Bulgaria – it’s the land of 40p a pint beer and hundred pound houses. It’s enough to make you book your flights now.
But, hold up – remember the saying: “If it sounds too good to be true…”
So let’s look at the truth of buying in Bulgaria and get some hot insider tips. As I’ve yet to buy a Bulgarian bolthole, I interrogated New Estate who are leading estate agents in Bulgaria for their local expertise.
You Are Not A Lottery Winner
With prices being so cheap in Bulgaria, you can feel a rush of affordability that usually only lottery winners experience. Sudden excessive affordability, much like sudden wealth, plays strange tricks on the mind. Low, low prices can make you feel empowered. But the worst buys are those which are motivated “because it’s cheap”. Cheap beer is fine for a while, it may make your wee a funny colour and maybe even whirl your tummy some, but it will pass. Same as cheap food – it all comes out the same end, in the end. Taking that same cheap approach to property doesn’t really follow the same rules, apart from the fact; it will be sh*t in the end
So, repeat this mantra after me: Cheap does not mean good.
Bulgarian property may be cheaper than the UK – but everything is relative. Properties should be analyzed for what they have to offer – not how cheap the price tag is.
Dreams Can Come True
The high property prices of the UK can put a dampener on the wildest of dreams. But in Bulgaria, the cheapness of making dreams a reality is there for the taking. The caveat: This is Bulgaria. That means you have to make Bulgaria the right place for you and your dreams – not just the cheapest place for you to make your dreams a reality. For those who understand this, the opportunities to fulfil lifelong ambitions are there for the making, and the taking.
Success is measured in enjoyment rather than property value. Relief from high mortgage repayments can bring untold happiness and release. However, you need to have a clear plan of what you want to achieve and acknowledge life will be different – this is not the UK. But for those who dream – dreams can become a reality.
Most Estate Agents Are Scam Artists
Famished mosquitoes are a major problem. As are many Bulgarian estate agents, otherwise known as Money Fleecers. Professional, charming and using every tactic in the high-pressurised sales’ agent hand book, these agents know how to flick every switch. And how to get you to part with your hard earned money.
Think the property you’re looking at is popular with so many viewers? It’s most likely the rest of the so-called ‘viewers’ are unfathomably good actors ever present to hype up interest in a property. And if you think you’ve been let in on a cunning “secret” 20% VAT claim back scheme – join the rest of the “secret” scammed queue. That’ll be the one over there that the Bulgarian treasury is chasing. And now it’s payback time.
Been asked to pay in advance to sell or buy a property? Run. Vendors may be in shock at the current fall in prices, but no professional agents charge fees in advance. The property market works much like in the UK with commission being paid upon sale completion.
Cash Is King
Bulgarian mortgage buyers can take up to four months to present funds – which is a long time when you have a distressed vendor needing a quick sale. Cash buyers usually complete in 6-8 weeks and can pick up some rich pickings in return. A flat in Sofia has recently been sold for just 30,000e when an identical flat was going through the sale process at 51,000e. The only difference – the cheaper one had a distressed vendor and a cash buyer. The sale went through in just three weeks and the flat will rent for 270 e/ pcm. Opportunities exist for those with cash – and a trusted estate agent.
Snails Move Faster
In the UK, buying and selling property happens pretty sharpish. Not so in Bulgaria. Property in Bulgaria is pretty illiquid. Sofia is Europe’s 15th largest city with 1.25 million people and 607,000 homes, but just 3% of these were sold in 2012. That is just 18,166 sales. Movement is less common and less affordable. Properties can sit for extremely long periods of time on agents’ books, not because of price – but because of low demand.
Multiple Owners Are Best Avoided
Clear title is king when it comes to buying property in Bulgaria. It is best to avoid anything that has multiple owners as the purchase will be subject to all them agreeing – and that doesn’t just mean two or three people. A house New Estate tried to sell seven years ago had a colossal 24 inheritors for the 15,000e property. This meant each and every owner had to attend the notary’s office at the same time to agree to the sale. As many family members had not seen each other in years, old family arguments reared their heads. The property sale turned into a full-on fight, was not sold and is still for sale to this day with each family member still owning 1/24th!
Agency Fees Can Seem Disproportionate
Agency fees can look disproportionately high when compared to the value of the sale. It is not uncommon to pay around 2,500e to sell a property of 50,000e. That translates to around 5%, which when compared to the usual UK rate of 1-2% on much higher value properties, can seem a huge chunk of such a low value. However the reality is, in Bulgaria, agents still have comparable running costs and because of the low value of the property, higher fees need to be charged for agents to remain in business.
