|
GENERAL
Find out more in relation to additional purchase costs, maintenance fees and letting fees.
When should a client forward 20% for completion of the rough construction?
Agents will be notified in writing by Platinum Developments giving at least 4 weeks notice.
In the Preliminary Contract 5, Ownership title transfer, it states: ‘Each party shall bear the costs for its private councillors (Architects, lawyers, accountants, etc) if any. The transfer costs & expenses e.g. Transfer tax, notary fee, registration fee etc., shall be on account of the buyer’.
How much will these additional costs be approximately?
Architects, lawyers, accountants, etc – are optional, normally not needed
Transfer tax – 2% (stamp duty)
Notary fee (approx) – 0.5 %
Registration fee – 0.1 %
POA & Admin Charge (Optional) - .5%
These fees are charged on the value on the apartment.
How is the maintenance charge determined?
This is calculated by the number of square meters of built up area plus common area. Typically this cost is between ˆ10 and ˆ12 per square metre.
If property is to be let, what is the cost of the letting fee?
The letting fee will be determined by the contract we take with the tour operator, for example: if the tour operator wants the rooms changed every day, there will be a different price. Investors are not obliged to rent their apartment. The rental yield that we offer will be nett of all management and rental fee’s.
What is the approx. net % rental yield for the apartments?
The approximate gross % rental yield is averaged between 6% & 10% per annum
MORTGAGES
How much can I borrow?
The maximum is 3x single income or 3.5x joint income up to 40% of joint net take home pay. All your existing liabilities including any mortgage/rent payments, personal and bank loans, credit card payments (if the balance is not cleared on a monthly basis) and any maintenance payments together with your proposed Bulgarian mortgage payments must not exceed 40% of your net monthly income.
Example: Net joint monthly income £2,500 X 40% of that figure is £1,000 minus existing monthly mortgage payment £300 - No other liabilities. This leaves a balance of £700 for a proposed Bulgarian Mortgage payment
Who can own land in Bulgaria?
A foreign legal entity (Ltd, joint stock company etc) is entitled to own land, a foreign person is not. However, a foreign person may have full rights on an edifice, as he/she may own title of an edifice without owning the underlying land, e.g. you can own an apartment in a development without the need to own the land.
How long does it take to get a mortgage arranged?
Typically, it takes around 2 to 4 weeks for a mortgage offer although we can often obtain a decision or indication based on the financial aspects of your application within a few days of the lender receiving your application from us.
Can a non-earning partner or spouse join in a joint application?
Yes, assuming the non-earner has not had any serious past credit problems they can join in a mortgage application with an earning spouse or partner.
Can I let out my property in Bulgaria?
Yes, letting out the property for short term holiday lets, several weeks at a time is fine with all our panel lenders. If you wish to let out for long periods with a formal tenancy agreement, you will need to ask the lenders permission before creating any long term tenancy. You will need to check your buildings and contents insurance covers you during any third party occupation of the property, including short term lettings.
Will I need to be present at the signing of the Notary Act (Contract of Purchase) in Bulgaria.
The completion of a Bulgarian mortgage takes place in front of an appointed Bulgarian Notary and all representatives of the parties to the mortgage need to be present. A power of attorney will need to be presented to the lender in good time before completion - a draft document will be provided by the lender.
BULGARIAN LAW SECTION
What is your procedure for search of title?
When we buy the land we are building upon, we make a thorough investigation of the title of the seller and of any preceding owners for the last ten years (ten years is the maximum duration for which ANY third party claims over the property are precluded). This is fairly easy to do, as all claims that can be opposed to a good faith possessor of a property must be registered with a designated authority. Before we purchase any property, we check with this authority if the previous owner (or some of his predecessors) have mortgaged the property, sold the construction rights (see below) or had a court claim filed against him for that property etc. If no claim is registered against him then no such claim can be held against us and subsequently against you.
Similarly, you can make such verification of our title of the apartment we are selling to you. If we have mortgaged your apartment, sold it to someone else before you, etc, this would be registered under our name in the Registrar. If there is no such registration on our name for your apartment, you can be certain that there are no encumbrances over it.
