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How The legal processes involved in buying property in Bulgaria are relatively uncomplicated - but actually getting to that first contract exchange can be somewhat arduous. The problem lies with the lack of uniformity of the selling industry. Many circumnavigate these problems by buying direct from a developer when the process becomes pretty painless. But, should you be looking for that dream buy, a little comparative research and some local legwork goes a very long way. Estate Agents operate on a very varying fee structures but 5% is typical. Unlike the UK this is (just) sometimes paid by the buyer. Agents may also be receiving a fee from the vendor. If you are acquiring a very cheap property the fee may be fixed at a particular sum (generally more than 5% - the rationale being that a low cost purchase requires as much time and paperwork as a much more expensive property). Some, particularly in more remote areas will charge petrol costs for visits and others a daily viewing fee which is normally refundable from the purchase fee. Increased competition - particularly in 'hot spots' - are making such practices less common. To complicate matters further some new builds are inclusive of estate agents fees. In order to minimise the possibility of misunderstanding ensure you have first carefully defined the financial terms of your relationship with your Estate Agent regarding a particular purchase - at the very outset. This is really important. Foreigners are allowed - indeed positively encouraged - to buy property in Bulgaria. But currently not allowed to own land. So you can purchase the house - but not the garden. The means of circumnavigating this is straightforward - you simply register a company in Bulgaria which acquires and holds the land on your sole behalf. You own the company and the company owns the land. A competent estate agent or solicitor will do this for you for about £500 (depending upon complexity and your negotiating skills) or less. Establishing a Bulgarian Company account requires a mandatory deposit of 5,000 leva (approx £1,700). This money can then be used towards the purchase of the house, your expenses or any means you so choose. It is simply a legal requirement that in order to open a company account you need to deposit this initial sum. These practices will probably change in due course - but they exist today! Should you proceed along this route remember that you will need to appoint an accountant to complete and return the annual company accounts by March 31. Typically this costs £50 per annum or less. The Internet and the Bulgarian legal process means that it is quite possible to buy your property from the comfort of your armchair and never visit Bulgaria. And many Brits do. You simply give Power of Attorney to the Estate Agent or a local English speaking solicitor and they will send all necessary paperwork to you (generally by DHL) and act on your behalf with the vendor and the Notary. If you are in Bulgaria and have at last found your dream buy it is worth signing Power of Attorney to the Estate Agent - or solicitor if you are using one. You will need your passport. Particularly when using a solicitor it is probably worth opening two bank accounts - a sterling account for sterling transactions and a leva account for the payment of future utility bills and taxes (detailed below). Again you will need your passport. Should you be buying a new build apartment it is likely that the management agent will sort out utility bills and recharge you. Check. You will generally find that the Power of Attorney transfer and the opening of the bank account can be achieved together in a few hours. We use the United Bulgarian Bank and have so far met with no problems but your agent / solicitor will advise you Once you have found your dream home you will need to pay an immediate deposit. This is typically 10% but can be less. Our experience is that it is at this stage that sadly things can go wrong. Searches for the Preliminary Contract may reveal that the vendor does not fully own the property - or he may just decide to sell to someone else who has turned up with a big bag of cash (thereby saving an Estate Agent's perceived rip-off commission). Such problems are minimised when buying direct from a reputable developer. Any deposit paid will be returned but it is only once the preliminary contract is signed that you can truly relax. The Preliminary is binding and details building materials, fittings and an agreed schedule for completion. Fortunately it can normally be signed and witnessed before the Public Notary in a very short time - sometimes almost immediately. Ensure that you meet any agreed schedule of payment (for an off-plan - if the roof is on you'll need to pay the full amount). If the property is fully completed the Final Contract can be settled in as little as a month. Completion schedules can and do 'slip' - but rarely go totally 'bottom-up'. The building industry is too important an investment for major, long term, foul-up. Additional costs These are modest by UK standards. I n addition to possible estate agent fees listed above and the charges of a solicitor (if using) the other professional fees are due to the Public Notary - this normally costs around £10 per transaction (Preliminary then Final contracts). You will also have to pay a municipal stamp duty of 2%. Thus for each £10,000 detailed in the Deeds (final contract) you will need to cough up £200. Be aware that the sale price listed in the Final Contract will frequently be significantly less than the actual sum paid. It is commonplace. It constitutes tax avoidance - and a difficult moral problem for the conscientious purchaser. When it comes to annual revenue costs size matters. Maintenance charges vary wildly depending upon location and facilities but for full security, gardens and a pool expect to pay anything from £3.50 to £10 per metre. Check to see if this covers buildings insurance (the top end generally does, the bottom end doesn't) and the garbage collection tax. The garbage collection tax is around £15 per annum for a 50 square metre apartment. Property Insurance isn't expensive and can be arranged locally or via the internet. Annual Council Tax is 0.15% of the purchase price detailed in the Deeds (for every £10,000 on the purchase that's £15). Water and electricity is checked monthly and you can use your leva account to pay by direct debit. |
