Buying property in a foreign country can be quite daunting, particularly for those who may be visiting for the first time. So here, in the first part of a five-part series - A Sure-Fire Formula for Successful Property Purchase - we take an in-depth look at the property market in Bulgaria and identify a number of fundamental points that you should consider when planning your property purchase ...
Bulgaria's Property Options:
A city apartment, a house in the suburbs, a new-build in one of the beach or ski resorts, a villa on a golf course or a rambling old rural home in the countryside. The choices are extensive, the options are available and the decision is yours. Whether you're looking for cosmopolitan city chic, a place in the sun, a hideaway in the mountains, or a more laid-back village lifestyle - here's all the information that you need to make the right decisions about your property in Bulgaria.
Background to Buying Property in Bulgaria:
Real estate in Bulgaria includes: houses, flats, villas, building plots, apartments, holiday homes and village properties from all locations and areas of the country - cities, towns and villages, beach and mountain resorts, rural countryside. Buying property in Bulgaria is now well established and can be summarised into two main categories, namely: property with land - and - property without land
The defining issue is that under current Bulgarian law foreign persons may own physical property (ie: bricks and mortar) but they are not allowed to own land or properties that come with land, such as: houses with gardens, villas and building plots. New-build apartments do not normally have land attached and, accordingly, can be purchased by private individuals. However, until 2014 when the law is scheduled to change, the only way to buy a property with land is to form a Bulgarian limited company. The company that you register will own the property and you will own the company and its assets. The process of setting up a business is simple and straightforward and can be accomplished in around 3 to 4 weeks. While it's possible to set-up a business independently, most people use the services of a lawyer, often arranged through the real estate agent from whom they are purchasing property, with a Power of Attorney (POA) authorising them to act for their client. There is no requirement for a business set up in this way to trade, however, your business will be an official limited company and, therefore, you can conduct business operations if you choose to do so. Thousands of foreign nationals have set up businesses in order to buy property ... some are now trading - others are not. Once again, the choice is yours.
Bulgarian Property - Market Conditions:
There are thousands of city, rural and village properties available today and current market conditions reflect the impact of the recent global recession in terms of reduced asking prices for most properties. This has created a buyer's market in which price negotiation is the norm and there are plenty of properties available at bargain prices. But, as Bulgaria's post-recession recovery continues apace, demand is beginning to rise again and the bargain properties will inevitably be snapped up. Our advice is that if you are considering a property purchase in Bulgaria - even if you are only thinking about it as a possibility at this stage - we recommend that you should start your information gathering, planning and decision making sooner rather than later.
And when you are ready, remember that the entire package - from car hire, accommodation and English speaking staff for your viewing trip, through the set-up of your business, the translation and registration of documents, to the transfer of title deeds - can usually be completed in just 4 to 6 weeks
General Advice:
The general advice from a number of ex-pats who have already purchased property and live here is to focus on the following strategies at the time of purchase ... know what you want, confirm that this is what the agent / vendor will actually be delivering to you - and don't be fobbed off with silly promises of guaranteed returns on your investment, or statements such as "ah well, this is how it works in Bulgaria ..."
Underlying Strategies:
While property purchase in Bulgaria is simple and straightforward, it differs in a number of ways from buying property in the UK. So here, in the second part of our five-part series - A Sure-Fire Formula for Successful Property Purchase - we examine a number of underlying strategies that you should follow throughout the purchase process ...
1: While it is possible to buy in Bulgaria without even seeing your property (and many people do), it is better to visit the country at least once - and preferably a few times - before making your final decision.
2: Confirm that your agent has the necessary staff and resources in place to provide you with an end-to-end service including your business set-up, if applicable. Note: for off-plan apartments, the purchase process can take up to a couple of years.
3: Ask you agent for contact details of other clients so that you can carry out some background checks - if they can not or will not provide this information, just make your own judgement.
4: As with all property purchase and conveyancing, you will need a solicitor to deal with issues such as contracts, land searches and so on. Many agents will offer to provide these legal services for you but, if you would feel more comfortable with your own solicitor, we recommend that you employ an independent English speaking Bulgarian solicitor, rather than one in your own country who may not be conversant with Bulgarian property law. Otherwise, your UK solicitor will simply employ a Bulgarian solicitor to do the work - as you could - and then charge you for the service. Your agent should be happy to provide you with contact details for independent solicitors if required.
