A house for the cost of a car

by Peter Conradi of the Sunday Times, October 03, 2004

Who would buy a rural property in the middle of nowhere in Bulgaria? The Brits, that’s who. Sunday Times correspondent visits the towns where homebuyers are snapping up houses for £5,000

Mihail Chobanov is a young man in a hurry. Juggling two mobile phones and swerving to avoid the odd donkey cart as he guns his Mercedes at more than 100mph along the pitted roads of southeastern Bulgaria, he has little time to reflect on the runaway success of his property business.

“When I said a year ago I was planning to sell houses in the Bulgarian countryside, my business partner laughed,” says Chobanov, 29, co-founder of Bulgarian Properties, which specialises in selling to Britons. “He said, ‘Who the hell would buy a rural property in Bulgaria in the middle of nowhere?’ But he was wrong.”

Since setting up the company early last year, Chobanov has sold more than 100 houses in the villages scattered around the town of Elhovo, near the Turkish border. Total sales throughout Bulgaria, almost all of them to Britons, are nearing 1,000 — an impressive performance for somebody whose first experience of the British was picking fruit in Kent as a 22-year-old student.

Unable to afford the Algarve? Can’t face a year in Provence? Then Chobanov will be happy to sell you a little slice of rural Bulgaria. For the price of a four-year-old Ford Mondeo, you could have a solidly built village house, complete with substantial garden, outbuildings and — if you are fortunate — perhaps even an inside lavatory.

Bulgaria, best known in the bad old communist days for its hormonally enhanced female weightlifters, is not a country that traditionally features on the British property buyer’s radar. Few people could name the capital (it’s Sofia, actually). Try to come up with five famous Bulgarians and the only one who springs to mind is Georgi Markov, the dissident stabbed with a poison-tipped umbrella on Waterloo Bridge in London in 1978.

Communism is long since dead and buried, however, and Bulgaria has become a stable if poor country, with a steady currency, a government headed by an exiled king turned prime minister and, most important of all, the firm prospect of European Union membership in 2007.

Angela Baruch, 37, who works on economic regeneration for Liverpool council, is among those who has bought into this unlikely Balkan dream. For £5,000, she got a solid house, complete with vines, fruit trees and a 1,200sq m garden, in Ustrem, a little village near Elhovo. The only big expenditure was installing an internal bathroom.

“I love it here,” says Baruch. “I get tears in my eyes when I think of leaving.” Her husband Ran, 38, had just popped out to get his car repaired with the help of a neighbour who has become a firm friend, despite their lack of a common language.

The Baruchs’ house, purchased from an elderly woman, is typical of the rural properties on sale for £5,000-£7,000. With local unemployment at 50% since the fall of communism, most of the young people have long since left villages like Ustrem for flats in town. As their health fails, the elderly join them, selling their homes.

Hristo Ilchev, the mayor, whose office lies across Ustrem’s unpaved main road, is delighted with the influx. Although only three Britons have bought so far in the village, he would like to see more follow.

“Ten years ago, we had 3,200 people here and now there are just 1,500,” he says. “We have to thank these British people for bringing new life to Ustrem.”

He has bought some CDs to teach himself English and is trying to get EU funding to turn a half-built community centre into an eco-cultural centre.

While the Baruchs plan — for the time being at least — to use their house only for holidays, other Britons such as Dave and Karen Virgo from Brighton have moved to Bulgaria for good. They have bought a house in nearby Granitovo, and even enrolled their son, Joseph, 13, in the village school. Karen’s brother, Les Brazier, and wife Maggie, have moved in down the road.

“We’d had enough of England, the crime and everything,” says Karen, 45, during a noisy dinner for more than two dozen British owners in a little restaurant. “It’s a much better place for Joseph to grow up in.”

There are sound economic reasons too: property is not the only thing that is cheap by British standards. A beer in a bar costs 17p, a three-course meal for two washed down with a reasonable bottle of Bulgarian wine, about £9. The local equivalent of council tax is a pittance.

