Buying in bulgaria – don’t make basic errors

A UK-based investment advisory company and property developer has issued a buyers’ guide to would be investors in Bulgarian property.

The move follows Westhill executives encountering a number of disappointed buyers who have made fundamental errors when it comes to purchasing property abroad. 

Westhill director, Dominic Hicks explained, “It’s in no one’s long-term interest to have disappointed customers - we want as many people spreading the word that this is a great country to visit and make an investment. Yet we’re meeting people who have made the biggest purchase in their lives, without even visiting the country or seeking professional, impartial advice.”

The Guide includes tips such as checking the price against the square metres of usable space. It is common practice for balconies, terracing and a share of common parts (including stairwells!) to be included in the price of apartments. Reputable developers and agents separate these out so that it is easy to make accurate price comparisons.

The firm also urges investors to enquire about management costs when buying a new build. It is in the owner’s interest for the building to be well maintained. Many Bulgarian developers do not make adequate arrangements. Check the details of the managing agent and anticipated costs. Current rates are 7-10 euros per square metre, per annum. Any lower than this and necessary works are unlikely to be completed adequately.

Don’t be pushed into making rushed decisions to pay any ‘deposits’ or direct payments. Some disreputable agents and developers try to impose ‘Fines’ on negotiations if they do not get a deposit from a potential buyer on a first visit. Investors should always investigate the competition and discuss any decision with an advisor or friend ahead of making any payment.

• Always use a reputable English speaking solicitor/lawyer
  This ensures the buyer will be secure in the knowledge that all of the necessary legal checks ensuring title to the property are carried out, that there are no debts against the property and if it is an off-plan or new property, the developer has obtained all the necessary building permissions.
• Visit the property/site before purchasing
  Although some villas, apartments and rural properties can seem extremely cheap by UK standards, it is necessary to bear in mind that the least expensive will almost certainly require work in order to bring them up to a standard that a buyer may be used to. It is therefore advised that you do not buy without having seen the property or site and plans in advance.
• Make an effort to find out about the area/facilities
  It is advisable to find out if the property or development you are interested in buying is in an area that is in high demand for or is expected to be by the time developments are completed. If it isn’t in a desirable area with good facilities and a decent road network, then it could potentially be difficult to sell on.
•  Always read the small print of any rent rental al guarantee scheme
  Rental guarantee schemes have increased over the last few years and being used as an incentive to attract buyers. Although they might look fantastic in principle, the buyer could find it is reflected in the purchase price. The buyer should ensure that the guarantee has some substance. 
• Make price comparison comparisons with other ‘similar’ properties
  This will help that you get good value for money. 
• Check the price against the square metres of usable space
  It is common practice for balconies, terracing and a share of common parts (including stairwells!) to be included in the price of apartments. Reputable developers/agents separate this out so that it is easy to understand and you can compare the prices with others.
• Find out about the detail and cost of the management of your building if it is in a new development
  It is in your interest for the building to be well maintained. Many Bulgarian developers do not make adequate arrangements for this. Check the detail of who will be doing it and what it costs. Current rates are 7-10 Euros per square metre, per annum. If lower than this, it is unlikely to be done well.
• Check out your tax position income, capital gains and inheritance tax
  With imminent entry into the EU, rigorous reporting of tax authorities to EU standards will be expected.
• Look into the legal posit position of inheritance
  Bulgarian law on inheritance is completely different to British law so it is worth investigating your legal stance in advance.
• Shop around when it comes to transfer transferring money
  There are now many currency transfer agents who can save you a significant amount; look for one which has a good reputation.

• Expect the legal system to be the same as it is in the UK; it isn’t
  There is a rigorous system, but expect the process to be different.
• Forget that prior to EU membership, you are still only allowed 30 days in Bulgaria till in any 6 month period Visas can be obtained for visits outside of these restrictions, but the process is painstakingly bureaucratic.
• Expect the locals to speak English
  Make an effort with a few Bulgarian words since English has only recently been taught as the second language in schools and in many rural areas, no English will be spoken.
• Sign any documentation unless translated by an accredited translator
  For obvious reasons, have all documentation translated. As with any country, it is wise to be aware that there are dishonest estate agents/developers out there, so always ensure you know exactly what you are signing and agreeing to.
• Make any rushed decisions to pay any ‘deposits’ or direct payments
  Some irreputable agents/developers try to impose ‘Fines’ on negotiations if they do not get a deposit from a potential buyer when visiting. Always investigate the competition and at least discuss your decision in advance with a friend before making any payment.
• Expect your purchase to ma make immediate and massive gains
  It is likely that Bulgarian property will go up in price significantly but do not expect it to happen straight away.
• Use your mobile phone on visits, buy a local SIM card There are now three mobile phone operators, MTel, Globul and Vivatel and one mobile phone rental provider, Intrafonica Bulgaria, also offering mobile internet delivered via GPRS, and SIM cards for hire, so you can avoid inflated roaming rates and paying for being called.
• Unwittingly participate in tax evasion
  Buyers purchasing property in Bulgaria should be aware that some unscrupulous vendors insist upon declaring a lower price in the title deeds to reduce their tax liability. Be careful here as a large number of vendors prefer to state the "tax estimation" price rather then the "selling price” since this will reduce their tax liability. Do not participate in this type of tax evasion as penalties are severe. It is therefore essential that you insist that the selling price be stated on the deeds when buying property in Bulgaria, because if you state the tax estimation price and then decide to sell the property, you will be faced with a capital gains tax liability that is larger than it would otherwise be.
• Forget that owning a property does not give you an automatic right to live in Bulgaria on any kind of permanent or semi-permanent basis
  This also applies even if you have a Bulgarian spouse. You will need to contact the Bulgarian Embassy in London or one of their overseas missions in order to obtain a visa and this could take a number of weeks to process. You will then need to undertake a similar application process at the local passport office once in Bulgaria to secure a residence permit. All of the documentation you will need for this will need to have been stamped and legalised in the UK before travelling to Bulgaria. If this has not been done, you will have to return to the UK to arrange legalisation since the British Embassy in Sofia cannot do this.
• Let the first place you see be the last!
  It is important to ensure that you have seen enough properties/plans to form a well rounded opinion of what is on the market to get the most out of the money you will be spending.