‘277 fatal stabbings last year is the highest number recorded since records began 30 years ago’
AOL 29.12.08
‘British summer 2008 – the wettest since records began 241 years ago – in 1767’
BBC News 28.10.08
‘Last year 385,000 people left the UK’
Office for National Statistics August ‘08
‘In 2008 there were 67,428 people declared bankrupt in the UK’
The Insolvency Service
‘Estate Agents’
The property boom in Sofia over the last five years was indeed an explosion, a plethora of real estate agents emerged. The more reputable and remaining include the following, E denotes that English is spoken
43 Knyaz Boris Str 
(t) 953 1766 (t) 91144 (t) 868 1188ACWS Bulrock Group
(t) 816 4306Cleves
(t) 700 17008 (t) 976 9976El-Em Real Estate Agency Ltd
(t) 986 8010 (t) 975 3399 (t) 989 0791 (t) 963 2460 (t) 851 3131 (t) 987 0775 (t) 953 0116 (t) 810 5090
The following contribution on Property Value is written by a trusted friend to the definitive guide, who also has five years independent asset management and renovation experience in Sofia.
Boom To Bust
- a merry dance on Bulgarian property market!
The merry dance became more frenetic as it reached its climax, when the music stopped, investors and developers fell to the floor exhausted by the tangled carbuncle of Bansko and Sunny Beach entwined between them.
The problem with the Bulgarian property market and particularly the off-plan developments was, that buyers heard only what they wanted from the plethora of agents only too happy to oblige by indulging their potential clients. Apartments were churned-out to meet the budgets of buyers, predominantly from the UK and Ireland, rather than to meet the needs of the local market or long-term sustainable future in leisure and tourism.
Off-plan property sales were commoditised to meet the expectations of buyers surfing the tsunami of an orchestrated web-marketing machine. Glossy CGI’s (computer generated images), free-phone numbers to call-centres were supported by agents on massive inducements colluding to allow the purchasers to buy into a fantasy! Investors often buying online, sight unseen lest the first pot-hole or fragrant taxi driver shatter their illusion of entitlement to massive and continuing capital growth! Thus the dance wound its merry way along the yellow brick road south to the peaks of the Pirin range and north past the cliffs of Balchik!
Developers believed they could sell anything. In fact for a while it seemed they did, with buyers believing that they could purchase just about anything and it would return a handsome profit! Of course that nice sales guy at the Milton Keynes call-centre told me Bansko is the next Austria and Sunny Beach is going to be the new Spain - right! The investors do not escape without responsibility as many seemed to have left basic commonsense and principles of sound investment in a locker at Terminal 5!
In the long run, sadly, both sides have been left disillusioned with their respective dance partners. Their eyes met across Ballroom Bulgaria, lit by the alluring sparkle of the glitter ball promising easy money and quick returns, like many a popular ‘Chalga’ song! The rewards coming on the back of cheap, available credit and a diminishing loan-to-value mortgage in a relentlessly appreciating UK property market!
The fall-out is a negative FDI (Foreign Direct Investment) for Bulgaria caused by short-term speculation and greed. Bulgaria could have managed and controlled development by implementing build strategies inline with underlying demographics for the benefit of long term development of infrastructure and tourism after accession to the EU complimented by a wealth of funding. In reality, vested political interests coupled with short-termism, localised corruption and an endemic lack of vision prevailed over the opportunity to put Bulgaria on the map of Europe as a quality tourist destination. Natural specialisms could include balneological-spa, eco, wellness and wine tourism. Perhaps severely delayed and now more difficult as the image of Bulgaria needs to change and be re-branded, a slow and painful process!
In the short-term many investors have more chance of realising a return on their investment than they do of seeing a smiling waitress in Sofia bringing the ketchup before she serves the desert or indeed the rare opportunity to see a brand new black SUV stop at a crossing for a ‘baba’! Sometimes more rewarding than investing, Bulgaria is a wonderful country, long may another dance continue.
James Flint
Director
(t) +359 (0) 2 9530116
(m) +359 (0) 897 684 208
(e) James@sofiacasa.com
Purchase
Visitors to Bulgaria are referred to as ‘foreigners’, though with EU accession a lot of the foreigners are Europeans. At present, Bulgarians can buy a house but foreigners are not permitted to own land in Bulgaria. Therefore, if you want to buy anything other than an apartment* it is necessary to form a limited company that can own land and then register as a company director. The company formation usually takes around four weeks and costs approximately 650 euro.
A solicitor, usually representing the builder (“investor” in Bulgaria) will draw-up a preliminary contract of sale. The contract will usually be bi-lingual, Cyrillic and English, however there are sometimes horrendous instances of lost in translation. The Latin phrase used universally by the judiciary is caveat emptor, translated to buyer beware. The reason to beware in this case is that, the Cyrillic version of the contract will apply. Despite eventual recourse to the European Court as an aggrieved purchaser, initial resolution through a Bulgarian court could take between three and five years. For peace of mind and prior to signing a preliminary contract, consult an English-speaking Bulgarian attorney (available through bi-lingual www.lex.bg), this should not cost more than 100 euro.