5: New build properties (eg: apartments) are subject to VAT at the standard rate - re-sale properties (eg: village houses) are not. If VAT is applicable to your purchase, ensure that this is included in the quoted price.
6: Insist that the full purchase price paid is entered on to the title deed. Some agents or sellers will encourage you to accept a lower recorded purchase price. Note: if your agent or seller pushes this point, you can always walk away.
7: Ensure that all associated costs (eg: purchase taxes, fees, commissions, service charges) are fully detailed and explained - and don't forget to budget for furnishing, renovations or additional building works as applicable.
8: Check your contract to make sure that the property details and specifications for finishing, fixtures and fittings are as you expect - note: it is quite common for new apartments to be built to "Bulgarian Completion Standard", which is walls, floors, doors and windows - but without any decoration, flooring, electric fittings, kitchen or bathroom units.
This might sound a lot to remember but, in general terms, the advice is: know what you want and confirm that this is what the agent or vendor will actually be delivering to you.
Two Golden Rules to Remember:
Finally, beware the expert. Apart from the many registered and reputable real estate agents in the country, you'll find that everybody from the taxi driver at the airport and the staff at your hotel to the students pushing property flyers at you on every street corner is a property expert. Everybody has the best deal for you - or the latest news - or the most important advice. This is often cited by property seekers as a major source of confusion but, to counter this, there are just two simple rules to remember ...
Bulgaria's Property Options:
A city apartment, a house in the suburbs, a new-build in one of the beach or ski resorts, a villa on a golf course or a rambling old rural home in the countryside. The choices are extensive, the options are available and the decision is yours. Whether you're looking for cosmopolitan city chic, a place in the sun, a hideaway in the mountains, or a more laid-back village lifestyle - here's all the information that you need to make the right decisions about your property in Bulgaria.
Background to Buying Property in Bulgaria:
Real estate in Bulgaria includes: houses, flats, villas, building plots, apartments, holiday homes and village properties from all locations and areas of the country - cities, towns and villages, beach and mountain resorts, rural countryside. Buying property in Bulgaria is now well established and can be summarised into two main categories, namely: property with land - and - property without land
The defining issue is that under current Bulgarian law foreign persons may own physical property (ie: bricks and mortar) but they are not allowed to own land or properties that come with land, such as: houses with gardens, villas and building plots. New-build apartments do not normally have land attached and, accordingly, can be purchased by private individuals. However, until 2014 when the law is scheduled to change, the only way to buy a property with land is to form a Bulgarian limited company. The company that you register will own the property and you will own the company and its assets. The process of setting up a business is simple and straightforward and can be accomplished in around 3 to 4 weeks. While it's possible to set-up a business independently, most people use the services of a lawyer, often arranged through the real estate agent from whom they are purchasing property, with a Power of Attorney (POA) authorising them to act for their client. There is no requirement for a business set up in this way to trade, however, your business will be an official limited company and, therefore, you can conduct business operations if you choose to do so. Thousands of foreign nationals have set up businesses in order to buy property ... some are now trading - others are not. Once again, the choice is yours.
Bulgarian Property - Market Conditions:
There are thousands of city, rural and village properties available today and current market conditions reflect the impact of the recent global recession in terms of reduced asking prices for most properties. This has created a buyer's market in which price negotiation is the norm and there are plenty of properties available at bargain prices. But, as Bulgaria's post-recession recovery continues apace, demand is beginning to rise again and the bargain properties will inevitably be snapped up. Our advice is that if you are considering a property purchase in Bulgaria - even if you are only thinking about it as a possibility at this stage - we recommend that you should start your information gathering, planning and decision making sooner rather than later.
And when you are ready, remember that the entire package - from car hire, accommodation and English speaking staff for your viewing trip, through the set-up of your business, the translation and registration of documents, to the transfer of title deeds - can usually be completed in just 4 to 6 weeks
General Advice:
The general advice from a number of ex-pats who have already purchased property and live here is to focus on the following strategies at the time of purchase ... know what you want, confirm that this is what the agent / vendor will actually be delivering to you - and don't be fobbed off with silly promises of guaranteed returns on your investment, or statements such as "ah well, this is how it works in Bulgaria ..."
