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STOP PRESS 1 - revised minimum share capital required for business start-up
One of the first steps in setting up a Bulgarian registered business is that a capital bank account must be opened either by the company manager or a person authorised by a power of attorney. All persons with authority over the bank account must provide a specimen signature. The Commercial Act has recently been revised to the effect that the amount of initial share capital required to open the account has been changed from 5000 BGN (Bulgarian Leva) to a notional amount of just 2 BGN. Despite the fact that this change will make the registration of your business easier and more cost effective, our advice is that you should always work with an English speaking Bulgarian solicitor either independendently or recommended by your real estate agent. more to follow ... |
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STOP PRESS 2 - cash payments for property
deals to be ended
New rules dictating that all property transactions with a purchase value of more than 10000 BGN must be carried out via bank transfer, rather than cash payment, were approved in January and it is expected that this will soon become a legal requirement. The new legislation will require that vendor and buyer specify their bank accounts for conducting a property deal and that payments can be processed through a new State Depositary Bank which will serve as a guarantee for all payments in the form of the state acting as custodian for deposits. The conditions for depositing money will be specified by the Notaries acting for the respective parties in written agreements. more to follow ... |
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
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.
General Advice
Current market conditions reflect the impact of the recent global recession in terms of reduced asking prices for most properties. This has created something of a buyer's market in which price negotiation is the norm and there are plenty of properties available at bargain prices.
Buying property in a foreign country can be quite daunting, particularly for those who may be visiting for the first time. 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 ...
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 .. more ..
6: Insist that the full purchase price paid is entered on to the title deed - some agents / vendors will encourage you to accept a lower recorded purchase price - note: if your agent / vendor pushes this point, you can always walk away .. more ..
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 .. more ..
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 but, in general terms, the advice is: 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 .."
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 diver 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 ...
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.
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| Rural & Village Houses | Building Land | Resort Properties | City Homes |
Background to Buying Property
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.
General Advice
Current market conditions reflect the impact of the recent global recession in terms of reduced asking prices for most properties. This has created something of a buyer's market in which price negotiation is the norm and there are plenty of properties available at bargain prices.
Buying property in a foreign country can be quite daunting, particularly for those who may be visiting for the first time. 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 ...
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 .. more ..
6: Insist that the full purchase price paid is entered on to the title deed - some agents / vendors will encourage you to accept a lower recorded purchase price - note: if your agent / vendor pushes this point, you can always walk away .. more ..
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 .. more ..
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 but, in general terms, the advice is: 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 .."
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 diver 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
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If it seems too good to be true, it definitely is
- and -
If it seems too good to be true, it definitely is
The Purchase Process
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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| Step 6 | Property with land- or -Property without land Set-up a business: - or -Business set-up is optionalEither independently or with your agent's lawyers acting on your behalf |
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| Step 7 | Confirm validity of title and all relevant documents 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 |
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| 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 |
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| 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) |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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| 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 |
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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
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