Buyers Guide

On this page we try to explain in plain English what is involved in buying real estate in Bulgaria...

The fact that you've landed on this page probably suggests that you share our view that the Bulgarian property market has a lot to offer, and compared with other European destinations provides exceptional value for money. Even if you only have a small budget, there will be something for you in the real estate market.
Now that Bulgaria is an EU member, the property market is attracting even more attention and there is an increasing number of people wanting to buy second homes, investment properties or even emigrate.
We very often find that our clients come to us with a certain view on what they want, but after a while change their mind. So it's worth just reviewing the issues and seeing what fits your situation. Let's try to answer these important questions:

• why are you investing? - personal use or investment?
• what location are you interested in? - ski, coastal, city or rural?
• what type of property do you have in mind? - apartment, house or land?
• what is your budget and timeframe?

Other considerations are whether to buy off-plan and if the purchase involves ownership of land, you will have to set up a company (unless you are Bulgarian!).
It is important you feel comfortable about what you are doing, and you should not feel pressured into making commitments.

Where do you start looking?

There are a vast number of properties available; the trick is to find just the one you need. You can spend many hours surfing the internet... you can also let someone else do the searching for you. Why not try our: Find It For Me feature? You just key in your requirements, and we'll let you know when we find it.

Do I need to set up a Company?

At the time of writing (2008) non-Bulgarians are not allowed to own land, as individuals. 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. This situation is due to change in 2014, when EU citizens will have the right to buy land.

If your purchase includes land, a Limited Liability Company (OOD) will need to be formed.

How do I set up my company?

This is not as formidable a process as it might first seem. You don't even have to go to Bulgaria, but certain legal requirements have to be met, and as long as the required documentation is correctly completed (may need a trip to the Bulgarian embassy in London) the company can be setup with little effort on your part.

A company bank account is opened with a minimum of 5,000 leva, which can be withdrawn following the company formation.

Morley Estates has the staff qualified to raise and progress all documents necessary for company setup, and can also arrange for Power of Attorney to reduce the customer's involvement to a minimum. The total cost of this is 625 euros, which includes translations of key documents, so you understand exactly what is going on and what everything means.

Real Estate Taxes

The transfer of real estate is subject to notary and municipal fees. The notary fees (1%) and municipality fees (2%) are paid based on the Tax Evaluation amount as stated in the Notary Act, in a similar way to the payment of Stamp Duty in the UK.

Local taxes and rates

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.

Value Added Tax

Transactions involving land and lease of property for residential purposes are exempt from VAT. All other real estate transactions are subject to VAT (currently 20%) assuming that the seller is VAT registered. The buyer is entitled to a VAT refund, provided that he is registered for VAT purposes.

Running Costs

If you buy an apartment, remember to take into account the additional cost of annual maintenance and management fee. This covers the insurance of the building, plus maintenance of the public areas such as communal gardens and swimming pool (if there is one), caretaking and security. These costs are normally based on the size of the apartment.

Buying Off-Plan

If you are buying an off-plan apartment, the process is normally along the following line:

• you pay a reservation fee (1-3000 euros), normally non-returnable
• you sign a preliminary contract and pay the first instalment of an agreed payment schedule (*)
• make your stage payments throughout the build
• make final payment, sign the final contract (Notary Act) in the presence of a notary to effect transfer of the property

(*) Payment schedules vary greatly, but typically would be something like:

• initial payment: 30%
• foundation complete: 20%
• roof complete: 20%
• building finished: 30%

Discounts may be given if you pay more than required up front.
Variations that you should be aware of involve:

• the Tax Evaluation amount, which is to be entered on the Notary Act
• whether the price includes VAT, and if so, on what proportion of the price VAT is payable

These issues should be resolved by your solicitor before you sign the preliminary contract.

Other Purchases

If you are buying, say a rural house or a plot of land, you may have to pay a deposit and there may be a preliminary contract. Neither is absolutely necessary, as the seller may want to move straight to the Notary Act stage, where you pay all the funds in one go.
You should have the existing legal documents (Notary Act and Plan/Skitsa) checked by your solicitor before signing at the notary's office.

Disclaimer

We strive to keep the information provided on our website accurate and up-to-date. However, we will not be liable to any person for any information supplied on this website. We cannot be held liable for any consequential loss resulting from the information provided here. Any decision made in relation to the purchase of goods and/or services as a result of information obtained from this site is your sole responsibility.