Underlying Strategies:
While property purchase in Bulgaria is simple and straightforward, it differs in a number of ways from buying property in the UK. So here, in the second part of our five-part series - A Sure-Fire Formula for Successful Property Purchase - we examine a number of underlying strategies that you should follow throughout the purchase process ...
1: While it is possible to buy in Bulgaria without even seeing your property (and many people do), it is better to visit the country at least once - and preferably a few times - before making your final decision.
2: Confirm that your agent has the necessary staff and resources in place to provide you with an end-to-end service including your business set-up, if applicable. Note: for off-plan apartments, the purchase process can take up to a couple of years.
3: Ask you agent for contact details of other clients so that you can carry out some background checks - if they can not or will not provide this information, just make your own judgement.
4: As with all property purchase and conveyancing, you will need a solicitor to deal with issues such as contracts, land searches and so on. Many agents will offer to provide these legal services for you but, if you would feel more comfortable with your own solicitor, we recommend that you employ an independent English speaking Bulgarian solicitor, rather than one in your own country who may not be conversant with Bulgarian property law. Otherwise, your UK solicitor will simply employ a Bulgarian solicitor to do the work - as you could - and then charge you for the service. Your agent should be happy to provide you with contact details for independent solicitors if required.
5: New build properties (eg: apartments) are subject to VAT at the standard rate - re-sale properties (eg: village houses) are not. If VAT is applicable to your purchase, ensure that this is included in the quoted price.
6: Insist that the full purchase price paid is entered on to the title deed. Some agents or sellers will encourage you to accept a lower recorded purchase price. Note: if your agent or seller pushes this point, you can always walk away.
7: Ensure that all associated costs (eg: purchase taxes, fees, commissions, service charges) are fully detailed and explained - and don't forget to budget for furnishing, renovations or additional building works as applicable.
8: Check your contract to make sure that the property details and specifications for finishing, fixtures and fittings are as you expect - note: it is quite common for new apartments to be built to "Bulgarian Completion Standard", which is walls, floors, doors and windows - but without any decoration, flooring, electric fittings, kitchen or bathroom units.
This might sound a lot to remember but, in general terms, the advice is: know what you want and confirm that this is what the agent or vendor will actually be delivering to you.
Two Golden Rules to Remember:
Finally, beware the expert. Apart from the many registered and reputable real estate agents in the country, you'll find that everybody from the taxi driver at the airport and the staff at your hotel to the students pushing property flyers at you on every street corner is a property expert. Everybody has the best deal for you - or the latest news - or the most important advice. This is often cited by property seekers as a major source of confusion but, to counter this, there are just two simple rules to remember ...
If it seems dodgy, it probably is
- and -
If it seems too good to be true, it definitely is
The Purchase Process - Key Steps:
Your step-by-step guide to a successful property purchase ...
