Bulgarian property owners could risk losing their homes
BULGARIA’S low prices and beautiful scenery tempted Brits to buy property in the country during the buy to let boom.
But lawyers are warning that some owners could face financial penalties and even risk losing their property because of changes to Bulgarian law.
West Yorkshire-based property specialists John Howe & Co believe many people could be unaware of the complexities of the Bulgarian legal process and its potential impact.
John Howe says: “We have been contacted by several owners of Bulgarian property who fear they may lose their assets to the government. There could be many other property owners who don’t know about the Bulgarian legal process and who could potentially risk losing their homes.”
Until recently, foreigners have not been able to buy land, or property with land, including houses, villas, and even some apartments, in Bulgaria in their own name. Therefore, it was common practice for foreigners to register a Bulgarian company and buy property through that.
What many owners do not realise is that to comply with EU legislation, the Bulgarian government required all companies to be re-registered by December 31 last year. The companies which failed to meet the deadline can no longer reregister, their trade activities are permanently ceased and they cannot trade or dispose of their assets.
When new EU laws come into effect in Bulgaria this October, anyone who failed to re-register their company may face the prospect of a large bill and losing the assets to the state, including any property.
As one of only a handful of firms nationwide recommended by the Law Society for matters relating to the purchase of properties and apartments in Bulgaria, John Howe and his team have come up with a solution to this latest legal challenge for British owners of Bulgarian properties.
John says: “Our specialist team of property lawyers have done a lot of work investigating the issues surrounding the re-registering of Bulgarian properties and believe they have found a solution whereby individuals can liquidate the company and transfer all the assets to a group of shareholders.
“The ultimate result is that the property remains in the hands of the original purchaser and isn’t lost to the state.”
There are thousands of Britishowned properties in Bulgaria, many of which were bought in the recent boom as holiday homes. The country has also attracted British expatriates.
The British Embassy in Sofia estimates there are between 8,000 to 9,000 British people living in Bulgaria.
One of the most appealing features of buying a property in Bulgaria is the perceived value for money. An average villa close to the sea can be purchased for around £30,000 with rural properties being offered for as little as £5,000, according to www. mybulgaria.info.
The country boasts stunning scenery, coastal and skiing resorts together with a wonderful climate. However, overseas buyers must be cautious, as the latest problems show.
It pays to do your homework on buying and selling processes and to keep yourself informed about changes to laws affecting property ownership.
Those buying abroad should also check out the country’s inheritance tax rules, as these can be complex and may result in extra costs for loved ones. It also pays to investigate on other property taxes as some countries impose hefty penalties on second home owners.
As always, seek independent legal advice before signing any contracts.
For more information visit the Foreign and Commonwealth Office website, which has a “Know Before You Go” section, www.fco.gov.uk.
John Howe & Co is an independent firm of solicitors based in Pudsey, Leeds, www. jhowe.co.uk