Buy Romanian Property
Steps to buying
Romanias emerging real estate market offers incredibly cheap properties that have the potential to be excellent investments.
There are many reasons for buying a property in Romania, and foremost among them are climate, value for money, lifestyle and investment potential. Homes for a peaceful and fulfilling retirement are becoming increasingly popular as are, of course, holiday properties. The latter have potential for renting, as well as for personal use. From 1989, the real estate market has developed quickly. Most Romanians had lived, up to that point, in homes that were registered as state property. They were then given the right to buy them. Others regained family-inherited properties taken by the former Communist regime. However, there were inevitably some bureaucratic delays. Statistics for the last two years show that prices for both land and homes have doubled in some areas, and specialists assume the market will follow the same course over the next five to ten years. This is due to the growing number of foreign tourists, and to Romanias European Union entry in 2007.
STEP 1 Why buy in Romania?
Romanians are lively and warm people with a desire to be included in mainstream Europe. Young Romanians are particularly open-minded, with attitudes that are both pragmatic and optimistic. Family values are highly regarded, and women are considered in a progressive, respectful way. The climate has both temperate and continental features. It is characteristic of Central Europe, with hot summers and cold winters, as well as very distinct seasons. Among the particularly attractive aspects are the sunny days of autumn, which last from early September until late October. When buying a property you should take account of local variations of weather. The shoreline along Romanias Black Sea coast stretches for some 244 kilometres and has recently seen plenty of building developments.
Here are modern resorts such as Mamaia, Costinesti and Eforie Nord. The beaches are ideal for sunbathing and particularly suitable for children. The sea water and gentle waves are excellent for the health-providing thalassotherapy(a common spa treatment used to reduce cellulite).
STEP 2 Comparing prices
Spain may be the preferred option for 52% of Britons buying abroad, but a well-located, three-bedroom villa there now costs in the region of 150, 000. Romania, on the other hand, has prices ranging from 25, 000 to 250, 000, satisfying everyone from the frugal purchaser to the bigger spender. An outlay of 50, 000 would secure a substantial mountain property, and the price for a smaller villa on the Black Sea coast is comparable. Here is a country on the edge of Europe to become part of the EU, and offering premium positions in the housing market at discount prices.
STEP 3 Finding an agent
The best route for a foreign national is to find a reputable agent to enlist the help of experts and assist with translation matters such as Romanian Properties Ltd based both in Romania and in the UK (www. RomanianPropertiesLtd. co. uk).
STEP 4 Finding a property
The best methods for finding a property are the traditional ones using an estate agent, looking through newspapers, searching the internet, and talking with local people. Your first step, though, should be to work out which region you prefer. In the end, you will probably be looking at one of four distinct areas: there is the relatively compact Black Sea coast; the Carpathian mountains; the picturesque towns in the Northeast; and apartments in the capital, Bucharest. Assess which area suits you best and then jump on a plane and explore the area in person.
STEP 5 The buying process
Foreign nationals wishing to buy property in Romania are treated differently from locals. The upshot of this is that in order to purchase land (as distinct from buildings) you will need to set up a holding company. This acts as a legal wrapper for one, or any number of plots of land. It will probably be phased out with accession to the EU, but for now it is a requirement. It is advisable to use and English-speaking lawyer based in Romania to take you through the process. You must also acquire all necessary paperwork before the notaries who handle the conveyancing. It is theoretically possible to complete the legal process within just one working day. In practice, though, you will need to allow between two weeks and three months for matters to be completed.
STEP 6 Buying to let
There are no legal differences between buying a property for your own use, or for business purposes that may include renting to residents or tourists. While Romania appeals to many, and its assets are likely to increase in both value and demand, it has yet to acquire spontaneous acceptance as a holiday or retirement centre.
STEP 7 New build or resale
The mortgage market for overseas buyers has started in 2006. Building surveys do not carry the same legal implications as in the UK. It is worth getting a survey done, though simply for the peace of mind that comes with knowing that you are not about to throw a lot of money down the drain. A relatively high number of Romanian homes suffer from structural damage, yet thanks to low labour costs and the high skill levels of those in the construction industries, you can overcome these faults fairly easily. It pays to know someone in the building trade, but it is even more important to gain the ear of someone in the local mayors office. It is here that registration of deeds and contracts takes place and, although the days of national state control are over, the power of this office has survived.
STEP 8 Other costs to consider
You may have the money to buy the property, yet you will have some additional costs. You will have to pay around 500 to set up the limited company that is necessary to hold land. Our view is that a prudent purchaser will also use a lawyer, who will liaise closely with the notary on the verification of the title, obtaining the Land Registry excerpt and the drafting of the agreement for the transfer of ownership of the real estate. Generally speaking, hourly rates of Romanian lawyers are lower than those of solicitors in the UK practicing in similar circumstances. State taxes are around 3% of the value of the property. Other utilities do not attract standing charges.
STEP 9 Things to be aware of
So how do you keep your property secure when you are back in Blighty? Luckily, in Romania, empty homes are not generally perceived as targets for crime. If you live in a village or small town, you should be able to find an observant neighbour to keep an eye on the property. In the cities there are other reliable security options. Romania is a beautiful country with an expanding economy. Its young people look to the West, and expect that Romanias entry into the EU in 2007 brought further integration. By purchasing a property here, you will not only be making a sound investment, youll be buying into a country with an intriguing past and, more importantly, all the makings of a bright future. ?
ROMANIAN CHARGES: THE PAPERWORK FACTOR The essential factor to bear in mind is that, in Romania, bureaucracy can cost almost as much as the construction work. The critical issue involves the amount of paperwork that has to be collected in order to make the sale valid. If the previous owners have archived the records perfectly, then costs will be negligible. If extensive or intensive searches have to be made, then lawyers will have to be paid. So you could end up forking out nothing at all or, in a worst-case scenario, up to 2,000. Notaries charges vary wildly, as they do anywhere in the world, but set aside 1% to 2% of the purchase price for these services. The labour and material costs required to repair a property in poor condition will be low by western European standards. Surveys have little legal significance, but it pays to use a local builder to assess what work, if any, is needed be prepared to pay 200 to 300 for a thorough investigation. This is money well spent, however, as it will give you the peace of mind that comes with knowing that your property is structurally secure.