Graham Norwood
This is Money
A decade ago, the idea of buying a holiday home in Bulgaria would have been laughable. How things change. Ten years on, and now a member of the European Union, it is one of the fastest-growing property markets in Europe.
In fact, analysts at estate agent Knight Frank consistently put Bulgaria in the world's top five areas for growth - with price hikes of 20.5% recorded over the past year alone. Another British mortgage broker estimates that Bulgaria will account for 25% of overseas business by 2020.
But there are concerns about the market overheating. Some estate agents are promising unrealistic levels of capital growth and rental income, and a starburst of developments in the coastal resorts could, in the long run, create a property surplus and stifle future price rises.
But EU membership will both bolster the country's economy and help to police the cowboy operators. Either way, it remains one of Europe's hot spots, so if you want to join the gold rush, here is our definitive ten-point guide.
JUDGE THE MARKET
There are three key areas in which to buy: the tourist haven of Bansko, home to eastern Europe's largest ski resort; Sunny Beach, on the country's Black Sea coast; and the capital Sofia, where booming business means growing demand for buy-to-let apartments and good rental returns. Over-supply in Sunny Beach is a growing problem, as is poor infrastructure, but Bansko is transforming into a year-round resort so may be a better option. EU membership - Bulgaria joined on January 1 - should mean more international investment and a steady rise in employment, living standards and property prices.
WHAT YOU SHOULD PAY
Prior to EU accession, prices were remarkably cheap. And you can still get a very good deal. A studio apartment in Bansko now costs ВЈ40,000; a one-bedroom flat, ВЈ45,000; a three-bedroom flat, ВЈ70,000, and a three-bedroom townhouse tops ВЈ85,000. Sunny Beach prices are similar, but you may still bag a real bargain here as some landlords are selling cheaply because of the glut of homes being built. Expect to pay 50% more in Sofia.
BULGARIAN ESTATE AGENTS
Many local estate agents are unsophisticated and unregulated, so be careful. Some even charge to accompany you to properties. However, respected British agents such as Savills and Knight Frank now operate in Bulgaria and are a safe place to start. Often properties will be registered by its seller with different agents, sometimes at different prices, so be sure to check around to get the best deal.
THE BUYING PROCESS
Non-Bulgarian nationals are not permitted to own land in Bulgaria, so if you buy a property and land (that is, a house) you have to form a company. This is easy to do, costs ВЈ400 and is handled by estate agents. This ruling does not apply to apartments. Thankfully, Bulgaria's system is slowly improving: a land registry is being set up, surveys are now becoming standard and by the end of 2007, new laws will mean that foreigners will be able to buy land without setting up a company.
LEGAL ADVICE
If you buy an older property, there may be disputes over its title, that is who owns the land and building and therefore who receives the sale price from you. In some rural areas, several families may claim ownership, so get independent legal searches done. Alternatively, avoid this problem by buying a new property.
FEES
Budget for just under 10% of the purchase price to cover transaction fees. These are likely to be broken down as follows: five% transfer tax; one% lawyer's fees and three% agent's fees (estate agents are paid three% by both sellers and buyers). Beware also that 20% VAT is levied on some newbuild properties, so check the final cost before committing to a purchase.
RESIDENCY
The first step is to get a longterm stay permit - valid for one year and renewable annually for ВЈ1,000. After five successive years, you can apply for permanent residence, which entitles you to Bulgarian benefits, but not to vote. There are no significant tax advantages when compared to the UK.
TRAVEL
Bulgaria is three hours from many UK airports served by Bulgaria Air, British Airways and budget airline Wizz Air, which flies to Sofia. EasyJet and Ryanair may also commence flights between the UK and Bulgaria. Major airports are Sofia for the capital and Bansko, and Burgas for Sunny Beach. Roads are poor but improving and railways are reliable but basic.
EDUCATION
School is compulsory for children aged seven to 16. The main types of secondary schools are: general educational schools, vocational schools, language schools and foreign schools. Private schools are also being established. There are 41 higher educational institutions offering undergraduate and graduate degrees.
WELFARE
Medical treatment can be expensive and payment is expected up-front. Facilities in local hospitals are basic and specialised treatment is available only in large cities. Medical insurance is therefore vital.
* The title of the article has been changed by Novinite.com
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