Although Mongolia’s horse dependent nomadic culture has been around for thousands of years, it continues today, with around a third of the population of just over 3 million identifying as nomads. In fact, more than half the households in the country’s capital Ulaanbaatar still occupy traditional accommodation known as ‘ger’.
However, urban migration has led to Ulaanbaatar’s rapid expansion in recent years, with an urbanization rate as high as 66.4% according to the National Statistics Office of Mongolia. Growing numbers of expats are also finding a home in the capital, drawn by the former Soviet satellite’s rich natural resources and some of the most favourable foreign investment laws and regulations in Asia. But what are the rules governing property in Mongolia? Here, we summarise the main points worth considering.
Buying property in Mongolia
Mongolia employs a floating freehold title system for real estate. Immovable property, such as apartments and other buildings, can be owned outright by foreign investors, however they can only lease land. Mongolia’s Law on Land allows lease of land by foreign citizens for up to 5 years, with the option to renew. For specific investment opportunities click here.
Renting property in Mongolia
Available rental properties in Mongolia tend to be apartments, usually fully furnished for foreigners. However, if you’re interested in experiencing a nomadic lifestyle, you can also stay in a traditional ger dwelling. An agent experienced with foreigners can help find accommodation and furniture as well as bridge any language gaps.
Property taxes in Mongolia
The property tax system in Mongolia is relatively straightforward. An annual real estate tax of between 0.6 and 1.0 per cent is payable, depending on location and size, though apartments are exempt. Income earned from rental property is taxed at a flat rate of 10 per cent per annum.
Obtaining finance in Mongolia
Obtaining finance for real estate locally in Mongolia may provide a challenge to foreign investors. However, there are options available to foreign investors. Developers may offer in-house financing and, with no foreign exchange controls, or restrictions on the flow of foreign capital into or out of the country, funds may be brought in from overseas.
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This article is intended as a preliminary guide only and refers to some but not all elements required to consider in detail prior to starting any property dealings or due diligence. Property dealings are often complex, especially in foreign countries and we highly recommend you seek independent professional advice. If you have any enquiry, contact cashell@apipcorp.com
