Foreigners can be 100% owners of real estate in Armenia: they can acquire, hold, lease, sell, bequest and otherwise dispose of their property on equal basis with locals. They do not need to have a residence permit or otherwise show any links to Armenia. At the same time, investing in real estate can qualify you for a temporary or permanent residence permit.
The only restriction applies to foreign ownership of agricultural land. In order to own agricultural land in Armenia a foreigner may need to set up a legal entity and acquire the land in the name of that entity. Agricultural land can also be owned by foreigners who have special residency status in Armenia.
Armenian real estate market grew exponentially between 2002 and 2008 with prices going up by 570%. In 2009 the country’s economy was hit by the global financial crisis and real estate prices went gradually down over the next few years. They remained generally unchanged during 2014-2016, and started growing in 2017. In the first three quarters of 2018 alone, prices in central Yerevan went up by 20.2%.
As the above chart shows, real estate prices generally follow changes in Armenia's GDP which grew by 7.5% in 2017. Other factors contributing to the increase in prices are:
The transfer of ownership is initiated by signing a written contract of sale identifying the property and specifying the purchase price. Normally the contract must be reviewed and authenticated by a notary public. The buyer then has 30 days to register the ownership rights with the Registry (Cadastre) and get an ownership certificate. Failure to register ownership within 30 days will invalidate the contract.
Typically, the whole process takes around one week but with fast-track fees it is possible to complete all the formalities in 1-2 days. If parties are not ready to sign the main sales agreement a preliminary agreement may be executed by which the seller agrees to take the property off the market for an agreed period of time in return for a small advance payment. If the buyer then fails to sign the main contract the advance payment will be forfeited. If the seller defaults he will be required to return the advance payment and pay a penalty.
Buyers and sellers can be represented by attorneys, and their physical presence in Armenia is not required to complete the formalities.
Armenia ranks very high – the 14th – among 190 countries on the World Bank’s “Registering Property” index which measures both the efficiency and the quality of the property registration system. By way of comparison, the U.S. ranks 38th, the U.K. – 42nd, , France – 96th.
The buyer and the seller shall agree on who will bear the costs of registration, which typically is around $200. Official fees are fixed and do not depend on the value of the real estate. Fast-track services are also available for additional fees.
Fast-Track (Same Day)
Fast-Track (Next Day)
Fast-Track (Three Days)
Notarization Government Fee
Clean Title Certificate Fee
Ownership Registration Fee
Registration Government Fee
Transfer of residential property between individuals is normally not taxable, provided that both the buyer and the seller are individuals (not registered as private entrepreneurs). Thus, tax on capital gains realized by individuals form selling residential property is 0%. However, if the buyer is a legal entity or a private entrepreneur a withholding tax of 10% is applicable.
An individual is subject to a 20% sales tax (income tax) if he sells two or more properties within one fiscal year, provided that these properties were acquired during the same fiscal year. Sale by individuals of commercial or industrial property is taxed at a rate of 10%. However, if the buyer is a legal entity or a private entrepreneur a withholding tax of 20% is applicable. Individual real estate developers are taxable at 20% of the price at which they sell the properties.
The real estate tax is payable by the owner or the real estate on an annual basis. Tax rates are in the range of 0% to 1% of the cadastral value which is normally significantly lower than the market value. Where the real property is sold by an individual the new owner assumes the tax liabilities for any unpaid property tax.
Rental income not exceeding 58.35 million Armenian drams (approximately, US$120,000) per year is taxed at 10%. Rental income in excess of that amount is taxable at 20%.
Armenia does not have stamp duties, gifts or inheritance taxes.
#1. Right Location. The location of your apartment will naturally depend on your objectives and priorities. If you are looking for investment or rental property your search should be focused on central Yerevan, namely properties within the "circle" formed by Moskovyan, Khanjyan, Khorenatsi and Saryan streets. There is always demand for properties in this area, particularly during the high tourist season from April to October. Many owners prefer to rent out the apartment on a daily basis to tourists and other visitors during the high season and rent it out on long-term basis for the remainder of the year (November to March). Many investors avoid "Glendale Hills" neighborhood on Argishti Street despite its good location near the Republic Square. If you are not interested in rental properties you may also consider apartments in Arabkir and Davtashen districts or a detached home in the suburbs of Yerevan.
#2. Right Building. The majority of apartments in Yerevan are in low-cost, concrete-paneled buildings (high-risers) or lower quality stone buildings ("Khrushchyovkas") built between between 1960s and 80s. Investors should generally avoid such apartments. This leaves them with two options: the so-called "Stalinkas" built in 1930-50s and new buildings raised after Armenia's economic recovery in 2000s. "Stalinkas" are generally cheaper but because of their age, lack of elevators and poor maintenance of common areas they are not always attractive to buyers. New buildings also differ a lot in quality. Not all developers are reputable, and similar apartments in neighboring buildings can have very different prices. If the construction is not over yet you should be especially careful with documents and you also should expect delays as it is very rare for developers to finish the construction on time.