Prior to completion in the UK it is commonplace to ‘snag’ the property to highlight structural or finishing work defects. Snagging is not recognised by Bulgarian statute but is still recommended (irrespective of what the sales agent will tell you). The advantage to the buyer is that the builder is required to rectify structural defects for up to 10 years and other defects for up to five years. Many preliminary contracts stipulate two years for other defects but this is sharp practice and the term is illegal, as such it will not affect you statutory rights. That said, when faced with too much remedial work your builder is liable to bankrupt the company and transfer the assets to a newco and then any claims for compensation or work to be rectified will be without foundation. The two drivers towards the Protocol of Completion, the Deed transfer and subsequent ownership, are Act 16 and the Certificate of Habitation. Payment of the balance of the purchase price, including 20 per cent VAT plus local taxes and the Notary fees conclude the transaction. This can all be transacted at distance providing your solicitor is given power of attorney.
Property Insurance
Property insurance is available to individuals and legal entities (the vehicle currently used by foreigners to purchase land and housing, not apartments).
The basic policy cover includes loss and damage resulting from fire (including the consequences of extinguishing thereof), lightning, explosion or implosion, aircraft, parts or the cargo therefrom, natural perils (including storm, hail, torrential rain, flood, snow and ice pressure, freezing, falling trees, branches, or other external objects following storm or hail), sewer water, vehicle or animal impact, and as well expenses made by the insured providing due care for loss minimization.
The basic policy cover includes loss and damage resulting from a burglary as well as additional damage (incl. to walls, doors, locking devices and the like) caused by the burglars. If agreed, the coverage may be extended to include a burglary by using technical device.
If agreed, the insurance cover may be extended to include:
• landslide or collapse of earth mass, earthquake, short circuit or over-voltage, malicious acts by third parties, change of address;
• removal of debris, relocation, protection and storage, loss of rent;
• glass breakage with the option of 'all risks';
• third party liability following an insured event.
The cover applies only to property located at the address stated in the policy. The sum insured can be established on the basis of actual or replacement or book value. The premium is rarely determined by actuarial calculations, the rates charged by the various insurers vary so much they could apparently have been made in accord with the gravitational pull of the Moon. The insurers include:
(t) 926 7111 (t) 930 2374 (t) 985 6262 (t) 801 3700 (t) 930 9031Bul Ins
(t) 935 9876 (t) 805 5318 (t) 981 5799 (t) 930 1919 (t) 935 0853
If you are now more confused than you were to begin with, welcome to Bulgaria, contact us to see how we little we have learned at info@sofiago.com. Please ensure the small print satisfies your needs, understand the process in the event of a claim with your chosen insurer and accept the fact that the only simple part will be paying the premiums.
Removals
The concept of “Dad, do you the piano is on my foot – no son, you hum it and I will play it” is alive and well in Sofia.
There are the large, reputable and established removals companies including the English firm Allied Pickfords (who also benevolently support the children’s charity – One Life Bulgaria). There are also many small companies who will convey your domestic or company possessions. The scope of the service and cost provided by the various removals companies will vary considerably. There are a number of obvious considerations:
• The quantity of goods to be moved;
• Cross-border removal requires international experience;
• Within Bulgaria or across a city;
• The cover, if any, afforded by the removers’ insurance
• A need for English speaking or not
Be quite clear in your requirements and ensure, to the best of your ability, that the three quotes you receive are made on a like-for-like basis. The larger, more reputable companies include:
(t) 807 6633 (t) 962 5032
Be warned, particularly with the smaller companies, that what you believe to be a fixed quotation may not be so. There are numerous instances of companies trying to inflate their original quote, particularly to foreigners through excuses such as ‘the traffic was bad’ or ‘it is taking longer than we thought due to the rain’ or ‘there was more to move than we quoted for’.
Utilities
It is necessary to take hallucinogenic drugs to understand how most utility providers operate, or not as the case maybe.
In Sofia, the electricity provider is CEZ Group. Bulgarians regularly comment that it is easier to plat sand than change the content of one of their quarterly bills. Examples of lunacy include:
• A quarterly charge (payable monthly – according to assumed consumption until the quarterly reading) of 75 leva, with assumed usage the next monthly charge levied was 134 leva.
• Our sympathies to the Bulgarian who purchased a Sofia apartment in 2005. Having endured the conveyance and “remont”, CEZ continued to address the bill to the deceased former occupier at the wrong apartment but with the correct ITN (meter number). When the new occupant tried to resolve the situation he was told by CEZ to write a letter and visit their Head Office which would involve queuing for hours, the factura (bill) remains blissfully incorrect!
To prove we are not persecuting CEZ, another authority provides hot water to radiators. Last year a friend of the definitive guide, received demands from the Municipality for hot water to his electric radiators! Exasperated by the officer’s retort of “it’s your bill it’s not my problem”, our friend said that if he was not happy with his wife he could divorce her. The reply from the officer was ‘Till death do us part, it is easier to divorce your wife’!
Experience dictates that when dealing with governmental and other bureaucratic organisations a can-do attitude does not exist. Seemingly a thousand reasons will be given why something cannot happen before, if ever, it actually does!