Buying Property in Bulgaria
Practical Information for Buying Property in Bulgaria
Top 10 Tips
1. Property prices are much cheaper than in Western Europe but they are starting to grow.
2. Agent’s fees are often split between buyer and seller.
3. A public notary is responsible for completing the sale.
4. An initial contract includes provision for a non-refundable deposit of up to 10%/.
5. Property registration can be quite slow in Bulgaria.
6. There are restrictions on property purchase by non-EU nationals and the law has only recently changed for non-Bulgarians.
7. Ensure all repairs are done before signing final deal.
8. Income from rent is taxed at 15%.
9. An annual property tax is payable.
10.You are likely to need the services of a Bulgarian lawyer or one in Ireland with a good knowledge of Bulgarian property.
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The Bulgarian Property Market
Before buying in Bulgaria, determine your budget and if you are obtaining a mortgage from an Irish financial institution, make yourself aware of the sum available to you and any terms and conditions applying.
Bulgaria still represents excellent value in comparison to most of the rest of Europe although double digit annual increase in the price of property is now common. EU membership and the booming tourist industry have contributed to this growth and significant construction projects continue especially along the Black Sea. The costs associated with property purchase in Bulgaria are generally less than other territories and this is also a factor in its growth but bureaucracy remains a hindrance.
How to Find a Property Agent
There are some agents in Ireland who assist in buying Bulgarian property (not as many as for France, Spain or Portugal, however) and occasionally advertise on the web and in magazines and supplements or property exhibitions in Ireland. It makes sense to contact such agents before you travel to an area to look at property. Most Irish buyers tend to buy as part of a new development scheme.
You will need to decide on the type of property for which you are looking. Is it a holiday home to be used a few weeks in the year, a more permanent residence or a rental investment? A holiday home ideally will require little maintenance.
On purchasing a property in Bulgaria it is common practice for the buyer and seller to split the estate agent’s fees 50/50. A typical total percentage will be approximately 6% of the purchase price. On occasion, the buyer may be expected to pay the whole fee – so be sure to clarify who pays what before making an offer.
Make sure that you make appointments with agents in Bulgaria in advance. Give the estate agent a clear understanding of what you seek in a property. Be prepared for the types of property you are viewing i.e. wear appropriate clothing. Take a good local map and have a list of questions prepared.
The Legal Issues
Traditionally, according to the Bulgarian Constitution, foreign individuals can buy buildings but not land. Therefore the most common method for foreigners buying property in Bulgaria where they also wish to own the land is to set up a company which then owns the land and the buildings. The law changed with the entry of Bulgaria into the European Union in January 2007. Current amendments to the constitution will allow citizens of countries with which Bulgaria has agreements on land sales to buy land in 2007 when the amendments would come into effect, while EU citizens will have the right to buy land in 2014. In the meantime a company is still required for land ownership. If you do not have European Union nationality and are buying a holiday home you have to apply for permission from the Bulgarian Government, which must be obtained before you complete. Apart from this, the process is relatively simple.
Negotiations over price and any other issues may occur with all parties present, who will then draw up a preliminary contract outlining the details and any conditions that must be met before the sale completes (e.g. repairs). You pay a non-refundable deposit (normally about 10%) and the date for completion is set. All the necessary checks are made and proof must be provided that there are no loans secured on the house.
It is advisable that you use the services of a Bulgarian lawyer or an Irish solicitor who has a good knowledge of the Bulgarian property market.
Before buying, carry out a full examination of the location and price of the property.
Most important is to have the house inspected carefully, if not by oneself, then by a knowledgeable person in the area. This can be a broker or someone with relevant expertise.Any renovations or repairs of damages need to be checked. The roof should be examined by an expert or a good eye before buying.
When you have agreed a deal with the seller, the preliminary contract is taken to the office of the local notary. Always review the contract carefully and have it translated if necessary. Prepare any questions you have in advance, don't hesitate to ask them and allow sufficient time for getting full answers.
Amongst other details, the contract must include property details, agreed prices and payment conditions and clauses specifying what will happen should either party fail to complete the contract.
The notary is a State official and is legally bound to act as an impartial middleman between buyer and seller. He or she checks the land register to see whether the property can be sold at all and if it can be, whether there are any restrictions on its use. The contract spells out the obligations of each party and the measures to be taken in the event of default. Once it is signed, the notary registers the change of ownership with the municipal government and enters the property in the land register. Ideally, you should look for a notary that can speak English.
At the actual signing ceremony, the notary requires that both parties fully understand its content. The buyer may ask questions and interrupt the proceedings if a clause isn't completely understood. Since the reading is likely to be in Bulgarian, the buyer has the right to have a professional interpreter present, though this will be an additional cost.