Tax Doesn’t Have To Be Taxing
Notary fees and taxes are the Bulgarian equivalent of Stamp Duty and it applies to all transfer of property. It is a varying percentage of the declared sale value which is 4-5% state fees. Unlike the UK there are no price brackets. Take note – in the domestic market these fees are often split 50:50 but when a foreigner is buying, they usually pay 100%.
If you sell a property in Bulgaria and you have a switched-on agent, it should be declared as your single and sole Bulgarian residence. Done this way, there is no Capital Gains tax to pay. Any subsequent property sold in the same year will attract around 10% tax on any profit made. The rule of thumb: sell one property per year tax free.
You Don’t Need A Solicitor
In Bulgaria, you don’t actually need a solicitor to represent you for the sale or purchase of property. The state licenses government solicitors, notaries, who oversee every transaction. Without a notary’s inspection of the deal and final consent, no transfer of ownership is possible. In 90% of transactions, no additional solicitor is involved beyond the notary. Unusually, anyone can prepare the conveyancing for a property in Bulgaria – which means you can even do it yourself!
You Will Need A Power Of Attorney
Unless you live in Bulgaria full-time, you will need a Power of Attorney (PoA) to buy and sell property. The PoA is an elected representative who can act on your behalf and is an individual who is specifically appointed and named on the PoA documents. The PoA you sign is critical and must be read extremely carefully – it is an official instruction and supersedes all prior agreements. The PoA should contain the gross sale or purchase figure. If it does not include these, it is an ‘unlimited PoA’. This basically means your representative can sell your property for any amount they decide and then transfer any amount they feel like.
Solicitors Are Not To Be Trusted
Bulgarian solicitors operate in what is best described as the Wild West of law. Solicitors regularly “steal” properties and cut agents out of deals to sell to their own clients, often at much reduced prices. The legal clout of a solicitor means many vendors trust their solicitor over their estate agent. That means if a solicitor informs a vendor their buyer has backed out (even if they didn’t) many believe the solicitor over the agent. What often follows, is the solicitor will then market the property for a reduced price gaining both sales commission and legal fees. In many cases an ‘unlimited PoA’ has been signed – which means it’s also legal.
Buy With An Eye On The Future
What you see today in Bulgaria – is most likely not what you will see in years to come – especially when buying in Sofia. Understanding future infrastructure plans is critical to buying in the right location. Convenience is king. Massive infrastructure projects are redeveloping whole swathes of the city including new ring roads, metro stations and regenerated boulevards.
Making money from property in Bulgaria is about spotting area potential and buying in the right location. The individual property matters far less than the actual location of the property. It is a case of macro over micro. Forget what you can do to a property – look ahead and see what the government is doing to the area – this will add far more value than you ever can. Consider how active the local mayor is and research the investment being spent.
Foreign Can Be A Better Buy
Buying local usually offers the best deals, however when it comes to Bulgarian property, buying foreign can be a better buy. Foreign owned property tends to be better maintained with superior quality fixtures and fittings. Surprisingly, foreign owned property is also often cheaper to buy. The simple economics are that foreigners can afford to sell for less. A price drop of 2-3,000e on a property means much less to a foreigner than a local person where 2-3,000 could be a year’s salary. Plus, a foreign owner usually wants ‘out’ whereas a local owner is rarely motivated to sell under pressure and will happily wait years for a buyer.
Difference Should Be Expected, Accepted And Looked For
Bulgaria is like many southern European cultures who like to socialise every night of the week – and weekend! The lack of traffic, long commutes and need to be in the office allows for a more relaxed style of life.
Foreigners are embraced and often adored into Bulgarian culture. Post communism introduced choices to the Bulgarians for the first time since World War II, and even after 24 years of democracy, people still desire things that are not Bulgarian. That means difference is accepted and yearned for. People are generally keen to know more about other cultures and welcome an opportunity to talk, eat and drink with foreigners. Learning to live successfully in Bulgaria is about getting stuck in with the locals rather than just herding with other expats.
The Future Can Be Bright
Things will not work like they do in the UK. The Bulgarian authority’s processes are often illogical and bureaucratic. The roads are bad and the drivings’ even worse. But if you want a country with potential, and are prepared to wait for the infrastructure to come, then Bulgaria could well be your place.