Buying a Property in Bulgaria

Bulgaria is one of the least crowded countries largely mountainous but with over 80 miles of beach on the coast of the Black Sea as well. Nestled between Greece and Romania, it has a temperate climate with hot and dry summers, the winters being cool and wet, colder in the hills and mountains. A well-known but still emerging country on the international property market, Bulgaria is distinguished by having three vibrant markets with good returns: city buy-to-lets, traditional coastal apartments and villas, and increasing ski resort activity.

City Lights

For pure investment, buy-to-let in the capital city, Sofia, is the best bet, as long as you can ensure that the property is the right one to secure good tenants. The year-round rental will be less per month than either skiing or beach property, but over the year this will outweigh the 3-4 month long seasons in those tourist areas. New-build apartments are on sale for less than €1000 per m2, making a one-bedroom apartment as little as €55,000, and on the outskirts they will be less than half that. Many people think that steady capital gains of more than 10% per annum are possible, especially now that Bulgaria is a full member of the EU (since 1st January, 2007).

Bulgaria’s second city, Plovdiv, is beginning to see interest from buyers from the UK too. Property prices are very low, with a two-bedroomed house costing as little as €15,000, but the potential for renting them out is very limited. One for the gamblers, perhaps, or retirees, who would be able to live like kings on a reasonable pension.

Black Sea Coast

On the coast of the Black Sea, a lot of the property pre-dates the fall of the Eastern Bloc, and is therefore not of the best quality. New developments are springing up but there are now restrictions are in place so there will be no more beachfront building, so this may put the prices up in the long run. One development ‘in’ popular Sunny Beach has apartments from €60,000, but those ‘near’ Sunny Beach are only €25,000. You would be wise to check the locality to find out what’s actually in the area of your proposed purchase. Also be aware that the Black Sea coast’s popularity as a house buying spot is currently outdoing its popularity as a tourist attraction. Careful research is the key.

Ski Resorts

The skiing market is the one exciting many British buyers at the moment, and with one-bed apartments on sale for a sixth of what they would cost in France or Switzerland, you can understand why. Do not expect the infrastructure to be the same however, and nor the rental yields. But there’s no denying that a property in Bansko, a new resort, or the more established Pamporovo or Borovets, can give a family an excellent holiday amenity, which should more than pay for itself and also offer the possibility of long term capital growth too. Many vendors were touting Bulgaria’s 2014 Winter Olympic candidacy as an event that would drive capital growth, but they were not selected and will try again for 2018.

There are also new resorts springing up in the Bansko area that offer skiing in the winter and golf in the summer, with a new Ian Woosnam designed course going up at nearby Pirin. This, if it can attract the crowds, will lengthen the number of weeks per year that an apartment can be let out, increasing its profitability, and apartments are available for as little as €27,000.

Buying Restrictions

One peculiarity of the Bulgarian market is that foreigners are not allowed to buy land, only buildings. So leasehold purchases are fine, but to obtain a freehold, you will need to set up a Bulgarian company to own the land. This will take about four weeks and costs €350.

Buying Process

The buying process takes around six to eight weeks and you will almost certainly need an English speaking lawyer to help you through the deal. The estate agent’s commission is a hefty 5-6% and split between the buyer and seller, at least with a resale home. With a new build you will be dealing with a developer so is less likely. The usual 10% deposit is paid at the preliminary contract stage and this ensures that the property is taken off the market. The lawyers then do all the necessary checking of all the paperwork, looking for debts secured on the property and other anomalies, then draw up the terms of the final contract. At the signing of the final contract the balance of the purchase price and all fees and taxes are paid and the title deed is re-registered in your name. You should receive the new title deeds about a month later.

Those Little Extras

There are quite a few extra costs in Bulgaria but in total they will only cost around 4-5% of the purchase price (this excludes estate agent fees). The transfer tax is 2-2.5%, notary’s fees 0.5-1%, and other legal fees will amount to around 1-1.5%. Other optional costs, depending on the property and your situation, might be surveyor’s costs, foreign exchange fees and mortgage fees.

Almost Anyone Can Join In!

Doing your homework is key to investing in Bulgaria. The climate is good and the people friendly, and with prices so low that almost anyone can get on the property ladder here. Add to that the choice of beach, ski or city investments, and it could be just the ticket to get into the international property market.