Step 1: Plan and prepare funding sources and set your budget
Do the numbers and make sure that your finance is in place - eg: private finance, savings, arrangements for stage payments or a mortgage facility. Set your budget and don't be swayed from it by promises - no matter how attractive - of how easy it will all be as values rise in the future
Step 2: Identify preferred locations and type of property
Are you looking for: city, coast, mountain, countryside, a holiday base, an investment property, a long-term or permanent home, a new-build villa, an off-plan apartment, or a village house? Decisions made at this stage can save time and money later
Step 3: Select Agent(s) and shortlist properties for viewing
Conduct background research, check client recommendations, review property websites and communicate with several agents. Narrow down the options but identify a number of possibilities so that you have sufficient flexibility of choice
Step 4: Arrange viewing trip
Your agent should organise airport pick-up, transfers, accommodation and scheduled viewings - but should not tie you down to a full and fixed programme that leaves you little or no time to visit other agents or explore other options
Step 5: Select property and negotiate terms
Your agent should advise and assist in negotiations in order to establish an agreed purchase price, details of what is and what is not included in the sale, the timescale for completion and any other matters that may require clarification
Step 6: Property with land
Set-up a business: either independently or with your agent's lawyers acting on your behalf
or - Property without land
Business set-up is optional
Step 7: Confirm validity of title and all relevant document
This should already have been done as part of your agent's due diligence pre-sale checks on the property but, at this stage, either your agent's legal team or your own independent lawyer should confirm again that everything is in order
Step 8: Pay deposit
Normally set at 10% of the purchase price or a minimum sum of, say, 1000 euro. Deposits for the purchase of off-plan properties may be set at a lower percentage of the price but the buyer might also be required to make the first stage payment at the same time
Step 9: Sign Preliminary Contract
This sets out the details and specifications of the property, together with the legal status, rights and responsibilities of the buyer and the seller. Must be written in Bulgarian but should have a translation in English (or your native language)
Step 10: Await completion process
Although the usual timescale is around 8 weeks, purchase of a re-sale property can sometimes be completed within as little as 3 to 4 weeks. Completion time for new-build properties and off-plan apartments, on the other hand, can extend for a period of up to 1 to 2 years
Step 11: Make final payment
The balance of the purchase price for re-sale properties, or the final stage payment for off-plan properties - plus State taxes, local taxes and Notary fees totalling around 4% of property value, plus your agent's commission, if applicable
Step 12: Sign Notary Act (title deed) in front of Notary Public
Ownership of the property is legally transferred to the buyer at the time of signing in front of the Notary - an experienced Lawyer with defined responsibilities for legalising contracts and documents and for protecting the interests of individuals in legal matters
Step 13: Register new ownership details with utility companies
This is normally done as part of your agent's after-sales service - but when purchase has been completed it is important to double-check that the utility companies are aware of the new property ownership details or the supply of services may be terminated
Step 14: Organise lifestyle & living arrangements
This is where the better agents really come into their own by working with you after the sale is completed to help you organise all the things that are important to you, such as: property management, furnishing, insurance, renovations and so on
And a final thought ...
Provided that you ask the key questions when selecting your agent, check and confirm the full costs of your property and focus on the facts, rather than the rumours, you will be well on your way to making a successful purchase and to joining the thousands of people already enjoying their home in Bulgaria.
Your step-by-step guide to a successful property purchase ...
Step 1: Plan and prepare funding sources and set your budget
Do the numbers and make sure that your finance is in place - eg: private finance, savings, arrangements for stage payments or a mortgage facility. Set your budget and don't be swayed from it by promises - no matter how attractive - of how easy it will all be as values rise in the future
Step 2: Identify preferred locations and type of property
Are you looking for: city, coast, mountain, countryside, a holiday base, an investment property, a long-term or permanent home, a new-build villa, an off-plan apartment, or a village house? Decisions made at this stage can save time and money later
Step 3: Select Agent(s) and shortlist properties for viewing
Conduct background research, check client recommendations, review property websites and communicate with several agents. Narrow down the options but identify a number of possibilities so that you have sufficient flexibility of choice
Step 4: Arrange viewing trip
Your agent should organise airport pick-up, transfers, accommodation and scheduled viewings - but should not tie you down to a full and fixed programme that leaves you little or no time to visit other agents or explore other options
Step 5: Select property and negotiate terms
Your agent should advise and assist in negotiations in order to establish an agreed purchase price, details of what is and what is not included in the sale, the timescale for completion and any other matters that may require clarification
Step 6: Property with land
Set-up a business: either independently or with your agent's lawyers acting on your behalf
or - Property without land
Business set-up is optional
Step 7: Confirm validity of title and all relevant document
This should already have been done as part of your agent's due diligence pre-sale checks on the property but, at this stage, either your agent's legal team or your own independent lawyer should confirm again that everything is in order
Step 8: Pay deposit
Normally set at 10% of the purchase price or a minimum sum of, say, 1000 euro. Deposits for the purchase of off-plan properties may be set at a lower percentage of the price but the buyer might also be required to make the first stage payment at the same time
Step 9: Sign Preliminary Contract
This sets out the details and specifications of the property, together with the legal status, rights and responsibilities of the buyer and the seller. Must be written in Bulgarian but should have a translation in English (or your native language)
Step 10: Await completion process
Although the usual timescale is around 8 weeks, purchase of a re-sale property can sometimes be completed within as little as 3 to 4 weeks. Completion time for new-build properties and off-plan apartments, on the other hand, can extend for a period of up to 1 to 2 years
Step 11: Make final payment
The balance of the purchase price for re-sale properties, or the final stage payment for off-plan properties - plus State taxes, local taxes and Notary fees totalling around 4% of property value, plus your agent's commission, if applicable
Step 12: Sign Notary Act (title deed) in front of Notary Public
Ownership of the property is legally transferred to the buyer at the time of signing in front of the Notary - an experienced Lawyer with defined responsibilities for legalising contracts and documents and for protecting the interests of individuals in legal matters
Step 13: Register new ownership details with utility companies
This is normally done as part of your agent's after-sales service - but when purchase has been completed it is important to double-check that the utility companies are aware of the new property ownership details or the supply of services may be terminated
Step 14: Organise lifestyle & living arrangements
This is where the better agents really come into their own by working with you after the sale is completed to help you organise all the things that are important to you, such as: property management, furnishing, insurance, renovations and so on
And a final thought ...