You should bring passports and other relevant identification to the purchase ceremony.
The notary then logs the change of title at the property registry. This is a slower process than in many of the new European member-states, and registration can take up to three months. The purchase price is transferred after the final contract is signed.
Insurance
From the signing of the final contract the buyer is responsible for the insurance of all the buildings on the property.
Taxes, Fees & Charges
Agent’s fees, normally around 6% are generally split between buyer and seller but check in advance.
Land tax and notary fees, amounting to approx 5% of the purchase price, fall due for payment at the final sale.
VAT is generally exempt in transactions involving land and lease of property for residential purposes. However, levied at 20%, it pays to ask the agent if the property is exempt or if VAT is chargeable if it is included in the purchase price.
The owner of a building or a plot is obliged to pay a property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. Arable land is exempt from local taxes. In addition to the property tax, owners also pay waste-collection fees. These fees are determined when you register your ownership with the municipality, which should be done within 60 days of completion. Small fines are levied where this registration is done after 60 days.
Should you rent out the property, tax on the income is payable at 15% and if at later date you decide to sell the property Capital Gains Tax on any profit between the purchase and sale price is charged at 15%.
You should consult your tax advisor on these matters.
Planning Permission
Check with the local authority where you plan to build or renovate.
Regional Guide to Bulgaria:
Below is a brief outline of the various regions within Bulgaria, for those of you that are not already familiar with the regions of the country.
Blagoevgrad
The city of Blagoevgrad is unarguably the economic and cultural centre of southwestern Bulgaria. It features a pedestrian downtown with preserved 19th century architecture and numerous restaurants, cafes, coffee shops, and boutiques. Attractions in the surrounding area include the resort the ski resort of Bodrost.
Burgas
Burgas is the second-largest city on the Bulgarian Black Sea Coast. Burgas has the largest and most important Bulgarian port. Today, it is the fundamental economic, cultural and tourist centre of southeastern Bulgaria.
Dobrich
Dobrich is a town in northeastern Bulgaria and is the centre of Bulgaria’s historical region. Agriculture is the one of the most important things for the areas economy. The territory of the region is a unique mosaic of natural and archaeological sites of interest. Many people go there for the four game reserves.
Gabrovo
Gabrovo is a town in central northern Bulgaria. It is situated at the foot of the central Balkan Mountains, in the beautiful valley of the Yantra River. Hiking is very popular in the picturesque Balkan National Park. Gabrovo is also internationally known as the centre of humor and satire and has two theatres that serve as a cultural institute, a centre, museum and gallery to popularize the comic arts.
Haskovo
Haskovo celebrated its 1000th anniversary in 1985. The cultural life in the town is presented by the newly renovated theatre, historical museum and art gallery. Every year, Haskovo, celebrates a folk festival which takes place in a nearby park called Kenana. The town centre has recently been the subject of many investments, such that one would be hard pressed to tell the difference to Western Europe, in terms of street cafes, restaurants, shops, etc.
Kardzhali
Kardzhali is located in the lower eastern part of Rhodope Mountains, on both banks of the Arda River. Five kilometers from Kardzhali you’ll find a spectacular natural phenomenon in which a series of white pillars have eroded out of the volcanic tuff and are referred to as the "Kardzhali Pyramids. Kardzhail is a popular place among fans of water sports and fishing.
Kyustendil
Kyustendil is a town in the very west of Bulgaria and is located at the foot of mount Osogovo, on both banks of the Banska River. Kyustendil is a well-known centre for the practice of balneology (the treatment of disease by bathing) and fruit growing.
Lovech
Lovech is a town situated in the northern-central region of Bulgaria. It is a stunning location, with many areas of natural beauty. The highest place in the town is a called Stratesh Park where a great number of lilac bushes grow. These bushes can easily be seen from the whole town, and provide a wonderful view in the spring. Due to this, Lovech is well-known as the town of the lilacs.
Montana
Montana is a city in northwestern Bulgaria. There are many interesting aspects of Montana, one of which being the remains of the areas old Turkish Baths. Over the years Montana has been revived and it now offers a great choice of interesting sites and entertainment. The region hosts numerous private villas and is suitable for recreation and sports.
Pazardzhik
Pazardzhik is a town situated along the banks of the Maritsa river in Bulgaria. Most Bulgarian cities have developed a totally pedestrian centre and Pazardzhik is no different. Several of the pedestrianised central squares are remenisant of the European café society and pedestrian culture. Among the town's landmarks are also the clock tower and the fascinating history museums.
