About: buying, Mongolia, Property, purchasing, Real Estate, Ulaanbaatar
Buying property in Ulaanbaatar is a surprisingly easy and straight forward process. Once you have agreed on the terms and conditions with the buyer or seller, the whole process can be done in a day, it follows 4 easy steps:
1) Signature of Contract
Go with the seller / buyer to any notary office in Ulaanbaatar, the notary will have a standard two page document where the names, passport numbers and other details of both parties will be written down. The property address and the certificate number will be added to the contract along with lots of signatures and red stamps. The contract will be done in triplicate and each party will get a copy (including the notary). If your purchase is a slightly more complicated one, it is possible to bring your own contract to be notarized but it must be written in Mongolian. While you are there, it is a good idea to have a few copies of your passport notarized as they will be needed later on.
You will need to bring with you, the property ownership certificate and your passport. The notary’s fee is usually quite small and ranges from 20,000Tgs to 150,000Tgs.
2) Payment of the Property Tax
Once the contract has been notarized, all parties should go to the Ulaanbaatar city Bank, located next to the main MIAT office (itself next to the Mongolian Central Bank). Once there, you will need to show the property sale contract as well as the property ownership certificate to the teller. A 2% fee will be calculated from the sale amount and this needs to be paid (in cash) at the bank. Upon full payment, you will receive a receipt stating that the sales tax has been paid. With all those documents you will need to go to the Immovable Property Office of Ulaanbaatar.
3) Changing the name on the certificate
As soon as your tax payment is done, you should head straight to the “Immovable Property Office” located about 50 meters from the Ulaanbaatar City Bank. This building is pure chaos but is a necessary evil. A complicated form has to be filled in (clerks are on hand to help you do that for a fee) and then passage has to be fought to one of the tellers. Once there, you need to hand in the filled in form, the property certificate, the tax receipt and a copy of the contract as well as notarized passport copies of both buyer and seller. The fee for this depends on your level of urgency, it is possible to get the new certificate done same day or to have them next day. Generally expect to pay between 200,000tgrs and 400,000Tgrs.
THIS IS IT, collect your certificate when it is ready and you may now call yourself the proud owner of a property in Mongolia.
4) Changing the ownership details at the district offices
This is possibly the most challenging step, once the property certificate is issued in your name, you will need to spend a few hours visiting all your district offices to change the names on their registration documents. This means going from little office to little office all over the district, they are hard to find and it is hard to do explain what you want. It is essential that you do this with a Mongolian who knows where all the offices are and what do to. Once this is done, all the bills will be in your name and you will be able to pay them directly.
Points to keep in mind when buying property in Mongolia:
Negotiations
Negotiate everything with the buyer or the seller, everything that is to be included in the apartment, including sanitary ware, curtains, doors, floors, lights, sockets etc… Also negotiate before going to the notary who will pay what fees and taxes. It is typical for buyer and seller to split the tax and the fees but this is dependent on your own negotiations. Negotiations in Mongolia are often frustrating as sellers tend to change their mind on a regular basis, once a deal has been struck that you are happy with, move fast and buy the property.
Declared Value
You will often find that sellers or buyers might be keen to declare a lower sale value of the apartment or even declare it as a gift. This is to avoid paying the 2% tax and reduce the amount of the capital gains tax. What you do is entirely up to you but bear in mind that the seller has to pay a 10% capital gains tax on the difference he bought it at and what he is selling it for, if you (as a buyer) declare a lower purchasing amount, when you resell, you will yourself have to pay capital gains tax from that declared amount. This can be dangerous (plus it is of course illegal).
Foreign Ownership
Foreign Investors have the right to own their properties 100% under their own names, there is no need to do any sort of joint venture with a Mongolia national or pay any “extra” fees. Mongolia is practically the only Asian country with no restrictions whatsoever on foreign owners of property. All property in Mongolia is freehold and protected by law. You own what is called a “floating freehold” which means you have no rights on the land on which the property sits but the Immoveable Property Certificate trumps the land ownership, so as long as you have a valid certificate, the land is locked to that property.
Ownership Checks
It is vital that once you reach the stage of making a deal you ask to see the Immovable Property Certificate linked to that property. When you do, check for the following:
- That the address on the certificate matches that of the property.
- That the person negotiating with you is the rightful owner with his full name written on the certificate.
- That he is the sole owner of the property, if there is more than a single name on the certificate, ask to meet all parties to make sure they know what is going on and are happy with it.
- That the certificate you have is the original certificate, not a copy. It is often the case that the property has outstanding loans on it or has been pawned, thus the vital importance of holding and seeing the certificate in person.
When to Pay
The modalities of the payment terms need to be negotiated with the owner but there are a few general rules to follow. It is generally not advisable to give money before the signature of the contract at the notary. Certainly not as a “show of good faith” or an advanced payment, you would have no legal protection if the owner broke the agreement and kept the money.
Once you exchange any money, keep hold of the certificate or place it in the care of a trusted third party. This will prevent the owner taking your money and pawning the property and running off with the cash.
I would generally advice that you pay 50% of the cash once the contract is completed and the remaining 50% once the new certificate has been issued in your name and you take control of the property. Do the full process in a single day to avoid landlords changing their mind or obstacles being placed in front of you once you have paid the first payment.
Keep a small percentage of the money to be paid until you take over the apartment, this guarantees you that the seller will stick to his word and not run off with the windows, doors and toilet. Before you pay the final amount, also check that all bills for the property have been settled, this means: phone, water, electricity, heating, internet, building maintenance, cable T.V… The landlord should have receipts for all of those.
If you pay by bank transfer, it is safest to use an escrow account to pay into. A number of banks in Mongolia offer this service.
Paying Property Taxes
To the best of my knowledge, the following taxes apply on your Mongolian property purchase.
- 2% Stamp Duty on the sales value of the property upon purchase, this can be paid either by seller or buyer.
- 0.06% Annual property tax on the value (purchase price) of your property.
- 10% Capital Gains tax upon resale of your property.
- 10% Rental Income tax, 20% if you are not a resident of Mongolia.
Please note that this is just the taxes I know about, verify with your property agent, lawyer or business advisor in Mongolia as to the applicable tax rates on your property purchase. Also note that various building and property charges might be applicable by the building management depending on where you purchase your property.
Last Advice
Once all is done and completed, your first action should be to have all external locks changed.
Other posts about Property that may be of interest to you:
How to…. Rent an Apartment in Ulaanbaatar
The Mongolian Property Boom V2.0
List of Real Estate Agencies operating in Mongolia
- M.A.D. – Property Investments and Corporate Relocation
- The Real Estate Company
- Mongolian Properties
- Mongolian Real Estate
- Richmond Road Properties
- Master Properties
- Mongol Leasing (deals only in Bodi Owned Properties)
- Realtor Properties
- Sakura Properties
- Uils Properties
- Torgon Zuuch
- UB Zuuch
————————————————————————————————————
Please Note: This article is written in good faith and is intended to be a helpful tool, the author makes no guarantees as to its accuracy nor takes responsibility if the process this information relates to has changed. It is always advisable that you do your own research and find various sources of information, in particular pertaining to laws and regulations.
If you have recently gone through this process yourself and would like to add or comment to the text above, please contact me so that I may make the necessary changes.
About: buying, Mongolia, Property, purchasing, Real Estate, Ulaanbaatar