Provided that you ask the key questions when selecting your agent, check and confirm the full costs of your property and focus on the facts, rather than the rumours, you will be well on your way to making a successful purchase and to joining the thousands of people already enjoying their home in Bulgaria.
Pricing Issues:
If we put your preferred type of property and the location to one side for a moment, probably the most important element in the entire purchase process is the price that you pay for your property. But the purchase price of a property in Bulgaria is not always what it seems. So here, we take the lid off two key pricing issues ...
Purchase price and Title Deeds:
When you buy property in Bulgaria, you will find that it is common practice for a lower value than the actual purchase price to be entered on to the Notary Act (title deeds) at the time of completion - this lower value is known as the Tax Estimation price. It is important, though, to ensure that the price written on your Notary Deed is the full price that you have paid for the property. Here’s why …
The price written on the Notary Deed is the baseline used to calculate the State Taxes and Notary fees associated with your purchase. The overall rate for these taxes and fees is approximately 3.5% to 4% of the price on the title deeds - so, if a lower price than you have actually paid for the property is entered on to the Notary Deeds, you will save money. And if a real estate agent is prepared to set this up for you, well .. saving tax is always nice and it might all seem to a pretty good idea. However, as with many of the nice things in life, there’s a sting in the tail and, in this case, it's called corporation tax.
There is a tax applicable on any profit that you make when you sell your property. This is considered as earnings by your company and as such is liable to Corporation tax. The rate of tax is currently 10%, calculated on the difference between the price recorded on the Notary Deeds and the price paid to you by the new buyer. So, suppose that you buy property for €25000 - but with a value of only €15000 written on the title deeds - and then sell it later for €50000 - consider the outcome …
You have made a profit of €25000 and your tax liability on this is €2500 - BUT - your records will show that you have made a profit of €35000 with a tax liability of €3500
Oh, yes ... and entering a low price on a title deed is also technically illegal
Purchase price and VAT:
New build properties such as apartments and villas are subject to VAT at the standard rate and you should ensure that this is included in the purchase price. The reason for this is that, as described above, it is in the interest of the seller (usually the builder or developer) to have a sale price that is as low as possible recorded on the title deeds because it is this price that is used to calculate the seller's tax and VAT liabilities. Some sellers and a number of real estate agents may encourage you to accept the purchase price without VAT as the price recorded on the title deeds - some may say that this is the way that things are done in Bulgaria - some might even propose that the purchase price is adjusted downwards and then an element of VAT is added so that you can say you have paid it. But beware all such suggestions ...
Firstly, VAT at the standard rate is due and must be paid. If the seller does not include it in the purchase price, the buyer will need to pay it anyway - but as a separate lump sum. Secondly, an under-declared price on the title deeds can invalidate the purchase. Thirdly, if the property is sold at a later date, any valuation for mortgage facilities will be based on the under-declared price, which means that prospective buyers might not be able to proceed because of a shortfall in funding. Fourthly, the Bulgarian Government - and, therefore, the Bulgarian people - loses millions of euro every year through these practices. And, finally, the relevant law states that " If the sale price shown in the sale and purchase agreement is lower than the actual sale price, the seller and the purchaser are jointly liable vis-à-vis the Tax Administration"
So, it is worth repeating the advice - if VAT is applicable to your purchase, ensure that this is included in the quoted price and that the full price paid is recorded on the title deeds. All that you have to do is steer clear of any developers and agents who suggest otherwise.
