Property Law

Buying property in Bulgaria is a sound investment but the need for good legal advice is as necessary as it is in any other country.  We suggest that you employ a solicitor to complete your Kalina purchase.  However, we can confirm that all our properties have the relevant building permissions and this can be confirmed by all our 40+ residents.   Our Office can put you in touch with all the necessary independent expertise you will need to complete your purchase and, if required, manage your property.  Bulgarian legal and accountancy is cheaper in Bulgarian than in the UK but the option is completely up to the purchaser.  We are only here to advise.  Purchasing a property, will take approximately 2 months as it takes approx 6-8 weeks to set up a Company - as outlined below.

On the facts side:

In Bulgaria, the law prohibits foreigners from owing land, a prohibition that is largely academic because those who want to own land simply set up a company that is permitted to make such purchases. A change to this restriction on land ownership has been approved in principle by the Bulgarian state as part of the precondition of EU accession, but will not come into force until 2014.

Can you imagine the impact on property prices once this restriction is removed?

Every European citizen will be able to buy property in Bulgaria without any restrictions or limitations, thus making buying property in Bulgaria more attractive, less speculative and, ultimately, more profitable. Even a novice economist understands that this will increase the demand for property, further fuelling the property market.

The Steps to Buying Property in Bulgaria

Set up a limited company

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Currently there are restrictions on foreigners buying land in Bulgaria. According to the Bulgarian Act on Foreign Investment, foreigners may buy properties but not land in Bulgaria. Therefore, the most common method that foreigners use when buying property in Bulgaria is to register a limited company that then owns the land and the property.

If you’re buying an apartment in Bulgaria, you don’t normally need to set up a limited company as the land is shared between the owners. This is already written into the contract. However if the sale includes land (as a house would), then a company needs to be incorporated to hold the land.

Setting up a company for the purpose of buying property in Bulgaria is a relatively easy process and, as above, we can either advise you and put you in touch with the relevant contacts, or you can employ your own.

 First of all set up a company bank account. You will need to deposit a minimum of 5,000 leva (the Bulgarian Leva is linked to the Euro) - this is  the minimum capital required in Bulgarian law to establish a limited company.This can be withdrawn once the company is formally registered which now takes approximately 6-8 weeks.  The process could be completed originally within a 5 day trip but since Bulgaria joined the EU then the process needs to be processed on a national register as opposed to the old local register.

Remember, that this is not the cost of setting up the company, but one of the conditions necessary to set up the company. The courts will not issue the company registration numbers unless you can prove that you have at least this amount in your account.

As soon as the courts have issued the registration numbers, you can withdraw the full amount or keep the account open for future transfers, the choice is yours.

In addition to a company bank account it is advisable to set up a personal bank account for future payments of utility bills and tax payments.

Once the company is formed, details of the company will need to be registered with the Bulgarian National Tax Register Authority, National Companies Register and the National Social Security Institute. Again we can assist with this.

In today's financial climate, this will cost approx £1,000 GBP 

WARNING!

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 hefty capital gains tax liability. Hopefully, it shouldn’t come to this as the purchaser will usually agree to insert the selling price instead of the tax estimation price.

Here’s a summary of the property buying procedure and the main points you need to be aware of when buying property in Bulgaria:

• Make an offer (re-sale property) Once an offer is made and a deposit paid to your lawyer (usually10% of the agreed price), the property is then taken off the market.
• Open a company bank account to deposit the 5,000 Levs to show that you have the funds required to set up a company in Bulgaria.
• Set up a Bulgarian registered company for buying property in Bulgaria. (The cost is around £1000 at today's rate.
• Open a personal bank account for future payments of tax and utility bills.
• Enlist the help of a lawyer with Bulgarian property expertise to perform searches to the Land Registry -once all documents have been checked and approved, a completion date will be agreed upon.
• Completion shall be effected upon transfer of funds and signing of the Notary Act, which is the transfer of Title Deeds.

Legal fees & costs on purchase price totals around 5% This includes

• Solicitors fees usually 1%
• Notary expenses are approximately 2%
• Notary fees varies, but usually are less then 0.5-0.8%
• Stamp duty of 2%
• Land registration tax of 0.1%

Time scale for the entire process is around 6-8 weeks