Swapping a cosmopolitan British seaside resort for a Bulgarian village is not for the faint-hearted, however. The local language, a close cousin of Russian written with Cyrillic letters, is impenetrable. It also took the settlers a bit of time to realise Bulgarians mean “yes” when they shake their heads and “no” when they nod.

Inevitably, misunderstandings are common: the elderly woman who sold to the Virgos was convinced she would be able to stay on in one of their rooms and “look after” the house. “We paid her to go a couple of times, but one evening we arrived back and she had jumped over the wall and was in the garden,” says Virgo. “It was really scary for our son.”

And then there is bureaucracy, a hangover from the communist days, which complicates simple tasks such as having electricity or water installed. The visa regime can also be a problem: although British passport holders can travel freely to Bulgaria, anybody who wants to spend more than four weeks out of any six months needs an elusive “D” visa.

Foreigners are also not yet allowed to buy land, but must set up a Bulgarian company. The process is simple and will add only a few hundred pounds, but could prove a turn-off for some buyers.

“The bureaucracy is the worst thing,” says Alan Paddock, 55, an HGV driver from Saltney, Flintshire, who has moved with wife, Norma, 55, into a house in Granitovo.

Paddock was smarting at just having had to pay £1,400 duty on an old Mercedes van, one of three vehicles that he and his wife had brought with him. They were only allowed one car each — obliging them to leave the third at customs.

Undaunted, he is already conducting a huge renovation of his house and is in a race with another British neighbour to be the first to build a swimming pool. He is so impressed with his Bulgarian workers, he is planning to set up in business with them to do renovation work. He has also bought a second house nearby as an investment.

Paddock is not the only person buying in bulk. Chobanov says that many of his clients, staggered by the low prices, have already bought several properties. The record is held by one man with 25 — for little more than the cost of a modest London home. “He started with six, and then kept coming back for more,” says Chobanov.

Not everywhere in Bulgaria is as cheap as the interior. Move closer to the sea and prices soon rise. John Fergus, 38, and brother-in-law Jason Robinson, 35, paid about £25,000 for a brand-new, three-storey shell five miles from Sunny Beach, a brash resort on the Black Sea coast, and are spending the same again to turn it into a five-bed, three-bathroom home.

Prices are higher still in Sunny Beach itself, where hotels and apartment blocks are springing up at incredible speed, fuelled by demand not just from foreigners, but also from middle-class Bulgarians. New flats that sold for £200 per sq m a year ago are going for £400 or more.

Buying off-plan brings its perils: investors, many from Ireland, who bought into the Pomorie hotel and golf resort, fear for their deposits after the project ran into trouble.

Despite such hiccups, experts say interest in Bulgaria is growing. Conti Financial Services, which began offering euro-based mortgages last month, has received more than 600 inquiries from budding investors since the start of the year.

“It’s unbelievable,” says Simon Conn, senior partner. “There are lots of new developments and lots of new ideas.”

John Howell, partner of John Howell & Co, international property lawyers, compares the situation in Bulgarian villages to rural France in the 1970s, but questions whether there will be enough demand to sustain price rises of the sort experienced there in the last 30 years.

Too far from Britain for weekend trips, its development could also be held back by its lack of tourist attractions and historic cities relative to Spain or France, and poor infrastructure and climate.

Although temperatures at this time of year are still about 25C, those expecting a balmy Mediterranean-style winter will be disappointed. “It’s fine in the summer, but 10ft deep in snow in winter,” says Howell.

Prices overall will certainly continue to rise, but not at the same rate as in the past 18 months, he believes. “It will only take a small dent in the market and they are all going to get egg on their face.”

Chobanov, meanwhile, is not just selling new properties, but also helping owners cope with the more mundane tasks of everyday Bulgarian life. “Sometimes we have so many people in the office we cannot serve the new ones,” he says.

As if on cue, his mobile rings as he is propelling his Mercedes around an especially tight corner. A British woman who bought a home a year ago says her septic tank, which she forgot to have emptied, has overflowed, contaminating the water, and her son now has a 40C fever.


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