Guide for buying property in Bulgaria

Maria Plamenova,  Monday, 4 November 2013


This article is part of a series of 8 articles about buying property in Bulgaria. The other articles in the series cover the following topics:

Buying land in Bulgaria by a foreigner is not an easy process. Although the country is a member of the EU since 2007, the Bulgarian legislation in the real estate field is still quite different from the European. Saying that, one may wonder why there are so many foreigners ready and even eager to go through this. There is a simple answer – Bulgarian real estate market offers excellent properties at quite low rates.

There are many specifics if you are a foreigner wanting to buy land in Bulgaria, but many people have gone through this process and now there are clear answers how it should be done.

According to the Bulgarian law at the moment foreign individuals are not allowed to own Bulgarian land. There is always a “but” in such prohibitions. The law in the country allows the foreigners to set a Bulgarian company and there is no obstacle for this company to own land. There is a widely spread system of registering a company whose sole equity owners and managers are foreigners. Then this company buys the property. Usually the whole buying process lasts for about two and sometimes even one month and then the foreigner is a proud owner of a Bulgarian property, through his Bulgarian company of course.

Usually the foreigners hire local lawyers, leave them a letter of attorney and let them go through the complex process. This of course means additional costs.

First of all, in order to choose an appropriate real estate, the buyer has to go in Bulgaria at least for a week in order to visit some properties usually whit a broker. It really helps if you take the time to look at some properties online first. This will give you a better idea what’s on the market and what you should be looking for. The commission for the broker paid by the buyer in case the deal goes through is usually 3-4% of the actual value of the property.

After choosing the property, the buyer should leave a letter of attorney to the lawyer and can go back home. The lawyer makes an incorporate account which should be credited with 1 euro. This is the minimal capital for an Ltd company in Bulgaria. After the registration of the company this incorporate account can be closed and the company opens up a new checking account which later will be used for transferring the money for the purchase.

The lawyer’s fee for registering the company with all the necessary documents, translations and taxes is approximately 400-500 euro and the process usually takes about one week.

Apart from the letter of attorney for the company creation, the foreigners leave another letter of attorney to their lawyers – this is for the actual purchasing of the chosen property on their behalf. This allows the attorney to make a preliminary contract with the property owner. After the signing of this agreement according to the practice, the buyer should pay 10% of the total property value. This deposit is nonrefundable if for whatever reason the buyer decides to call off the deal. The owner of the property on the other hand, should submit all the documents needed for the deal – a sketch of the property, tax assessment, title deed etc. The help of the lawyer here is always useful especially for a foreigner. The lawyer will check whether everything is fine with the documents and if this is the case, the buyer can transfer the remaining balance for the purchase to his company’s account. Now comes the time for the notary transaction which includes some additional costs. The notary fees are about 3% of the transaction value. They are usually paid by the buyer unless otherwise negotiated with the seller (sometimes they can be split between the buyer and the seller). These fees include the 2.5% municipal tax. When calculating the costs for such an investment in Bulgarian property, the buyers must have in mind some additional taxes they need to pay annually for their estate. There is an inhabited house duty that every owner in Bulgaria has to pay annually. It is a percentage of the property tax evaluation and is different for every municipality, starting from 0,1% up to 4%. Another important expense that should not be underestimated is the garbage collection fee. It is calculated as permil of the property tax evaluation and can be from 1 to 10 %ₒ.

Many foreigners choose to leave their lawyers dealing with all the details of the purchase, including the notary transaction but others prefer to attend such a transaction even at the cost of going again to Bulgaria. If the foreigner prefers to attend personally, the presence of a sworn translator is required. This will cost about 40-50 euro.

Buying a property through mortgage is also an option for the foreigners. Bulgarian banks are happy to loan money for such purposes after the buyer supplies all the necessary documents of course (copy of a working contract, income tax-form etc). The annual interest rates for such loans at the moment are 6-7%.

As a conclusion it is safe to say that buying property in Bulgaria is not an easy process and can take some time. The buyer will have to visit the country at least once and more if they want to be involved in the process. And still many people do it for some obvious reasons – good quality and lower costs.

House in the Bulgarian countryside
All types of property for sale in Bulgaria by private sellers and estate agents. Find your perfect villa, condominium or apartment on the Black Sea coast or in one of the Bulgarian Ski Resorts. 
Essential travel aid to Bulgaria

countryside bulgaria When buying property in Bulgaria the buyer should be prepared for some additional costs that come with the purchase. The most significant one is the local tax which is paid during the signing of the deal with the notary. The local tax is 2.5% the price in the deed between the seller and the buyer (the certified material interest). 
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