27.03.2007 Rural Properties and Land in Bulgaria: Rural Property Purchase and Resale; Ownership of Land by Foreigners

Polina Stoykova, BulgarianProperties

Foreigners’ interest in buying houses with gardens and plots of land in Bulgaria is being driven by two major factors: their desire to own a second home in a pleasant, picturesque area where they can spend their holidays or even move to live there permanently, and by the indisputable, great investment potential of these properties. For 5 or 6 years now, there have been tens of thousands of foreign people who have bought properties in Bulgaria – the largest investments coming from the UK, Holland, Russia, Austria, Poland, Germany, the rest of the European countries and even the USA and Japan. There are many examples of foreign people who have already moved to live in Bulgaria. They are young families with children or retired people who wish to start their new lives. All of them started with the same idea, to visit Bulgaria a few years ago and buy a cheap house in an unknown country, to see how things would work out, and to invest their spare money at the same time.

EVERYBODY CAN STILL AFFORD TO BUY A PROPERTY IN BULGARIA – there is a great variety of rural locations, and prices start from just 5,000 or 6,000 Euros (3,500 or 4200 GBP). Houses with land or plots of land for building or resale are the preferred option for people who don’t have a lot of money but wish to buy a property abroad, for young people who cannot climb on the mortgage ladder in their countries of residence, for people who wish to move to live abroad, for people who want to try with a smaller investment, and for people who already own a property in Bulgaria. It is strongly recommended that people, who buy apartments for investment, also buy a rural property to diversify their investment as it will be an additional investment for about one tenth of the amount spent on an apartment.

The prices of rural houses with gardens started from the incredible rate of 1,000 Euros (700 GBP) a few years ago and have increased by 500 to 1,000% being sold for 10,000 Euros (7,000 GBP) or even more at the moment. People who bought properties a few years ago for between 2,000 and 10,000 Euros (1,400 to 7,000 GBP) have now sold them for 15,000 Euros (10,500 GBP) or even up to 50,000 Euros (35,000 GBP) depending on the location and the renovations made, achieving a tremendous return on their investment. This proves that investments in cheap properties are also profitable and they can generate an excellent rate of return. The resale procedure is very simple and straight forward and there are no restrictions to taking money out of the country.

The expectations for price increases have appeared to be absolutely correct and it is important to say that it is not too late to invest in properties in Bulgaria – rural properties, land or apartments. The expected returns are of about 15-20% per year or even more. So, together with the option for holiday home or permanent living, buying a rural property for future resale is also very tempting. It is not compulsory to make any renovations to the house except if it is dangerously falling down. It can be kept as it is and resold in a few years.

RENTAL OF RURAL PROPERTIES IS AN INTERESTING OPTION. The rural tourism is rapidly growing mainly driven by the huge interest of Bulgarians who live in the cities. Most of them try to escape from the noise in the weekends and they love to rent a rural house to enjoy the peace and quietness of the surroundings. Lots of Bulgarians are now in a search for a holiday home in rural locations as well. The most popular website for rural property rentals www.RuralBulgaria.com reports an increased interest to such rentals. In order to rent a rural property, there are 2 very important things to arrange: repairs to a high standard – this will usually cost around 20 000 Euros (14,000 GBP) and a person to manage the property locally.

Many things have changed during the past few years and Bulgaria is now even more popular and offers a lot more. Being a member of the EU, there are now greater chances for getting long-term visas, retirement, better social and medical services and unification of the legislation and customs with those in the EU and western countries.

Together, with all the positive discussions about Bulgaria, there has always been THE BIG QUESTION ABOUT HOW TO BUY PROPERTY WITH LAND IN BULGARIA AND CAN FOREIGNERS BUY HOUSES WITH GARDENS OR PLOTS OF LAND AT ALL. The answer is: YES, foreigners can make a purchase of a house with land or land in Bulgaria. This is done by registering a Bulgarian limited company.

The process of buying a house with land or a plot of land goes from choosing the best property, signing contracts for purchase with a real estate agency and if the property is a house with garden or a plot of land - signing papers for formation of a Bulgarian limited company. The company formed by a foreign person in Bulgaria is a Bulgarian legal entity, which is allowed to acquire land in Bulgaria by Law. This way the foreigners are able to own a company in Bulgaria and the company owns the land or the house with land of their choice. It is a simple procedure to register a Bulgarian company – a lawyer needs to be appointed to do this and this can be any lawyer as this is a standard procedure and no particular proficiency or experience is needed.

WILL FOREIGNERS BE ABLE TO BUY LAND IN BULGARIA IN THEIR OWN NAMES AND WHEN?

There has been a lot of talk about whether foreigners will be able to buy land in Bulgaria in their own names without the need to form a Bulgarian company after Bulgaria joins EU. The outcome is that foreigners meeting certain requirements are now allowed to own land in Bulgaria but only in rare cases.

The new amendments to the Ownership Act allow foreign physical and legal persons to buy land in their names only if they:

1. Are citizens of a country, which has a special international treaty with Bulgaria signed after 1.01.2007, which has been ratified and recognized by the Parliament of the Republic of Bulgaria.
   
2. Inherit the property by Law.
   
3. Are EU citizens or citizens of EEA EFTA States, who have permanent residency in Bulgaria.
   
4. Self-employed farmers in a EU country, who want to buy agricultural land in Bulgaria for farming and move to live and settle permanently as farmers in Bulgaria and are registered under the Law for BULSTAT Register as farmers.

EU physical and legal persons will be allowed to own land in Bulgaria in the coming few years. The Treaty of Accession of Bulgaria to the EU allows Bulgaria to keep the prohibition for EU physical and legal persons to buy land in Bulgaria for up to 5 years for land and up to 7 years for forests and agricultural land after its accession to the EU. These conditions will be revised 3 years after joining of Bulgaria to the EU and things may then change. So, the earliest time when EU persons, who don’t reside permanently in Bulgaria may be able to buy land in Bulgaria will be in 2010.

IN CONCLUSION, foreign physical and legal persons, who don’t meet the above stated requirements, are still not allowed to acquire land in their names. These are the most common cases and nothing has changed for now – a Bulgarian company still needs to be registered in order to buy land and this will change not happen sooner than 2010.

For extensive information about purchasing a property in Bulgaria and customized advice on the best way to do this, you can contact any of our offices for professional help and guidance through the process.

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