Read more on our websites ...
MovetoBG.com - and Twitter @MovetoBG
Bulgaria Gateway - and Twitter @BulgariaGateway
Property Partners BG - and Twitter @PropertyPtnrsBG - or on Facebook
If we put your preferred type of property and the location to one side for a moment, probably the most important element in the entire purchase process is the price that you pay for your property. But the purchase price of a property in Bulgaria is not always what it seems. So here, we take the lid off two key pricing issues ...
Purchase price and Title Deeds:
When you buy property in Bulgaria, you will find that it is common practice for a lower value than the actual purchase price to be entered on to the Notary Act (title deeds) at the time of completion - this lower value is known as the Tax Estimation price. It is important, though, to ensure that the price written on your Notary Deed is the full price that you have paid for the property. Here’s why …
The price written on the Notary Deed is the baseline used to calculate the State Taxes and Notary fees associated with your purchase. The overall rate for these taxes and fees is approximately 3.5% to 4% of the price on the title deeds - so, if a lower price than you have actually paid for the property is entered on to the Notary Deeds, you will save money. And if a real estate agent is prepared to set this up for you, well .. saving tax is always nice and it might all seem to a pretty good idea. However, as with many of the nice things in life, there’s a sting in the tail and, in this case, it's called corporation tax.
There is a tax applicable on any profit that you make when you sell your property. This is considered as earnings by your company and as such is liable to Corporation tax. The rate of tax is currently 10%, calculated on the difference between the price recorded on the Notary Deeds and the price paid to you by the new buyer. So, suppose that you buy property for €25000 - but with a value of only €15000 written on the title deeds - and then sell it later for €50000 - consider the outcome …
You have made a profit of €25000 and your tax liability on this is €2500 - BUT - your records will show that you have made a profit of €35000 with a tax liability of €3500
Oh, yes ... and entering a low price on a title deed is also technically illegal
Purchase price and VAT:
New build properties such as apartments and villas are subject to VAT at the standard rate and you should ensure that this is included in the purchase price. The reason for this is that, as described above, it is in the interest of the seller (usually the builder or developer) to have a sale price that is as low as possible recorded on the title deeds because it is this price that is used to calculate the seller's tax and VAT liabilities. Some sellers and a number of real estate agents may encourage you to accept the purchase price without VAT as the price recorded on the title deeds - some may say that this is the way that things are done in Bulgaria - some might even propose that the purchase price is adjusted downwards and then an element of VAT is added so that you can say you have paid it. But beware all such suggestions ...
Firstly, VAT at the standard rate is due and must be paid. If the seller does not include it in the purchase price, the buyer will need to pay it anyway - but as a separate lump sum. Secondly, an under-declared price on the title deeds can invalidate the purchase. Thirdly, if the property is sold at a later date, any valuation for mortgage facilities will be based on the under-declared price, which means that prospective buyers might not be able to proceed because of a shortfall in funding. Fourthly, the Bulgarian Government - and, therefore, the Bulgarian people - loses millions of euro every year through these practices. And, finally, the relevant law states that " If the sale price shown in the sale and purchase agreement is lower than the actual sale price, the seller and the purchaser are jointly liable vis-à-vis the Tax Administration"
So, it is worth repeating the advice - if VAT is applicable to your purchase, ensure that this is included in the quoted price and that the full price paid is recorded on the title deeds. All that you have to do is steer clear of any developers and agents who suggest otherwise.
Completion of your Property Purchase:
The actual completion of your property purchase is the most exciting part of the whole process. When you sign the title deeds (Notary Act) the deal is done and you become the legal owner of your new Bulgarian Property. To make sure that there are no last minute hitches at this stage, we conclude with a look at the latest legislation and a summary of the overall costs for your purchase ...