The papers that the due diligence requires in search of title are the Notary deed (as well as the Notary deeds of any previous owners for the last 10 years), scheme of the land plot which accompanies it, Liens and Encumbrances Certificate (Issued by the Registrar described above), certificate from the State and Municipal authorities that the property is not registered as being in their possession and Certificate from the State authorities that there are no claims for that property filed in pursuance of the Restitution legislation (for restoration of property seized by the state during Communism) and construction permission. We seek to obtain all of these before starting to build and can produce them to you before the sale takes place. Actually in order to conclude such a sale the public notary will ask them to produce to him.
Do I own the land the apartment is situated on?
No, currently foreigners cannot own land in Bulgaria. However there is no limitation to own rights over it, which according to the Bulgarian law can be separated from the ownership. Thus, you may own the ‘construction right’ – superficia, which entitles you to build the land and subsequently to own the building being built indefinitely. If you buy an apartment, i.e. part of such building, you will own part of the respective construction right. For all practical purposes the owner of such right enjoys the same status as if he or she possessed the land, while the owner of the land which is built upon, remains with a title, denuded from substantive content.
Further on, if a foreigner insists on having title over the land as well, he can establish a sole man company in Bulgaria. All companies, incorporated within the country are considered local, no matter the personality of the shareholders, therefore a company with capital 100% possessed by you may acquire land with no limitations whatsoever.
Is the purchase freehold or leasehold?
By the Bulgarian law once a person becomes an owner with a notary deed, he/she is also the owner of the infinite constructional rights.
Must I arrange my own notary in Bulgaria as I have no idea who to use?
By Bulgarian law, a notary within whose jurisdiction the property is located must be used. There are many notaries along the coast. A list of public notaries is available here.
The notary deed can be signed personally by you or someone else who can sign on your behalf with power of attorney (above).
What is the name and telephone number of the Notary in Pomorie?
The phone number of the Notary is +359 596 22 330, roydev@pomonet.bg. The name of the Notary is Mr. Hristo Roidev. He has adequate English through which to converse. The Notary does not work at the weekends, office hours are 8.30 - 12 and from 13 - 17pm Monday to Friday.
The notary deed itself will be in Bulgarian only. However you can get a certified translation subsequently. Preliminary contracts will be generally made bilingual.
I do not wish to travel to Bulgaria. Can Platinum Developments look after this matter?
If an investor chooses not to go to Bulgaria upon signing of the notary deeds, the investor can choose use the power of attorney provided by Platinum.
What is the Platinum power of attorney procedure?
Platinum will send you a POA document prepared by independent Lawyers in Bulgaria, this document then needs to be Notarized by your local Notary. Once we receive this document back along with any Management/Rental Contracts we will send it to the Dept of Foreign Affairs (Eire) or Foreign & Common Wealth Office (UK) or similar in other Countries to get Apostiled. Platinum cover this cost for this transaction. Documents are validated and sent to Bulgaria to book a time slot with the Notary to close and register relevant declarations on your behalf. This ensures the Customer does not have to travel to Bulgaria to close in person. Title documents and keys will be DHL’d to Customer typically within 4 weeks. The cost of this service is .5%
Are there any restrictions on the resale of the apartments in the future?
There are no restrictions.
Is the property bonded?
No, the property is not bonded. It is highly unusual for any residential property to have a bonding in Bulgaria. Stage payments are the most common form of payment, Platinum as the Developer control the construction and will only request a further stage payment when the next phase of construction is complete.
I assume that the legal right of ownership is indefinite, that is there is no time restriction like leasehold right?
The ownership is indefinite. Banks are very comfortable with the title ownership rights of Bulgarian projects and that is why interest rates have dropped from 18%-7% in the last 2 years.
Can I open a bank account in Bulgaria?
Yes. Bulgarian non nationals can open bank accounts in any currency. They can also freely repatriate any money that they have invested in such accounts.
BULGARIA TAX
Your exposure to capital gains, rental income, transfer and local taxes.
