Apprehension Surrounds seaside apartment complexes
New and Improved Article:
Krasnodar, June 5 - Yug Times:
Sick of the legal limbo? So are many investors when it comes to owning apartments along the Black Sea coast. With the boom years of coastal development long gone, individual apartments have become a gamble due to the perpetual legal ambiguity.
Take the recent legislative changes, such as the new tourism law which requires all accommodation facilities to be classified by September 2025. Unfortunately, privately owned apartments aren't in the clear. They're nowhere to be found in the official registries, left stranded in a legal twilight zone. While hotels, resorts, holiday bases, and campgrounds all fall under the classification framework, standalone apartments are a no-go, just like aparthotels. This leaves them vulnerable, unable to show up on booking platforms or legally accommodate tourists, making their use and taxation a tiresome ordeal.
Earlier this year, the rejection of a long-anticipated bill that would have defined such apartments as part of multi-purpose buildings only added fuel to the confusion. To shed light on the situation, Aleksei Bravin, CEO of G5 Architects, explains, "Legally, apartments are commercial spaces used for living or business, but they are not classified as residential property." Although they're cheaper than flats and versatile, these units lack permanent registration rights, draw higher taxes and utility fees, and usually come without access to social infrastructure like schools or clinics.
Are developers and real estate agents capitalizing on this confusion by peddling apartments as flats but, in reality, offering hotel rooms with kitchenettes? urban planner Olga Shebzukova has her concerns. Misrepresentation, she warns, could hoodwink buyers and overburden local services that aren't equipped to support permanent residents. This growing issue is exacerbated by rapid redevelopment of old Soviet wellness resorts into aparthotels. This quick-buck trend, however, could lead to social and infrastructure strain, and the erosion of spa tourism capacity.
The city of Sochi, a popular resort area, has built one new wellness complex - 'Kristall' - in 25 years. Experts point to global examples like Dubai's mixed hotel-residence models or France's classification system for furnished rooms as potential solutions. Still, clear regulation remains the key to unlock the potential of these spaces while managing risks effectively.
Luckily, help is on the horizon. Starting from September 1, 2025, an experimental legal regime will be rolled out in 18 regions, including Krasnodar, to legalize guest houses, privately owned apartments rented out for tourism purposes. These properties must be registered in a unified state register of accommodation providers to legally operate their rental business. Without registration, owners are prohibited from advertising their apartments as guest houses and face fines if they violate this restriction. Moreover, if a property is jointly owned, the consent of all co-owners is required for registering the property as a guest house. Neighbors' written consent is encouraged to protect community interests and minimize conflicts arising from short-term rentals in residential areas.
Owners of registered guest houses are subject to a more stringent tax regime. They'll have to pay property tax, personal income tax, and a tourist fee. The tax authorities will have a clearer window into the business nature of the properties, impacting tax treatment at the time of sale. To ease the financial burden, some owners might register as self-employed. This tighter tax control aims to whitewash the previously informal or unregulated rental market, ensuring tax compliance and fair competition.
This legal update is designed to regulate and formalize the short-term rental market, balancing the interests of investors with those of the community. Stay tuned for more updates on our channels!
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Investing in real-estate along the Black Sea coast can be challenging due to the legal ambiguity surrounding private apartments. The new tourism law classifies all accommodation facilities, but privately owned apartments are conspicuously absent from the official registries, creating a legal gray area. In the realm of finance, this ambiguity affects the use, taxation, and profitability of such apartments.
