Buying property in Bulgaria

Buying Property in Bulgaria – Bulgarian Property Buyers Guide

If you are considering investing in overseas property or simply searching for a holiday home abroad then buying property in Bulgaria is certainly worthy of further consideration. Bulgaria is situated in the south eastern part of Europe and is a member of the European Union. It is bordered by the Black Sea to the east which offers some great coastal resorts, Greece and Turkey to the south, Serbia and Macedonia to the west, and Romania to the north.

Investment Property Partners overseas property buyers guide covers a number of important issues that you will need to consider if you are considering buying property in Bulgaria either as an investment or as a holiday home abroad.

Just when Bulgaria seemed to be catching on as a property market of considerable note the global financial downturn of recent times reached out to prick its burgeoning property balloon to such an extent that some investment specialists say that the term boom and bust has never been more appropriate… it seems only a few years ago that the boom began, which makes the bust even more dramatic.

However, it may be that the worst of the economic crisis has passed and property prices have now begun to stabilise, and in the most desirable locations there are green-shoots of growth beginning to emerge… so this may be a good time to look again especially if you are considering buying property in Bulgaria.

The Bulgarian Property Boom

Cheap house prices, quick and easy access to cheap finance and eager British and Russian buyers eyeing the opportunity of making a quick and substantial profit, set the ball in motion and those who bought and sold before the crisis were substantially rewarded with capital value increases of up to 35 to 40 per cent.

Bulgaria’s boom was brokered on new build property – mostly apartments – that were 25 to 50 per cent cheaper than those to be found pretty much anywhere else in Europe.

With Bulgaria also paving the way for a successful accession to the European Union everything in the garden at that time looked rosy, but the downward trend began in 2008… the number of sale transactions in one year tumbling by around 35 per cent, and house prices by over 20 per cent and more in some cases.

Is Buying Property in Bulgaria Only for the Brave?

It is obviously too early to say that Bulgaria has already had its very short day as far as residential property investment is concerned, but it is still considered a risky business investing there at the moment.

Having said that, any investors willing to buy property in Bulgaria now and take that gamble while prices are low could find it paying off hugely at some future date when there is a sustained upturn in the global and Bulgarian economies.

In the last few years the number of new-build properties being constructed has tailed off considerably – because there has been very little or no demand.

Property developers and speculative builders, like potential investors, are still holding back until things settle down and the green shoots of growth become visible again.

However, if you have the cash – and the nerve – to invest in Bulgarian property now, that day in the sun could come some time later.

What about Property Values in Bulgaria?

If you are looking at buying property in Bulgaria then there are good opportunities are to be had if you are looking buying one or two bedroom apartments on the Black Sea coast or in the ski resorts of Banso and Borovets, which are about an hour from the capital of Sofia… and it is only a little more expensive in the historic Bulgarian cities of Plovdiv or Varna.

Almost anywhere else in Europe would cost you significantly more, upwards of 25 to 50 per cent more for a similar property.

If you go for an older property you will find they are even cheaper.

The relatively low cost of purchasing property in Bulgaria has always been the same in this former Communist nation built primarily on agriculture and farming activities.

Land prices are very low in many parts of rural Bulgaria and building materials and labour are also remarkably inexpensive.

This means that those property developers and builders brave enough to invest in Bulgarian development land have been able to make significant profits without charging buyers the earth.

On the other side of the coin however, the new-build market is somewhat saturated, there has been so much cheaply-priced property built that it is not currently easy to sell it on and make a profit… the same applies if you decide to rent out your investment property on a buy-to-let basis.

Historically, the Bulgarian economy has not been particularly strong, there are significant levels of unemployment and rental levels reflect these facts.

Be aware that it is not easy to earn a suitable rental return if you decide to buy property in Bulgaria with buy-to-let as your primary objective.

It’s Essential that you get Local Help & Expertise

If you are seriously considering buying property in Bulgaria then it is essential that you get good local help and assistance from knowledgeable locals… as you have to be particularly careful in your property dealings to avoid getting stung.

Despite EU promises of greater transparency and a crack-down on corruption in general, there is still a lot that needs to be done, so you are advised to get as much local professional help as you can.

The Process of Buying Property in Bulgaria

Historically, if you are buying property in Bulgaria you will find that property title is relatively sound.

Additionally, from 2014 onwards in an agreement made when Bulgaria joined the EU in 2007 foreign property buyers are now able to buy and inherit Bulgarian property directly.

For independent advice you would be wise to engage the services of a UK based solicitor who has experience of Bulgarian property transactions to look after your interests at every stage of the acquisition process.

Bulgarian Property & Prospects for Capital Appreciation

It would seem that for now the easy money has been earned as far as investment potential and capital appreciation are concerned.

Residential property prices in Bulgaria officially increased by around 100 per cent between 2003 and 2008… and in some parts of Bulgaria they more than quadrupled!

But that was then and the picture now is very different… the boom years have quickly come and quickly gone… for many investors looking to buy holiday homes or property in Bulgaria it is currently very much a case of wait and see.

Property Purchase Costs, Fees & VAT

If however, you are seriously considering buying property in Bulgaria and do choose to go ahead with an acquisition there, you should budget around 22 to 25 per cent for the costs fees etc., and note that some builders and developers include VAT in the property sale price.

What about Capital Gains Tax on Property Sales?

Any capital gains realised by non-resident individuals from the sale of Bulgarian property are currently taxed at 10 per cent… although you should check these figures with the local Bulgarian tax authorities.

If you are a UK resident and registered for tax here you should also allow for Capital Gains Tax at the prevailing rate, payable to HMRC.

Financing your Bulgarian Property – Mortgages & Property Finance

Non-residents are usually able to secure a mortgage of up to 75 per cent Loan to Value (LTV) through a UK-based broker against a property in Bulgaria, although you should check the current situation with your appointed broker or advisor as these figures can shift rapidly.

Repayment and interest-only mortgages are generally available, with the minimum term of 25 years.

Overseas Property Investment Solutions

As a leading independent property and land investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are an investor searching for overseas property investment opportunities or a second home in Bulgaria please contact us today to discuss how Investment Property Partners can help you.

Further reading…

More information about Bulgaria… here →

More about and buying property in Bulgaria from the government of the Republic of Bulgaria… here →