Bulgaria best for young property buyers

[Jain and Chris]

Leading story about - A foot on the ladder: why are first time British buyers choosing Bulgarian property over the UK?

An Englishman’s home is his castle – or so the saying goes. However, getting a foothold on the property ladder is increasingly difficult for Britain’s first time buyers.

Nearly one in four are now priced out of the UK property market altogether, so it’s no surprise that they are now considering alternatives that will give them that all-important first step without succumbing to the UK’s sky- high property prices. With talk of 100 percent mortgages, shared ownership schemes and 75-year loan terms, UK home buyers are looking to the Bulgarian property market to make their first home purchase. Just a quick flick through Quest Bulgaria magazine or a search on the internet can reveal many Bulgarian properties that offer three or even four times the space of an equivalent UK house for fraction of the cost.

The average UK house price is now in excess of £200,000 as quoted by the BBC and recent interest rate rises coupled with a bleak economic outlook have not aided the situation. The burden of a lifetime of mortgage payments is weighing heavily on young homebuyers’ minds. Added to this, a survey with National Savings and Investments showed that a massive 84% of 18-24 year olds believe that buying their first home abroad is more viable than buying it in the UK. The National Savings and Investments survey revealed that in London, 36% of first time buyers would consider buying abroad as an alternative to purchasing in this notoriously expensive city. Barclays’ overseas divisions have reported a twofold increase in the number of enquiries about mortgages for overseas properties.

BARBie Girls and Boys
Unlike Britain, the Bulgarian property market is still buoyant and looks set to grow even further. It seems there is no better time than now to invest in Balkan bricks and mortar. Despite this positive forecast, many first time buyers remain reluctant to actually put down roots in Bulgaria. This could be due to preconceptions about the country which include, fear of the language barrier, its reputation for being a haven for senior citizens and worries about employment prospects. However, before writing off the possibility, younger and first time buyers should consider that there are infinite options open to them in Bulgaria.

UK salaries are disproportionately low when compared to the rising house prices, so it is not unusual for British twenty somethings to opt for a life back home with Mum and Dad instead of venturing onto the property ladder. The high deposit and crippling mortgage of UK property ownership need not elude potential homeowners. A Bulgarian bolt-hole can provide a rental income and potentially build equity if the Balkan market performs according to expectation. With everything these days comes the inevitable acronym, and the young who are investing in overseas homes are dubbed ‘BARBies’ (Buy abroad, rent in Britain). The buy-to-let market is on the up in Bulgaria, which coupled with the country’s very low taxation of just 10% shows there is a huge financial incentive to make your first property purchase there.

A short-term gamble
Alternatively, those after a more short-term fix could consider gambling on the property market in a more conventional way. Bulgarian property offers enormously good value for money and house prices are currently forecast to rise on average by 15% this year. If you’re banking on a quick return, look for up-and-coming areas in the process of regeneration. Similarly, improvements to transport links are usually a sure sign that an area is going up in the world. Low cost airlines tend to have a ripple effect on the surrounding areas of any airport they add to their ever-expanding routes. These airlines are pivotal to the increase in holiday getaways. More and more people are making the most of long weekends and cheap flights for mini breaks overseas. Nowadays, it is normal for people to take frequent trips to second homes instead of traditional, single longer vacations. This broadens the scope for Bulgarian property investment with some regions enjoying both long summers and ski-friendly winter seasons.

Making the move work for you and your job
Those regions with the best transport links offer a compromise between buying for pure investment and full-scale relocation. It is financially possible to live and work between two countries. Working in London and then spending your weekends in Sofia or Varna is now perfectly possible. It’s worth bearing in mind that, under the UK’s flexible working legislation, parents with a child under the age of six and certain adult carers have a legal right to request flexible working hours. Even if you do not fall in this category, it might be worth asking your employer if you can work flexibly. An employer may only refuse a request from an eligible employee should there be recognised business grounds for doing so. With high-speed internet connections available in Bulgaria, employees can take the opportunity to work from their Balkan home.

The brave may want to relocate entirely, which may entail finding gainful employment in Bulgaria. This is easier said than done if you don’t have the necessary language skills. However, you can always solve that problem by buying an established business, or a property with business potential. It is possible to buy a ready-made business and it’s not as expensive as you might expect. There are countless properties with potential to convert to bed and breakfasts or self-catering units. Projects can start as low as £30,000 for renovation projects with the opportunity to market your accommodation facilities to other Brits. The UK is awash with TV shows on property renovation, taking these elements and applying them to a Bulgarian home could pay dividends too. Many will agree that the UK property market is saturated with developers making renovation bargains thin on the ground. By comparison, Bulgaria is packed with potentially lucrative properties, from ready-made holiday apartments to serious building projects.

The Bulgarian property market is recommended for first time buyers as it is undoubtedly more accessible for them than the UK and the savvy should use this to their advantage. Just one shrewd purchase in Bulgaria could fund a future property purchase in the UK - or, you might just love Bulgaria so much you may never want to leave.

Top tips to making the right property purchase in Bulgaria:
- Remember to be realistic, if you love living in the city don’t opt for a rural property just because it’s cheaper.
- Check the local infrastructure and how it can benefit your situation specifically. Does your area have good transport links, Wi-Fi, schools?
- Don’t buy on a whim, do as much research as you can into your chosen town, city or village location.
- Be practical and budget. If you fall in love with a wreck, check the renovation costs with a professional and don’t forget to build contingencies into your budget.
- If your move is of a permanent nature, check out the job opportunities. Being a native speaker in a foreign country can give you a specific skill set that may offer new job possibilities.
- Don’t assume that all Bulgarian property is dirt cheap; it isn’t but it does offer better value than comparable property in the UK.
- Never underestimate the difficulty of establishing a business in a foreign country.
- Be aware that the Bulgarian legal system and buying process is different from the UK. Get independent professional advice at every step.
- Avoid buying on impulse. Remember, this is a financial commitment and monetary gains will invariably be reflected in your effort to weigh up the options.
- Get professional and impartial advice and use the same buying criteria as you would in the UK.

Reproduced from Quest Bulgaria magazine May 2008 edition.