Finding a decent flat - and a nice landlord - in Moscow isn't easy these days. My colleague, for instance, is looking for his third apartment in less than two months. Having found a nice cozy place at Akademicheskaya metro station in May, just a few weeks later he was asked by his landlady to vacate the apartment due to an emergency that forced her return from a trip abroad, originally planned to last at least several months.

Despite short notice, he did manage to find a new deal relatively quickly. What looked like a long-term solution vanished in a flash of female vanity as the new landlady decided to call it quits after finding my colleague's wife's hair in the vacuum cleaner brush.

Isn't that sick?! Definitely so, but even sick people own apartments. The best deal he could get was to negotiate a short-term extension before finding a new place.

Looking for it with the help of newspaper ads is useless, he says. "It's almost impossible to find the actual apartment owners - all of these ads seem to be fronting for rental agencies and though there are dozens of classifieds, you keep running into five or six phone numbers all the time. All of them are agency numbers," he adds.

The agencies have their tricks, too. One of their favorites is to show apartments for a non-refundable one-time fee that can run up to several thousand rubles. If you don't like the flat, it's your problem - the ‘service fee' remains with the agents.

Moreover, many tenants (my colleague's case was not an exception) enter into verbal agreements with landlords without any supporting paperwork, de facto empowering apartment owners to show them the door any time they please.

Those who exercise greater caution handle such deals through real estate companies, making sure their rights are fully protected.

"I would say that it is very difficult and has always been very difficult to rent without professional help. The pricier housing segment is very ‘civilized': proper agreements are signed, in most cases landlords pay full tax on rental income. Many companies like ours provide property management and other landlord and tenant support services," EVANS managing partner Anya Levitov told The Moscow News.

This means that the growing number of deals break the vicious circle of verbal agreements that have shaky commitments. By agreeing to rent an apartment without a proper contract, you provide your landlord with an opportunity to shun the obligation to report rental income to the tax authorities.

The most common argument brought up by landlords in favor of this model is that they would otherwise have to hike the rent, making the arrangement less attractive to you. At the same time, this model weakens your own status from the outset, which, in case relations sour for any reason, can result in you being thrown out of the apartment at short notice.

"Both Russians and prospective tenants from the former Soviet Union have to pay a premium over foreigners from Western Europe and the United States," says Levitov.

"Unlike other countries, where foreigners often have to pay more, in Moscow foreigners are considered better tenants - they are more likely to stay longer, more accurate with payments etc. The categories of the most discriminated against tenants are those featuring ethnically and racially different tenants: Russian citizens from the Caucasus, Azeris, Armenians, Georgians. Among the non-FSU clients, Indians are the least welcomed tenants. Overall, it's hard to believe how intolerant Moscow landlords are," she adds.

In a maturing market such as Moscow's, these things will be happening less and less as more tenants opt for more reliable deals despite the cost.

"In the January-June period the demand for apartments in the lowest budget group (with rents not exceeding $1,500 per month) has gone down from 8 percent to 1.8 percent, while the demand for the most expensive apartments has risen from 9 percent and 15 percent," Blackwood executive director Marina Litinet­skaya told The Moscow News.

According to Litinetskaya, this testifies to a shift in demand, which is gradually moving toward pricier niches.

"By raising demands for quality of refurbishments, furniture, the finishing work in communal spaces and halls, security, parking lots and other parameters, clients are ready to pay a higher rent for premises of high quality that match their needs," adds Litinetskaya.

According to Blackwood, the prices in the market's premium segment have been growing insignificantly against the residential property growth rates. In the first quarter of the year rents went up by 1 percent to 2 percent on average.

Due to the seasonal increase of demand (early in the summer prices traditionally rise) the rates for some premises have gone up as much as 30 percent, but overall in the first half of 2007 there were no significant price surges. The growth of rental rates totaled approximately 5 percent over this period.

Blackwood's forecast for 2007 predicts a 10- percent to 15-percent annual increase of rents. Considering the pricing trend in the first six months of the year, as well as the expected growth of residential property prices, the likelihood of this forecast being correct is rather high.

"Cheaper, low quality housing is going down in price. For new developments, better locations and better projects are outperforming their less well thought out competitors. In some nicer parts of Moscow region new developments are priced higher than in some areas on the outskirts of Moscow," says Levitov.

Having put behind a fantastic 2006, apartment owners face a moderate 2007 with residential property growth almost at standstill. This has deferred demand by potential buyers, prompting a good deal of owners to wait through and rent their apartments instead of selling.

"Currently, the housing market is going through the stabilization period, which is characterized by deferred demand. Apartment sellers continue to hold on to their apartments until there is resolution regarding the further development of the price situation," says Litinetskaya.

According to Levitov, a fair number of apartments offered for sale previously, were sold during autumn of 2006. Many early and foreign investors were actively selling and got rid of their apartments. Some apartments are still coming to the market now as the rental contracts expire.