Pernik
Pernik is a city in western Bulgaria. It is a semi mountainous region with a temperate continental climate. In the past few years Pernik has come on in leaps and bounds and now has a highly developed foot of terraces and villas. The surrounding areas of Pernik provide breathtaking scenery and exciting adventures.
Pleven
Pleven located in the northern part of the country. Recently the town experienced significant economic growth and has gradually establishing itself as a cultural centre of the region. There are over 200 sights and monuments in Pleven that are related to the Russo-Turkish War.
Plovdiv
Plovdiv is the second-largest city in Bulgaria after Sofia. The city of Plovdiv itself is particularly striking due to it being nestled in between seven hills. Plovdiv’s infrastructure has grown adding to the development of cultural activities, such as theatre, music and art. There are several main shopping areas and the central street is littered with shops, cafes and restaurants.
Razgrad
Razgrad is a city in northeastern Bulgaria. It is attracting many golfers from Bulgaria and abroad due to a new golf course being built near the Pchelina recreation area. Some of the most attractive objects in Razgrad include the Ibrahim pasha mosque (1616) and the Clock Tower, which is a symbol of the town.
Ruse
Ruse is situated in the northeastern part of the country. Noted for its rich culture, the city is particularly famous for its Baroque and Rococo architecture which attracts many to the province.
Shumen
Shumen is a city in the northeastern part of Bulgaria. The Balkans surround the city to the north and west, creating a horse-shoe which curve round it. Located at the foot of Shumen is the Shoumen Plateau Natural Park which provides many with a sense of tranquility and the opportunity to relax.
Silistra
Silistra is a port city of northeastern Bulgaria. It is a very picturesque city and is one of the more important cities of the historical region. The town is bursting with rich cultural and historic heritage. The hills surrounding Silistra give a lovely view of the city, the river and the near by islands.
Sliven
Sliven is a town in southeast Bulgaria. This town has many spectacular features including the famous rocky massif Sinite Kamani "The Blue Rocks". Recently Silven has developed and become one of the most cultural centers in Bulgaria, with much of its old heritage still preserved. It’s this heritage today that offers its citizens and visitors a lot of opportunities for a cultural life.
Smolyan
Smolyan is a town in the very south of Bulgaria. Due to its suitable location on top of Mount Rozhen it has become a popular ski resort. Smolyan can offer the cosy homestead and the rustic life that some people now crave.
Sofia
Sofia is the capital and largest city of Bulgaria. It is located in western Bulgaria, at the foot of the mountain massif Vitosha. It is the administrative, cultural, economic, and educational centre of the country. Sofia is also one of the oldest capital cities in Europe, blending its past and present in a remarkable architectural style. Sofia's geographic location, situated in the foothills of the Vitosha Mountains, further add to the city's amazing atmosphere.
Stara Zagora
Stara Zagora is a large city in the central part of Southern Bulgaria. Surrounding the town are many parks of natural beauty, but not only do the parks hold beauty but so do the streets. In Stara Zagora you will find leafy boulevards, friendly people and lively sidewalk cafes. To add to this Stara Zagra enjoys a Mediterranean influenced climate.
Targovishte
Targovishte is situated at the southern foot of a low mountain called Preslav and Targovishte its self is known to have both hilly and plain terrain. Targovishte is widely known as a wine producing region and with plenty of lakes and forests; it makes for a picturesque landscape.
Varna
Varna is the largest city on the Bulgarian Black Sea Coast. Varna enjoys the luxury of having sandy beaches in urban areas known as ‘Sea Baths’. The public transit system is extensive and reasonably priced. Varna has a fast-growing economy and rich cultural heritage due to its location. It enjoys a mild continental climate akin to the Mediterranean.
Veliko Turnovo
Veliko Turnovo is a city in central northern Bulgaria. Veliko Tarnovo is a town that grabs you at first sight with the ability to impress and influence. It has many historical monuments and landmarks, such as the ruins of the castle Tsarevets and is bathed in Renaissance style architecture and culture.
Vidin
Vidin is a town on the southern bank of the Danube in northwestern Bulgaria. The town is a mixture of different architectural periods and is dotted with historical sites; it all blends to give Vidin its own unique atmosphere and culture.
Vratsa
Vratsa is one of the most picturesque cities in the whole of Bulgaria. It is situated in the foothills of "Vrachanski Balkan". The city is very diverse and because of its attractive natural features it provides some great recreation opportunities.
Yambol
Yambol is a city in southeastern Bulgaria. It is a picturesque area with stunning nature and lush vegetation, not to mention the clean air. The thing Yamol is most famous for is its production of fine red wines.
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