Potential pitfalls of buying Bulgarian property
Bulgarian property offers enormous potential for investors and there is a wide and tempting choice of property for sale in Bulgaria´s coastal, inland and mountain regions. The process of buying property in Bulgaria is relatively straightforward, too.
However, the usual pitfalls of buying property abroad apply in Bulgaria as much as anywhere: there may be no recompense if your developer goes bust, there may be problems with title deeds or in tracing ownership of a Bulgarian property and, if you don´t do sufficient research, you may choose an unsuitable location or pay too much for your property in Bulgaria.
While none of these pitfalls is exclusive to the Balkans region, there are some specific issues to be aware of when you start looking at property for sale in Bulgaria.
- Bulgarian property with land: As individuals, foreigners cannot own land in Bulgaria so, if you plan to buy a Bulgarian property with land (ie a villa rather than an apartment), you have to set up a limited liability company. This is a commonly encountered requirement and the process is not complicated but it does add costs to buying property in Bulgaria.
- Bulgarian property and estate agents´ fees: Among the costs of buying property in Bulgaria is an estate agent´s fee of 3-5% of the purchase price, subject to a minimum of between £350 and £500. When buying off plan Bulgarian property, these fees are usually due when the preliminary contract is signed.
- Bulgarian property and prices: Vendors of property for sale in Bulgaria may insist that a price lower than the agreed value is declared on the Title Deed. There may be financial consequences to accepting this condition; if you subsequently sell the Bulgarian property your liability for capital gains tax would be calculated on the ´lower´ price on the Title Deed.
- Bulgarian property and vacant possession: Buying property in Bulgaria does not necessarily confer immediate possession on completion. Existing occupiers of Bulgarian property do not usually vacate the premises until one month after completion. This period can be shorter but will need to be negotiated.
- Bulgarian property and capital gains: A 15% tax is levied by the Bulgarian Government on any income or capital gains made on a Bulgarian property owned by a foreigner. This can be offset against any tax liability that may be due when bringing the income or gain into the UK.
- Bulgarian property zones and building programmes: If you are buying a building plot only, make sure the area is programmed for building. Similarly, if you are buying property in Bulgaria ie a villa, make sure the area is zoned for individually owned properties.
- Bulgarian property and communal areas: If buying a new apartment property in Bulgaria be clear on what communal areas and facilities eg swimming pools and gardens are to be shared by all owners of the complex. Arrangements should be in place for their management and control.
- Bulgarian property and the black market: Some vendors of property for sale in Bulgaria may suggest a reduced price if part or all of the original price is paid in Sterling, Euros or Dollars. This is illegal.
