If you are purchasing a new property in Bulgaria, the buying procedure may vary slightly from developer to developer. We would therefore advise you to become familiar with your specific development’s procedures.
This is uncomplicated and much the same as the process in the rest of Europe.
The running costs associated with a property in Bulgaria are much lower, compared to those in other European countries. The owner of a property pays an annual property tax, which is 0.15% of the declared value of the property. In addition, owners pay waste-collection fees, public lighting etc.which are also minor expenses compared to in other countries.
In residential developments, the owner may pay a fee per year or a community charge for 24-hour security, cleaning, swimming pool, gardening, insurance, etc.
Mortgages are now available for property purchase in Bulgaria. Their typical interest rates are variable and around 7% with borrowing at around 70%.
We can help you to find the financial institutions that best suit your needs. Buy to let mortgages will naturally take into account your projected rental income whilst calculating your suitablilty for the mortgage.
It is clear that buying property in Bulgaria can be a very lucrative option. We will help you avoid any possible pitfalls and guide you in the right direction for the best deals currently available. The importance of location and price for a wise investment is never overlooked in achieving our aim: to ensure you find the best property to fit your own particular needs.
By far the most popular option is to buy off-plan. It makes financial sense to get in there while the price is at its lowest and sell upon completion of the project.
Purchase price = €200,000
pay 30% deposit = € 60,000
plus 7% IVA (VAT) = € 4,200
Total investment = € 64,200
When the project is finished, if the developer puts up the price by 10%, then the increase is € 20,000.
If you bought the apartment immediately when it was released at € 200,000, then your gain would be as follows;
€ 20,000.00 / € 64,200.00 = 31%
If you had bought it newly built, after the increase, then you would have thrown away a 31% gain!
Remember, developers normally charge 1-2% to change all the paperwork from one name to another, but this is normally paid by the purchaser.
Investment in older properties is the cheapest way to buy property in Bulgaria and, bought in the right location, can offer good returns.
Bear in mind though, that your idea of paradise, next to a lake in superbly remote corner away from mass tourism, is not your average purchaser´s ideal location for a second home. When you wish to sell, it could therefore take you a good deal longer for the right purchaser to come along, than if you had invested in or near to tourist facilities.
Renovation is often easier and cheaper than building from scratch and avoids the problem of foreigners legally being obliged to own a company in order to buy land.
The cost to build is approximately 100-200 euros per m2 as opposed to a new build at 80-350 euros per m2.
The construction quality in Communist times is not comparable to the standards that are upheld today, so you may be in for more work than you bargained for. This is definitely an option for the more adventurous!
year guaranteed rental agreements are widely available for many of the newly built properties. Management services are also commonplace and often provided by the development company themselves. So you can effortlessly rent out the property for the time you are not using it, leaving nothing more for you to do but enjoy your property, and/or sit back and watch your investment grow!
On average, annual returns of your investment are between 8 and 10 %, provided you allow 95% occupancy time. You will receive regular monthly payments to your bank from the rental income generated by your property. Annually, this amounts to between 8 and 10% of the total investment price.
For foreign individuals, land purchase in Bulgaria is essentially not permitted. However if you set up a private limited company which then owns the land, you are free to do so. This is a simple enough procedure (formation costs around 500-700 euros depending on the value of the property) and it seems a small price to pay for the land investment opportunities still available. As soon as the law changes, which it will do in line with new EU standards in 2007, land prices are predicted to increase steadily.
A company is incorporated onto the Commercial Register in a district court. The application for registration and legal documents are filed with the Court by a managing body.
Transfer of funds into local currency can be an expensive transaction. Even the smallest movement in foreign exchange rates can make a big difference to the price you pay for your property in Bulgaria. Using a professional foreign exchange company will often offer a better rate of exchange and avoid paying commissions. We can recommend a company that assures the best exchange rates, no commission, forward buying procedures and low cost transfer fees.
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