Russian crackdown on expat property investors and home buyers

The Russian government is working on changes to existing foreign property ownership laws which will bar expats from either buying or renting homes outside Moscow without the authorities’ permission.

According to a report by the Economic Development Ministry, the changes are being drafted together with the Federal Security Service and Russia’s immigration department, the Federal Immigration Service. The new law is slated to come into force by the beginning of 2015.

Top level government officials, including President Vladimir Putin and the Mayor of Moscow, Sergei Sobyanin are believed to be behind the changes, as they have stated their opposition to low-income migrants forming ‘ghettos’ in the suburban areas. The upcoming restrictions were announced just several days after violent riots broke out in a predominately Muslim outer Moscow suburb.

Under current regulations, foreigners are allowed to purchase property in much the same way as do Russian nationals. However, they cannot buy property or land close to seaports, border zones, military establishments and infrastructure hubs, nor can they buy agricultural land,

Apart from Western migrants living and working in Russia, the country has a huge number of migrant workers, including illegal immigrants, mostly arrived from Central Asia’s former Soviet republics. Russian society in general is hostile to increased immigration, thus giving the government another reason for the new rules.

According to international property experts, the Russian real estate market is as attractive to investors as is its equivalent in most European states. A recent global real estate survey indicated that 87 per cent of company respondents considered Russian property attractive for investors, up by 4 per cent from those favouring European states.

Russia watchers believe that much of the upcoming crackdown will focus on individuals rather than on Western companies wishing to open offices and bring in expat staff. Companies with good track records will likely need to deal with extra bureaucracy, but it’s not likely that they’ll be rejected by the Moscow authorities.