Ways to Invest in Property in Bulgaria

Despite the fact that Bulgaria joined the European Union on the 1st of January 2007, its laws and legislation relating to the purchase of immovable property are not yet in line with the EU norm and buyers will actually have to wait until 2014 before they can directly purchase freehold title to any piece of land or landed real estate in Bulgaria.

As it stands at the moment the buying process in Bulgaria flags up two potential purchase methods for buyers – they can either establish a local limited company and purchase their land and property through the company and thus obtain freehold rights to the property – or they can forego their right to own the land outright and either purchase a simple apartment or buy limited rights to the land such as ‘leasehold’ equivalent or construction rights.

Purchasers who are researching their options often find it difficult to get a definitive answer as to the best way to buy – is there a right way to buy in Bulgaria after all, or is it down to the individual to make up their own mind?

Well, there are many facts and figures that need to be brought into the equation and evaluated so that potential purchasers can indeed find the personally right way for themselves to proceed.  It’s an unfortunate fact that many would-be buyers fall foul of slightly less than independent and indeed, unbiased agents during their property search and are therefore pushed down a certain purchase process path and often encouraged to buy without first establishing a company.  While this can be the right method of approach for some people, it is not the right method for everyone…

Buying property in Bulgaria without a limited company – the facts: -

The vast majority of foreign buyers who are currently interested in buying property in Bulgaria are encouraged by their agents to steer clear of using a limited company.  This is simply because the process to establish such an entity is time consuming.  It can take anywhere between three weeks and three months for the processing of the paperwork and excited agents keen to make a sale will push their clients into foregoing their right to own freehold title to land and landed property in Bulgaria.

For anyone wishing to simply purchase an apartment with no land associated with the purchase at all, of course there is no clear need to set up a limited company…even so, having a company in place does have advantages over and above simply giving one the right to own land.  For example, by placing property assets within a limited company in Bulgaria an investor or buyer can offset costs associated with the purchase and ongoing maintenance of their property through the company.  This can alleviate a taxation burden and mitigate expenses related to renting out an investment property in Bulgaria for example.

As stated though, it is true that the establishment of a company can take time and it does of course require a great deal of paperwork!  If you are purchasing an apartment for personal use – it may not make sense for you to set up a company.  But the good news is, if you do want to set up a company all lawyers and many estate agents working in Bulgaria have experience of establishing these entities and some can even fast track an application for a slightly more substantial fee.

If a buyer is considering simply purchasing the equivalent of leasehold rights to a property or construction rights only on a piece of land this could have adverse effects on the value of the real estate in the future as most future purchasers would expect the vendor to have freehold rights before they will consider a resale.

Buying property in Bulgaria through a limited company – the facts: -

If you want to purchase anything other than an apartment, in the vast majority of cases legal advice will be along the lines of advising a potential purchaser to bite the bullet and establish a limited company.

The process can be fairly long drawn out and it does cost money – but in absolute reality, if a buyer uses the services of an agent or a lawyer this will expedite and simplify the whole process which is basically: -

Decide on a company name.

Decide on the directors, (shareholders), of the company and the stake each has in it.

Determine the registered office address for the company and then sit down with an agent/representative, a translator and a solicitor to get the ball rolling.

You will need a company bank account with an initial deposit of 3,500 leva in it which is about £1,200, this money is simply held in the account while the company is established – it is not a fee.

The fees involved in setting up the company range from £300 to £500 depending on who you use and whether you need your agent to try and speed up the establishment process.  You simply provide your solicitor with power of attorney to act on your behalf, pay your fees and wait for the company to be established…if you allow for a couple of months duration for the company you should have everything in place when it comes time to buy.

If you are serious about finding a property in Bulgaria to purchase then you can use the two months to search for the most suitable property to meet your requirements.

Special Reports: Property News for Bulgaria

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