A Place in the Sun Magazine: “We Can’t Afford to Buy in the UK, so We’re Looking in Bulgaria”

A Place in the Sun Magazine, August 2009

In its August issue British overseas property magazine A Place in the Sun tells the story of Charlie Horton and Toni Walker from Wiltshire who want to buy property in Bulgaria. Charlie and Toni have a budget of 5,000-7,000 GBP and their plan is to buy two rural properties, or a house with an outbuilding they can renovate. Their plan is to spend half the year in Bulgaria and the other half in the UK, so that Charlie can keep an eye on his business interests, which, they're hoping, will bring in enough cash for them to live on in Bulgaria, where the cost of living is low.

According to the magazine Charlie and Toni have ambitious plans to start a new life in Bulgaria, and the panel of experts were happy to give them some words of wisdom to help them on their way:

Polina Stoykova is Chief Operations Manager at estate agency Bulgarian Properties (www.bulgarianproperties.com)

Buying a rural property in Bulgaria for their budget is absolutely achievable and Charlie and Toni will have plenty of options. The financial crisis has caused the property prices to drop to 2004-2005 levels.

My advice would be to go for a property that is €9,000 (£7,692) or even a bit more as properties in the €10,000 (£8,547) price bracket are in a much better condition than the ones of €5,000-€6000 (£4,274-£5,128). By buying a very cheap property, they would spend more money on the repairs and renovations than the difference in price.

The requirements the couple have will certainly be met. Most of the rural properties in Bulgaria have large gardens, and come with outbuildings that can be converted, and have at least two bedrooms. The only thing about rural properties that foreign buyers find strange is that most of them don't have internal bathrooms and toilets. However, these facilities can be installed by a builder.

As they wish to spend half a year in a village, I would recommend they choose a bigger village for a better social life and good facilities. When they are away for the summer, they will be able to hire local people to look after the property and rent it out to tourists. This is something that the big property companies can also assist in.

Katerina Partenova - Junior Lawyer

In Bulgaria it is frequently more economical to buy an existing house and renovate it, than to build new. Works on existing buildings necessitate a number of permits issued by government agencies. Preparing the documents may take up a lot of the time and expense spent on the project. Naturally, an existing building may hide a lot of risks. The couple should appoint a professional surveyor, and review carefully the contractual responsibility undertaken by the surveyor for their advice, as the corresponding liability in tort in Bulgaria is less well developed than it is in the UK.

As they will rent the property and gain an income from it, they are obliged to pay income tax in Bulgaria. This may be excluded from UK taxation through the Double Taxation Avoidance Treaty between the UK and Bulgaria. The couple will also need to look at their position on tax residence.

When hiring someone to look after the property and maybe arrange renting it, the couple need to be careful to preserve the contract for services and not of service nature of the relationship, to avoid an obligation to pay employer's social security.

The couple could register a limited liability company in Bulgaria, which is more appropriate for tax administration purposes. In conclusion, while the couple have several methods of structuring matters, they should carefully arrange the financial and legal side of their investment.

Amanda is presenter of Channel 4's hit TV series A Place in the Sun.

Rural tourism in Bulgaria is becoming more and more popular among both foreign and local people. Local people (mostly from the big cities like Sofia) travel a lot and seek rural houses to stay in over the weekends to be away from the noise of the cities and the resorts.

Haskovo has very good access to local sights -the ancient city of Perperikon near Kardjali and many other historical, natural and cultural sights. It is also convenient for visiting neighbouring Turkey and Greece. If they choose another area like Pleven and Montana, for example, they will find other interesting things around - caves, historical monuments and beautiful mountains.

The key to success in renting a rural property is to have proper facilities in the house (Charlie and Toni may have some work to do in getting a property up to scratch if they want to attract tourists), a good housekeeper to welcome the guests, a good advertising strategy and proper pricing.

Although they are after an isolated rural property, they may have trouble finding one, due to Bulgaria's communist history. As people used to work together in the fields, they would generally live fairly close to each other. However, they've chosen a great time of year to house-hunt - the landscapes in Bulgaria are beautiful and the villages are picturesque and full of life.

The aftermath

Charlie and Toni are given three rural properties t choose from – a house near Haskovo (which they rate 4/10), a house near Stara Zagora (which they rate 7/10) and a house near Haskovo (which they rate 7/10). The aftermath is that the whole experience and the information that they received throughout the process has led Charlie and Toni to be even more determined to move to Bulgaria. However they will definitely be taking into account its communist background and the possibility that we may not find a remote property in the countryside. They have increased their budget to include higher-priced housing which should require fewer renovations.

Where to buy in Bulgaria

There are bargains aplenty to be found across Europe, and Bulgaria is no exception. Buyers who need finance, however, should do their homework because options have dwindled - see page 29 for a summary of mortgages in Bulgaria. The good news, however, is that prices there are often so low that, for those who have even a modest amount of capital, there are plenty of opportunities to buy without a mortgage.

Stephane Lambert, director of British-owned Bulgaria estate agency Stara Planina Properties, says that bargain-hunters should head for the new developments and off-plan properties in the coastal resorts around Varna and Bourgas and the ski resorts based around Bansko, Borovets and Pamporovo.

"There are some real bargains out there right now, with prices being slashed by up to 50 per cent," he says. "Not only are the developers lowering their prices but also recent foreign buyers (including many British and Irish) who were being adversely affected back home by the economic crisis are being pressured into selling their foreign assets. So for all those that think they missed the boat in Bulgaria, now is perhaps the best time to get into the market. Whilst advertised prices in most instances appear still high the actual completion prices are much lower, so shop around and bargain hard!"

According to Lambert, a one-bed apartment on a beach resort can be had for as little as €30K (£26K). "Whilst not being front-line and likely to be surrounded by other developments, these properties are usually still just a 10-minute walk from the beaches."

If it's a city pad you're after, you'll find that prices have fallen less sharply, with Varna and Sofia being the most expensive. "A one-bed apartment in Veliko Tarnovo, for example, would now cost just €30K [£26K], and a two-bed €50K [£43K]," says Lambert.

As we have seen above, it's possible to find much cheaper properties in rural Bulgaria, with the Veliko Turnovo region being the most popular hunting ground for buyers. Prices can be low but this can reflect the condition of the property. "You can still pick up run-down rural properties for under €10K [£8.5K]," says Lambert. "However, realistically speaking, you will need to spend at least €50K [£43K] buying or doing up a place to make a decent home."

Of course, Bulgaria is a large country and prices for rural properties show great variation. According to estate agency Bulgaria Properties, in the Varna region, a newer or renovated house with a 500-square-metre garden will cost around €38K (£32K). About 40-50 kilometres from Bourgas, you'll pay €27K (£23K) for a decent-sized house (150 sqm) with an 800-square-metre garden that doesn't need too much doing to it. Moving down the price range, an average 100-square-metre house to the north of Sofia, around the town of Svoge, with 500-1,000 square metres of land can be bought for just over €16K (£13.5K). Alternatively, 30-40 kilometres north of Veliko Tarnovo you can buy an old house that's in good condition for about €12,600 (£11K). For properties around the €10K (£8.5K) mark that need renovation, try east and west of Yambol, or the Stara Zagora region. And for really cheap properties of around €4K (£3.5K) but needing renovations, try the Montana or Pleven regions.

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