Investing in Bulgaria
An investment in Bulgaria is an excellent opportunity, however before any investment is undertaken, the proper legal and tax advice should be undertaken by each investor, especially as the Bulgarian economic situation is undergoing rapid change.
There is currently a Double Taxation Agreement between Ireland and Bulgaria, and between the UK and Bulgaria. This means that when tax is deducted by the Bulgarian authorities it will be allowed as a tax credit when completing the relevant tax returns in Ireland / UK. Investors in other jurisdictions should seek advice in their own tax district as to whether or not there is a DTA in place with Bulgaria and the terms of the agreement.
An investor in Bulgaria would normally have the following exposure to the following taxes in Bulgaria:
Capital gains
Capital gains realized by non-resident taxpayers from the sale of real estate situated in Bulgaria are subject to withholding tax of 15%.
Rental income
For non-residents of Bulgaria, if you purchase property as an investment, and you rent it out then the rental income on the property will also be subject to withholding tax of 15%.
Transfer taxes
The transfer of real property is subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates, with the maximum being BGN 3, 500. In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated.
Local taxes and rates
The owner of a property is obliged to pay a real property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. In addition to the real property tax, owners also pay waste-collection fees.
Value Added Tax
Transactions with land and lease of property for residential purposes are exempt from Value Added Tax (VAT).
All other real estate transactions are subject to VAT at the uniform rate of 20%.
Bulgaria and the European Union
In 2004, Bulgaria continued to implement the Europe Agreement Act and the Road Map for accession adopted in 2002, and the negotiations with the EU have been brought to a successful conclusion. In April 2005, the Accession Agreement was signed by Bulgaria and the EU, which confirms Bulgaria’s succession into the EU, and this is scheduled for 1 January 2007.
Your exposure to capital gains, rental income, transfer and local taxes.
Investing in Bulgaria
An investment in Bulgaria is an excellent opportunity, however before any investment is undertaken, the proper legal and tax advice should be undertaken by each investor, especially as the Bulgarian economic situation is undergoing rapid change.
There is currently a Double Taxation Agreement between Ireland and Bulgaria, and between the UK and Bulgaria. This means that when tax is deducted by the Bulgarian authorities it will be allowed as a tax credit when completing the relevant tax returns in Ireland / UK. Investors in other jurisdictions should seek advice in their own tax district as to whether or not there is a DTA in place with Bulgaria and the terms of the agreement.
An investor in Bulgaria would normally have the following exposure to the following taxes in Bulgaria:
Capital gains
Capital gains realized by non-resident taxpayers from the sale of real estate situated in Bulgaria are subject to withholding tax of 15%.
Rental income
For non-residents of Bulgaria, if you purchase property as an investment, and you rent it out then the rental income on the property will also be subject to withholding tax of 15%.
Transfer taxes
The transfer of real property is subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates, with the maximum being BGN 3, 500. In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated.
Local taxes and rates
The owner of a property is obliged to pay a real property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. In addition to the real property tax, owners also pay waste-collection fees.
Value Added Tax
Transactions with land and lease of property for residential purposes are exempt from Value Added Tax (VAT).
All other real estate transactions are subject to VAT at the uniform rate of 20%.
Bulgaria and the European Union
In 2004, Bulgaria continued to implement the Europe Agreement Act and the Road Map for accession adopted in 2002, and the negotiations with the EU have been brought to a successful conclusion. In April 2005, the Accession Agreement was signed by Bulgaria and the EU, which confirms Bulgaria’s succession into the EU, and this is scheduled for 1 January 2007.
Disclaimer
Important please note: receipt of these particulars do not form part of any contract and are for guidance only. Drawings and maps are for illustration purposes and are not drawn to scale. Intending purchasers must satisfy themselves as to the accuracy of the details given to them. Offers are subject to contract/contract denied.
No person in the employment of Reals LTD has any authority to make or give representation or warranty whatever in relation to any development. Any queries regarding the above please contact REALS Ltd.
|
;)
;)
;)
;)
;)
;)
;)
;)