Bulgaria Lures the Bricks and Mortar Brigade from Britain
Bulgaria Lures the Bricks and Mortar Brigade from Britain << Back to list of articles
Views and Records
By Robert Nurden and Sam Dunn
It's hard to move for adverts offering cheap flats in Eastern Europe. Whether it's off-plan, new-build or old urban, the billboards, posters and flyers paint a picture of instant riches - and there's no shortage of interested parties.
For British investors, it's becoming harder to make money in the buy-to-let market at home. The five rate rises from 4.5 to 5.75 per cent since August 2006, and increasing anxieties about affordability, have slowed price rises, while there have been negligible increases in rental income.
So it's become more common to look east for cheap property investment - particularly since the expansion of the EU to include countries such as Poland and the Czech Republic.
One of the most hyped countries for investment has been Bulgaria, where you can still buy flats from Â¿34,000 (Â£23,000). Although capital appreciation has slowed dramatically from the heady 40 to 50 per cent of the past three years, figures from www.world-ofproperty.co.uk suggest that, in both the first and second quarters of 2007, the average price of an apartment in Bulgaria rose by 5.4 per cent.
Low prices continue to be the main attraction. For example, you can pay Â£25,000 for a new flat (ready in November) in Platinum Residence III, an area close to the city centre in the Bulgarian capital of Sofia. Alternatively, Â£32,000 could secure you an apartment in the four-star All Seasons development, due for completion next June, near the popular Bansko ski resort.
An estimated 40,000 Britons now own property in Bulgaria, and there is still plenty of demand pushing up prices. But brokers warn that there should no longer be any expectations of quick, easy returns.
Don't attempt any overseas purchase without visiting the property at least once and double-checking every tax rule on rental income and capital gains. And make sure you don't sign any legal documents that you don't understand.
As for a home loan, if you don't have enough cash to buy outright - as many buyers in Bulgaria do - a broker can help find a good deal.
Miranda John, manager at independent mortgage broker Savills Private Finance International, says: "It's possible to borrow up to 75 per cent of the purchase price when buying property in Bulgaria. All loans are on a repayment basis but the lender may allow you to go interest-only for the first year. The maximum term is 25 years and you must be no older than 65 when the term of the mortgage expires."
Loans are only available in euros, she adds, and interest on variable-rate deals starts at 7.25 per cent.