Article by Property Law Centre Bulgaria joined NATO in 2004 and is striving towards accession to the European Union. Property prices look set to continue to rise, leading up the proposed acceptance in 2007. Foreign investment has poured into Bulgaria during the last three years. Annual inflation is currently 3.8% and the country enjoys one of the highest economic growth rates in Europe at 4.5% and low rates of taxation compared to the rest of Europe. A former communist country, Bulgaria is now governed under a parliamentary democracy. In 1996, Bulgaria experienced a fall of the socialist government, as a result of a major economic downturn. But, Bulgaria is now committed to economic reform and has experienced steady economic growth. Whether a property is being bought for investment, a holiday home, or a retirement home, current prices are exceedingly low, but they are set to rise. The continued growth in tourism is fuelling the price rise as foreigners realise that Bulgaria is a desirable alternative to Spain, Portugal or Greece as a holiday destination. There are many areas to consider when buying a property and obviously it helps if you can narrow your search. There are three main areas to consider:- The Black Coast, the ski resorts and the mountain regions of Rila, Rodophi or Pirin mountains or property in the more rural areas of Bulgaria.
A large number of new construction projects has begun and the coastline is in the process of dramatic change. Prices in some areas have risen nearly 25% in the last 12 months. The prices are expected to continue to rise in the foreseeable future, as more foreigners invest on the coast and the awareness of the desirability of the country grows and grows. Mortgages have just become available for properties in Bulgaria and this is likely to cause a great surge in demand for Bulgarian property. However, the cheapest way to finance a home overseas is to re-mortgage your existing home, because the UK has the most efficient and competitive mortgage market in Europe. In the more rural areas, property prices are much cheaper, and although prices are on the increase, the rise is far less dramatic. Three of the main areas that are becoming more popular are the old medieval capital of Veliko Tarnovo, properties along the Danube River and around the major town of Ruse. Buying a rural property is considerably cheaper than buying off plan. Restrictions on foreigners buying property There are still restrictions on foreigners buying land in Bulgaria, but these are due to change in the next year or two, as it works towards EU directives for joining the European Union in 2007. At the moment, a foreigner can buy buildings as an individual, so if you are buying an apartment, this can be done in your own name, but if you are buying a house, which is obviously set on land, then you need to up a limited company. Setting up a company is a relatively easy process. Once the company has been registered, it buys the property and owns the land. You are the sole owner of the company and respectively of the land. The company does not have to operate or trade, it is just tool to enable you to buy property. Each year it will be necessary to declare the company accounts and this can be organised by a firm, such as ourselves. A minimum of 5,000 Bulgarian Leva needs to be deposited (approximately £1,700.00) in your company’s bank account. This is the minimum capital required by Bulgarian law to establish a limited company. This is just your starting capital and it can be used for the initial deposit and any fees incurred.