Rent costs 50% higher than minimum wage
- By Amarjargal Munkhbat -
- Aug 31,2023
There is unofficial statistics in the capital city that about 70,000 students migrate to Ulaanbaatar annually. There are not enough dormitories to house them and therefore, apartment hunting is extreme, especially, in the new academic year and in winter, so the prices of renting apartments go higher from August to October. In relations to this, we were interested in this year’s price on rents, townhouses, and a single room.
We also talked to landlords and tenants about the price and the situation of the rent. Resident of Bayangol district G.Munkhjin said, “My wife and I have been living in a rented apartment for six years. Five years ago, we rented a studio apartment with a separate kitchen in third and fourth khoroolol for only about 400,000 MNT per month. Rents could be paid in up to three months with flexible terms. But as of last week, the monthly rent for a studio apartment with a separate kitchen, costs 1.2 million MNT. It means that in addition to receiving the payment in three months, one month’s deposit or a total of 4.8 million MNT should be paid. The monthly income of our family is about 2.5 million MNT. Almost 50 percent of it will be spent only on apartment rent.” Among the apartments for rent, studio or one-bedroom apartments, located in the city center, are the most sought after. Monthly fees for such apartments vary depending on whether they are furnished or not, and studio apartments usually cost 800,000 MNT to 1,900,000 MNT. For 800,000 MNT, you can find one located on the outskirts of the city like Nisekh or Yarmag, or you can rent one for 1.5 million MNT to 1.9 million MNT in the downtown. The rent is usually paid for more than three months, in addition to fearing that property may be destroyed or damaged, money equivalent to 500,000 to one month’s payment will be seized as a deposit. Additionally, the monthly rent for a one-bedroom apartment is between 1.2 million MNT to 4.5 million MNT. Most of them are furnished and they are expensive if they are in the city center, close to schools, kindergartens, and bus stations. There were more ads for renting two- to three-bedroom apartments than studio and one-bedroom apartments. The demand for these apartments does not seem to be high. Such apartments are often fully furnished and are attractive for long-term rentals, and the prices are high. Specifically, it ranges from 1.5 million MNT to 7.5 million MNT. The owners explained that the apartments costing more than 4 million MNT per month are mostly rented to foreigners and are newly built and fully furnished, and include utility bills. So, the monthly rent for the cheapest studio apartment is 800,000 MNT, which is almost 50 percent higher than the minimum wage. In addition, if you rent two- to three-bedroom apartments for 5.5 million per month, you will pay 10 times more than the minimum wage.
Due to the high cost of rent, students and single people often rent a room next to a household. The price of a single room starts from 300,000 MNT per month, and if it is in the city center, it is 400,000 to 600,000 MNT. Bathroom, washing machine and kitchen are shared, and in some cases, a certain percentage of electricity and internet bills may be paid. I contacted a person according to the advertisement that a single room of an apartment is for rent. An 18-square-meter room with a balcony will be rented out in the building no. 10 of the fourth khoroo of Bayangol District. The landlord said, “Three rooms separate from our kitchen will be rented out one by one. The fee for one room is 500,000 to 600,000 MNT, one to two people can live there. Tenants will also pay for internet, electricity, heating, and houseowners’ association fees. Utility bills are 200,000 MNT in winter and 100,000 MNT in summer. A clean apartment with a security guard and a camera.” When asked about the basis of which the rent is calculated, they said, “We have studied the rates of the rented apartments in this area. In general, three rooms cost more than 1.5 million MNT. Dividing each room for rent is beneficial for us and for those who live alone.”
It is less expensive to live in townhouses in the ger district. Four to six families can live on one floor, the bathroom is shared, and the monthly rent for a 20- to 30-square-meter apartment is 160,000 to 300,000 MNT. But if you live in a large room with a bathroom and shower inside, the price is 400,000 to 500,000 MNT. The three-month rent is usually paid upfront. In addition, the basement floor of some apartments is furnished and rented out. Living in such a room cost between 100,000 and 250,000 MNT depending on the amenities and size of the area. If you have a small room for one person, including one bathroom, the rent will be reduced to 100,000 MNT. Apart from this, there are many hostels for girls. Usually, three to five people can live in one room with bunk bed, wardrobe, and kitchen furniture. Depending on the location and amenities, one person will pay 250,000 to 350,000 MNT per month. Utility bills are included in the price of the apartment. In short, rent prices have increased by 30 to 40 percent per month compared to this time last year, and almost doubled from 2021.
Renting apartments and town houses has become a business. Such businesses are run by real estate agents or individuals. Broker agents set the price by adding a service fee of the price offered by the individual. In this regard, a real estate agent said, “If the apartment is rented out by an agent, the owners do not need to worry about anything. All you must do is offer your price. We find the owner to rent to, show the apartment, and hand it over to the owner intact at the end of the lease. A lot of people are interested in apartments for rent, and it takes time to show apartments. A contract is also signed and notarized, and the notary fee is usually paid by the landlord. As a real estate agent, you are paid by your company based on your sales revenue. We pay taxes from our salary.” No other tax is paid for renting or leasing an apartment, except for the notary fee. There are no legal provisions or regulations governing this. When clarifying whether renters of apartments, real estate, and stalls must pay taxes, the Mongolian Tax Authority said, “Citizens pay taxes by declaring their personal income. Taxes may be paid on rental and other income, but those who rent out apartments and rooms are less likely to pay tax. Also, there is no general information about how many apartments are rented out in the capital per year, at what price, and how they earn income. In fact, if you pay personal income tax, you get a refund for buying real estate and paying student tuition fees.”
Citizens often pay an average of 1.5 million MNT per month to live in an apartment. It will amount to 18 million MNT per year and 36 million MNT in two years, and it will form an advance for a mortgage worth 100 million MNT. However, citizens cannot accumulate such funds and cannot get into apartments because they do not meet the credit criteria. On the other hand the Ministry of Construction and Urban Development reported that from 2017 to 2022, an average of 17,000 apartments were put into operation per year, while 6,900 households were given mortgage loans. For example, if 10 new apartments are put into operation, only three to four of them will be included in the mortgage loan, that is if the demand and supply do not intersect. In 2019, the housing program for rent-to-own was implemented in the capital city to solve this problem. About 1,000 families currently live in such apartments, as can be seen on the website of the Ulaanbaatar City Apartment Corporation.
They said that in the future, they would put out many apartments for rent or rent-to-own that fit citizen’s income, but it has not been implemented. Also, the Ulaanbaatar City Apartment Corporation said that they will not accept applications from citizens who are interested to live in such apartments and cannot provide information.