Bulgaria Property Buying Guide
There is apparently no stopping the Bulgarian property market! Prior to EU entry the risk takers bought in, they were aware that prices would rise once EU entry was secured and how right they were. In 2007 when Bulgaria and Romania joined the EU folds prices did indeed rise and they are continuing to expand in line with demand particularly in the ever popular ski resorts such as Bansko.
If you’re been drawn to the natural appeal, accessibility, affordability and attraction of Bulgaria and you want to buy property there, then this Bulgaria property buying guide will give you the pertinent facts that you will need in order to make your buying experience a smooth and stress-free one.
Currently anyone wanting to buy freehold title to landed property in Bulgaria has to set up a Bulgarian company to do so. This is a very straightforward process and any lawyer, developer or estate agent can assist. As the Bulgarian constitution slowly changes to come more in line with the EU norm in matters such as the foreign right to own real estate, so this requirement will change. It is not expected to alter before 2012 at the earliest however.
So, if you’re buying anything other than an apartment in Bulgaria and you are serious that you will make a purchase, get your company set up as soon as possible as it can take time and you don’t want this holding up your purchase. Other than a Bulgarian company, the one thing you have to have when buying property in Bulgaria is a good and reputable, experienced and English speaking lawyer. This is because you have to ensure title searches are conducted thoroughly and that the person selling you a property has the right to do so. Additionally, if you decide to buy off plan property in Bulgaria you need your lawyer to tell you about the background of the developer if possible and also to arrange suitable stage payment plans according to the stage the construction has reached and not a stage in time reached – which is what many developers actually push for! They push for payment to be made in this way so that they can drag the build out as long as possible and get your funds regardless. By ensuring you only make the next stage payment when a certain stage of construction has been reached, you remain in control of your funds.
With a company established and a lawyer on side you can begin hunting for that perfect home. When you have a property in mind you can pay for a survey to be done on it and when buying a home in need of renovation it makes sense to do so. You can also ask a local builder to quote you on work needing doing and advise you about your need to apply for planning permission to have work completed. When you are happy with your choice of property you can put in an offer for it. If this is accepted you can sign a preliminary contract at which point you will be expected to pay between a 10 and a 40% deposit which is non-refundable if you withdraw from the sale for any reasons other than any you have stipulated in the preliminary contract. If you have not yet done so, now is the time to have a survey done and now is the time when your lawyer will conduct his searches.
When completion date is reached you sign a final contract and transfer all monies. It is often the case that the agent or vendor will ask you to under-declare the sales price on the contract – this may be because the agent has inflated the price, more likely it is to reduce the vendor’s capital gains tax liability. Do not agree to sign a contract with an under-declared value on it. Firstly it is illegal and secondly it will leave you open to a far greater capital gains tax bill when you come to sell.
Estate agents in Bulgaria charge anywhere between 3 and 10% with an average figure of 6% the norm. As the buyer you usually pay half this fee but check up front. You will pay your lawyer a fixed fee of around GBP 1,000 but again, ask up front. Other than these fees you will need to pay land tax and a notary and this will come to about 2% of the property purchase price, VAT may be levied at up to 20% and local property taxes come in at 2%. Income tax and CGT are 15% and there is no inheritance tax in Bulgaria - but if you’re a UK citizen, the UK tax man will be able to get his hands on your Bulgarian estate when you die unless you protect yourself against this happening.
All in all the process to buy property in Bulgaria is a simple and straightforward one – but don’t try and save money by not employing a lawyer. Get a lawyer on hand to help you before you sign or agree to anything!