Rental Housing Comes Under Stricter Scrutiny: Tax Authorities to Launch Automated Checks in 2026

Starting in January 2026, tax authorities in several European countries, including Greece, plan to introduce a new system of comprehensive oversight of the rental housing market. The initiative предусматривает automated cross-checking of declared annual rental income by landlords and tenants, allowing discrepancies to be identified without manual audits.

At the same time, Ukraine is also intensifying discussions around bringing its rental housing market out of the shadow economy. One of the key proposed tools is a revision of tax policy for residential rentals.

How the automated control system will work

Following the launch of an updated Property Ownership Register, tax systems will automatically analyze rental data submitted by both parties. If rental payments appear unusually low in areas with high real estate market value, the landlord’s financial activity may be flagged for further review.

According to tax officials, the register will not only detect inconsistencies in declared rental income but also generate analytical reports for auditors, significantly speeding up enforcement and reducing reliance on traditional inspections.

Property sales will also face tighter monitoring

The same automated approach will apply to residential property sales. If the buyer and seller declare different transaction prices, the system will immediately register the discrepancy.

For example, if a 50-square-meter apartment in a prime location is sold for €80,000 while the official zonal value stands at €4,250 per square meter, an automatic audit will be triggered. The reason is a significant gap between the declared transaction price and the estimated market value.

Even when taxes are paid based on the official valuation, auditors may still investigate potential undeclared payments. This includes reviewing bank accounts and payment card transactions of all parties involved.

Ukraine moves toward rental market legalization

Alongside European developments, Ukraine is preparing its own measures to legalize the rental housing sector. According to Olena Shuliak, head of the parliamentary committee on regional development and urban planning, more than 90% of Ukraine’s rental market currently operates informally.

The main obstacle, she says, is excessive tax pressure on property owners, which discourages them from signing official lease agreements and declaring rental income.

Why landlords avoid formal rental contracts

A clear example is Ukraine’s state rental subsidy program for internally displaced persons. One of the program’s requirements is an officially registered lease agreement between tenant and landlord, which implies full tax compliance.

However, fewer than 100 families have been able to benefit from the program so far. The key reason is that under the current tax burden — approximately 23% — formal rental arrangements are financially unattractive for property owners.

Lower taxes may be the key to bringing rentals out of the shadow economy

Lawmakers acknowledge that under current conditions, convincing landlords to operate legally is extremely difficult. As a result, proposals are being discussed to reduce taxes on rental income, making formal lease agreements more appealing than informal arrangements.

According to proponents of the reform, a transparent and legally registered rental contract must become more выгодным than a “grey” agreement. Only then, they argue, will Ukraine be able to gradually legalize the rental market and increase budget revenues without applying excessive enforcement pressure.