Cash payments for property deals to be ended:
New rules dictating that all property transactions with a purchase value of more than 10000 Leva (BGN) must be carried out via bank transfer, rather than cash payments, were approved in January and it is envisaged that this will become law in May or June of this year. The new legislation will require that both the seller and the buyer specify their bank accounts for conducting a property deal - alternatively, payments can be processed through the account of the Notary who is over-seeing the sale and purchase. The conditions for depositing and transferring money through their bank accounts will be arranged jointly by the buyer and the seller and specified in written agreements.
There is still some tidying up to do with this new legislation but, when implemented, it will make the purchase process simpler, safer and more secure for all concerned.
Summary of purchase costs:
While actual figures may very slightly from area to area and from agent to agent, the typical costs for purchasing a property in Bulgaria are:
If you are buying a property with land, you will also need to include the costs for setting up your business. In addition you will need to budget separately for insurance, furnishing, maintenance costs, business administration and accounting, and property management as applicable. You might find the following listing useful to summarise all the elements of your total purchase cost
Follow the Formula ...
In this five-section article we have covered all the critical aspects of buying property in Bulgaria. First, we identified the need for thorough planning and background research; then we considered a number of buyer-strategies for you to adopt; section 3 covered all the key steps in the purchase process; then we explored fundamental pricing issues; and, finally, section 5 has brought everything bang up-to date with a look at the latest legislation and an overall summary of current purchase costs.
So, it's all here. How it works, what to do and what not to do; everything that you need to know and everything that you should look out for. All that you have to do now for a successful property purchase is - Follow the Formula ...
The actual completion of your property purchase is the most exciting part of the whole process. When you sign the title deeds (Notary Act) the deal is done and you become the legal owner of your new Bulgarian Property. To make sure that there are no last minute hitches at this stage, we conclude with a look at the latest legislation and a summary of the overall costs for your purchase ...
Cash payments for property deals to be ended:
New rules dictating that all property transactions with a purchase value of more than 10000 Leva (BGN) must be carried out via bank transfer, rather than cash payments, were approved in January and it is envisaged that this will become law in May or June of this year. The new legislation will require that both the seller and the buyer specify their bank accounts for conducting a property deal - alternatively, payments can be processed through the account of the Notary who is over-seeing the sale and purchase. The conditions for depositing and transferring money through their bank accounts will be arranged jointly by the buyer and the seller and specified in written agreements.
There is still some tidying up to do with this new legislation but, when implemented, it will make the purchase process simpler, safer and more secure for all concerned.
Summary of purchase costs:
While actual figures may very slightly from area to area and from agent to agent, the typical costs for purchasing a property in Bulgaria are:
- the purchase price of the property plus VAT if applicable
- agent's commission, normally at 3% or a minimum of, say, €1000
- 3½% - 4½% of the purchase price for taxes, fees and charges
If you are buying a property with land, you will also need to include the costs for setting up your business. In addition you will need to budget separately for insurance, furnishing, maintenance costs, business administration and accounting, and property management as applicable. You might find the following listing useful to summarise all the elements of your total purchase cost
- Price of property plus VAT (if applicable)
- Agency commission (usually 3% of purchase price)
- State taxes at 2% of purchase price
- Municipal taxes at 0.25% of purchase price (may vary)
- Court registration fee at 0.1% of purchase price
- Notary fees at 1½% of purchase price (1½% maximum)
- Maintenance costs or service charges
- Additional costs - eg: furnishing, management
- plus, if you are buying a property with land
- Set-up costs for business at approximately € 400 to € 600
- Total purchase costs:
Follow the Formula ...
In this five-section article we have covered all the critical aspects of buying property in Bulgaria. First, we identified the need for thorough planning and background research; then we considered a number of buyer-strategies for you to adopt; section 3 covered all the key steps in the purchase process; then we explored fundamental pricing issues; and, finally, section 5 has brought everything bang up-to date with a look at the latest legislation and an overall summary of current purchase costs.
So, it's all here. How it works, what to do and what not to do; everything that you need to know and everything that you should look out for. All that you have to do now for a successful property purchase is - Follow the Formula ...
Read more on our websites ...
MovetoBG.com - and Twitter @MovetoBG
Bulgaria Gateway - and Twitter @BulgariaGateway
Property Partners BG - and Twitter @PropertyPtnrsBG - or on Facebook