#3. Right Apartment. Apartments on the ground (first) floor and the last floor are generally sold at a discount. Ground floor apartments are avoided for reasons of security, lack of privacy, noise, humidity coming from the basement, while apartments on the last floor (in older buildings) are less demanded because of potential leaks from the roof, stronger sun heat in summer and difficulties of access without an elevator. Many old buildings have superstructures in the form of one or two extra-floors. It is better to avoid investing in such structures. Apartments facing north generally lack natural light. Apartments with large windows facing south can create the opposite problem.
#4. Beware of Unscrupulous Agents/Brokers. The services of real estate agents in Armenia are generally limited to bringing together the seller and the buyer. Normally they do not have exclusive agency rights, and one property can be listed by dozens of agents who will indicate different prices. In Armenia it is common for the agents to charge 2% to the seller and 2% to the buyer, bringing the amount of the commission to 4% of the value of the deal. The agents are not licensed by the government or any professional association. They are not bound by any code of ethics, not bonded, and if anything goes wrong with the sale they will not take any responsibility. Because the agents have a strong incentive to sell the property at the highest possible price it is unwise to make decisions based on their recommendations.
While buying real estate in Armenia is generally safe, prospective buyers are advised to take certain precautions.
#1. Know the Seller's Marital Status. If the seller is married or divorced it is likely that the spouse's consent will be required for the sale. Even if the property was not acquired in marriage you still have to be careful because the spouse may claim that he/she had contributed to the improvements of the property and thus acquired rights in it. Armenia does not recognize common law marriages. However, relying solely on public records may not be sufficient as the marriage could be contracted in a foreign country.
#2. Gifts & Inheritance. If the seller inherited the property or received it as a gift you need to find out if there are other family members who are likely to contest the will or the gift. It is possible that an heir will appear after the sale and claim rights in the property. Note that if there are children involved, the transaction will need to be approved the guardianship authority (head of the local community). The latter is required by law to ensure that the sale is in the best interests of the child.
#3. Evaluate the Seller's Capacity to Contract. You need to be attentive if the seller's behavior seems strange. Under Armenian law people with mental disability may be declared incapable by a court order, while those addicted to drugs, alcohol or even gambling may be limited in their capacity. Agreements with such people can be easily contested and invalidated by their guardians or other interested parties. You may want to check the court records or ask for a certificate confirming the seller is not registered with mental institutions.
#4. Understand the Seller's Financial Situation. If it turns out that the seller is in a difficult financial situation and sells the property below market value it is possible that he will be declared bankrupt shortly after the sale and the bankruptcy trustee may challenge the sale in court within a 3-year period of time. Thus, if you buy property at a discounted price make sure that the likelihood of bankruptcy is low.
#5. Verify Encumbrances and Litigation. Prior to signing the sale agreement the government will issue a free title certificate confirming that the property is not mortgaged, arrested or otherwise encumbered with third party rights. However, it is still recommended that you find out if the seller is involved in any litigation that may affect the property.
#6. Investigate the Chain of Preceding Transactions. Even if there are no encumbrances and pending disputes the property's history needs to be checked to make sure there had been no suspicious activities in the past. For example, a number of transfers over a short period of time can be a sign of potential problems. The statute of limitations in Armenia normally does not exceed 10 years but even older transactions can be scrutinized. Particular attention must be paid to acquisition of property by donations, inheritance or privatization.
#7. Verify that There Are No Outstanding Tax Liabilities or Unpaid Utility Bills. Under Armenian law property tax liabilities are assumed by the new owner. If the seller did not pay taxes over a long period of time it is possible that substantial penalties have accumulated. Therefore, it is wise to ask for a certificate confirming the absence of tax liabilities. By law the new owner does not assume any unpaid utility bills. However, in practice it may be difficult to sign new contracts in your name with the utility companies if the old owner failed to pay the bills. To save time and nerves it is recommended that you ask for statements confirming the full payment of all utility bills.
#8. Notarize the Sales Agreement. While certain sales do not require notarization you should still consider having the contract executed before a notary public. A notary is personally liable for malpractice and has the incentives to do all the necessary checks, such as ensuring all consents are in place, powers of attorney are valid and not revoked, the seller is in sound mind etc. Notarizing the agreement will show your good faith if any dispute arises in the future.
#9. Escrow Accounts. The common practice in Armenia is for the seller to make the payment in cash at the time of signing the sales agreement at the notary's office. However, this practice is not advisable because carrying bags full of dollar bills is not very safe, and the seller may want to take the money to the bank to check if the notes are fake (the ratio of fake dollar bills in Armenia is relatively high). More importantly, it is not recommended to pay the full amount before your title is officially registered. These problems may be avoided by using an escrow account or an equivalent tool. The drawbacks of using an escrow account are the additional bank charges in the range of 0.1-0.3% of the money deposited and the costs of converting the money into local currency (the law requires the payments to be done in Armenian drams but the seller normally expect to get paid in US dollars).
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