Why don’t they sign a rental agreement in Azerbaijan?

Why don’t they sign a rental agreement in Azerbaijan?

In recent years, a large number of people in Azerbaijan, including the capital Baku, have solved their housing problem with mortgage loans and other means.

However, there are still thousands of people in the country who are homeless and usually live as tenants in someone else’s home.

Those who go to rent are also those who have a house, but go to big cities to work or study. Therefore, we can say that a viable rental market has been formed in Azerbaijan. But almost all transactions in this market take place in a chaotic form – in the spirit of verbal agreement. That is, people who rent their house and take a house for rent, as a rule, do not sign a contract. This creates a risk both in terms of the rights of landlords and tenants, and prevents the control of the rental market and taxation of market participants.

Part of the “shadow economy”.

“Report”Elnur Azadov, executive director of the “Azerbaijan Association of Realtors” Public Union, member of the Public Council under the Ministry of Economy, says that the rental market is actually a part of the “shadow economy”: most citizens do not sign a rental contract because it is a “black market”. is to avoid paying tax.If the contract is concluded, to the income received 14% tax applies. So citizens 95%-i does not conclude a contract. An exception is only when renting a house to foreign citizens or organizations. This is an important part of the “shadow economy”.

Let those who rent their house pay less tax

According to him, the tax burden should be reduced in order to legalize transactions in the rental housing market and stimulate landlords to sign contracts: “We suggest that those who rent out their homes should pay 5-7% tax instead of 14%. But tax evaders should be fined a large amount. Currently, the Economy The State Tax Service under the ministry is preparing a draft law in this regard. The penalty mechanism will be applied.”

A rental agreement is a peace of mind

E. Aazadov says that not only landlords, but also tenants should be interested in concluding a rental agreement: “A contract is a matter of peace of mind. For example, a landlord cannot evict a tenant early, or increase the price unexpectedly. If a citizen lives in a place for a long time, must be registered. With this, one can use medical services in that area, send one’s children to kindergarten and school, participate in elections, take loans from banks and stores. That is, this agreement can solve many issues.”

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