blocking, and funds can be deposited, although with consideration of the restrictions imposed by the Central Bank of Russia.

As of the beginning of June 2022, citizens are allowed to transfer up to $150,000 abroad per month. There are also certain restrictions regarding the storage of money in foreign banks – up to €100,000.

Difficulties of Russian citizens

It should be noted that experts emphasize that Russians are indeed facing certain difficulties due to the sanctions imposed against their country, as well as retaliatory measures. There are often situations where accounts with amounts exceeding the established limits are blocked by Cypriot banking institutions. This creates additional obstacles for those who wish to conduct financial transactions on the island.

The problem of transferring funds

An important aspect that deserves attention is the process of transferring money from bank accounts in Cyprus for Russian citizens to accounts in other jurisdictions. Many Russians have faced the problem of transfers not reaching their intended destination and becoming "lost" due to a blockage on the part of one of the correspondent banks involved in the money transactions. However, it should be emphasized that this situation is not a result of property management.

Opportunities for Russian citizens

Russian citizens can direct funds to their accounts in Cypriot banks, allowing them to cover various expenses such as utility bills and mortgage obligations.

Difficulties with opening an account

Currently, opening a new bank account in Cyprus for Russians has become quite a complicated process. However, having a new account is not a necessary condition for completing a real estate transaction. If the seller wishes to receive financial compensation, it is possible to use an account in a Russian bank (this applies when the buyer is also a Russian citizen) or to open an account in the country where the transaction is taking place.

The process of selling real estate

Therefore, the process of selling property in Cyprus may depend on how and where the client intends to transfer the funds. If the money is planned to be taken to Russia, it makes sense to look for buyers among the citizens of the Russian Federation. Financial transactions can, for example, take place in Moscow, while the Cypriot real estate agency can handle all the necessary paperwork by acting on a power of attorney.

Payment of corporate tax

To pay the income tax, which is calculated taking into account various factors and individual circumstances, the presence of a representative of the buyer will be required.

Real estate in Montenegro

As for the real estate market in Montenegro, here, as in Turkey, Russians have the opportunity to carry out real estate transactions much easier. If a person has an apartment or house in Montenegro, the process of opening a bank account in a local institution and receiving funds from the client will be carried out without much difficulty.

Choosing a banking institution

Some prefer to open accounts in Serbian banks, which are considered more "friendly" compared to banking in Montenegro. However, the conditions for opening accounts in Montenegro are also quite favorable.

Residence permit

It is important to note that many property owners in Montenegro have already begun the process of obtaining residency permits. Owning property, regardless of its price category, can serve as a basis for obtaining the corresponding status.

Conditions for the sale of the apartment

In order to successfully sell an apartment in Montenegro, the seller must fully settle all tax debts, including:

• annual property tax, which is determined individually,
• calculations for electricity and other utility services.

In some cases, the consent of a spouse may be required.

The situation in the real estate market

In the real estate market, experts claim that there aren't many people looking to sell their property, and there is also a noticeable absence of panic among owners.

Introduction to the real estate situation

In reality, a large number of clients from various countries are asking the question: "When will Russians start selling their real estate at extremely low prices?" However, contrary to optimistic forecasts, such situations are not observed. On the contrary, in the current economic situation, some properties that had been on the market for a significant amount of time even increased their prices this autumn due to fluctuations in the euro exchange rate, and in some cases, they were completely removed from sale.

The situation in Bulgaria

The situation in Bulgaria clearly illustrates this trend. Convincing reports from local realtors confirm that over the past two to three months, some Russians have indeed started considering selling their homes and apartments. This decision has been prompted by both the rising prices of airline tickets and concerns about losing their property amid the overall instability in the world.

Issues with bank accounts

Moreover, most owners of foreign real estate did not have bank accounts in Bulgaria, as they did not consider it necessary: all utility payments and mortgage payments were successfully made from Russia. However, now the ability to conduct transactions is only available through banks that have been subjected to international sanctions, which creates certain difficulties. The only option left is to try to find ways to conduct cash transactions.

Real estate sales

As for the sale itself, having a bank account in Bulgaria is not a necessary requirement. Payments can be made through Russian banks if the buyer is also a citizen of Russia, or one can use institutions from other countries where opening an account is not particularly difficult.

Decision on selling or waiting

It is worth discussing the question of what to do: sell real estate now or wait for more favorable conditions. The global economic and social changes that have occurred since February 24, 2022, have not led to a mass sell-off of foreign real estate by Russians. Moreover, in certain markets, there is an influx of new buyers from Russia, Ukraine, and Belarus. In particular, in April, Russians ranked among the top three foreign investors in Turkey, which has become a kind of refuge for citizens of Russia and Belarus affected by Western sanctions.

Activity in other markets

At the same time, buyer activity is evident in other markets as well. Transactions continue despite the challenges, even in countries targeted by so-called "unfriendly" measures. Interest in real estate in countries like Cyprus, Spain, and Bulgaria remains high. Currently, Russians who are not on the sanctions list do not face significant risks when owning property abroad, as there are no grounds for an urgent sale of an apartment in Spain or a villa in Cyprus.

Conclusion

Undoubtedly, owners of foreign real estate face numerous challenges, but all of them are solvable. The most complicated situation is observed in Spain, where many financial institutions have restricted incoming transfers to the accounts of Russian citizens. Thus, this circumstance requires a careful approach and thoughtful decisions for anyone interested in acquiring and owning foreign property.

Conclusion

In concluding our article on the current situation regarding the sale of foreign real estate for Russians, I would like to summarize all the identified problems and possible solutions. The concerns of owners who faced restrictions after February 24, 2022, are quite justified. However, there is no need to panic. It is important to approach the issue of selling real estate thoughtfully and consciously, taking all aspects into account.

Current challenges

First and foremost, it is important to clearly understand the complexity and diversity of the current circumstances beyond our country's borders. Yes, restrictions on funding accounts in foreign banks and difficulties with air travel affect the lives of property owners and create additional challenges. Nevertheless, many experts agree that despite all the risks and uncertainties, real estate in European countries remains an important asset.

Experience of the pandemic

The loss of confidence in the availability of real estate abroad due to the pandemic also requires a serious reassessment. This experience has taught us the value of flexibility and adaptability. In today's conditions, many property owners can take advantage of new approaches to managing their assets. For example, if you have the opportunity to temporarily rent out your villa or apartment, this can be a good way to generate income and maintain financial stability.

Consultations with experts

Finally, for those who are still considering the issue of selling, I recommend:

• Consult with local specialists.
• Evaluate the real value of your property.
• Explore optimal ways to resolve the situation.

When discussing the possibility of selling, it's important not to rush and to carefully analyze repairs and investments for the future. Sometimes it's better to wait than to take hasty steps that could lead to financial losses.

Market prospects

Against the backdrop of all these changes, we see that the real estate market in various countries, although facing challenges, still has growth potential. Our task is to act wisely and consciously, without giving in to panic. By relying on information and expert advice, we can find the most suitable path in the current economic situation.