The Azeri government has taken broad legislative measures to encourage much-needed foreign investment including the introduction of a foreign investment law, some tax incentives and price liberalisation. There are no restrictions on foreign companies or private individuals buying commercial or residential property. The new Law On the Protection of Foreign Investment of 2005 gives a reliable guarantee of rights of foreign companies and individuals investing into property and other markets. There are also international agreements between Azerbaijan and UK and US on mutual protection of investment. The purchase process is relatively uncomplicated, although local legal assistance is essential to ensure the validity of the transaction.

When buying a building (either residential or commercial) or an apartment, a deposit is normally paid against the written agreement on intent which is followed by the actual Agreement of Sale and Purchase. This key document validating the transaction is signed by the buyer and the seller in the presence of their legal representatives and a notary public and bears a notary seal. The stamp duty is payable on completion by the purchaser to the state at a fixed rate of approximately $379 per transaction at the current exchange rate. This Agreement is then followed by a new Title Deed to the property issued by the Mayor’s Office in Baku or relevant municipal authorities elsewhere. Local legal assistance is instrumental in ensuring the timely issue of the Title Deed.

As most undeveloped land is still state or municipality owned, the purchase of land is normally a two-stage transaction. The first stage is allocation of the land by the state to the purchaser, normally on a 99 year (or even infinite!) lease basis with a statutory rent paid to the state at current maximum of approximately $0.60 per sq m per annum. This stage is then followed by an application for privatisation. Upon privatisation a stamp duty is paid at approximate current equivalent of $0.5-2.55 per sq m. Once the stamp duty has been paid, the Title Deed is issued within 30 days. Due to their two-stage nature, land transactions are quite complex and qualified legal assistance is of utmost importance.

In the case of renting an apartment, a house or office space, the lease is based on a Tenancy Agreement with the landlord. As opposed to the Agreement on Sale and Purchase, which has a standard legally prescribed form, terms of tenancy agreements may vary and these agreements do not have to be notarized. Rent is normally paid in advance monthly or quarterly. In addition a deposit is required, normally equivalent to one months’ rent or slightly more. The deposit is held during the tenancy and will be used at termination to pay for any damage, cleaning or other breaches of the Tenancy Agreement.

There are no legal restrictions on repatriating the proceeds of lease or sale of property out of Azerbaijan.

Our legal team is qualified handle all legal aspects of property transactions in Azerbaijan on behalf of our customers (See "Our services" – Legal).

* All US Dollar equivalents are calculated at average exchange rates as of July 2007 and are for reference purposes only.