Renting property abroad will never be as straightforward because it is in your own language and culture, nevertheless it needn’t be stressful, costly or complicated. This information will guide you through the essentials for successfully renting in Sofia under the current market conditions, the procedural norms and things to consider if a managing agent tries to make use.

Unlike the vacation markets throughout Bulgaria the town of Sofia has domestically generated demand that is constant and self sustaining. The dimensions and maturity of the market implies that trends and patterns could be analysed, unlike the ski or beach markets where rental is much more like guesswork. Like every major city you will find good and bad areas, the ones that are desirable and growing and those that aren’t. However, there is no doubt that wherever you’ve purchased there is sure to be a suitable tenant, the cost will invariably determine the rate where you find that tenant and how long they stay before moving onto spending their money with your competition.

How has got the recession affected the Sofia rental market?

It is vital to think about the affects of the current economic system in order to understand the processing affecting availability of stock, tenants and shifts in market rates. Before 24 months ago rental properties were clearly of two types; those that were modern new builds and those that we 1960′s-80 communist concrete constructions. The brand new builds were relatively quite few as few ‘off-plan’ projects had completed, those that were finished were desirable and thus in high demand, this pushed prices up. These off plan purchases were being made by some shrewd foreigners but the great majority were Bulgarian owned.

It is generally accepted that buyers were investing for future growth and not for his or her own habitation. However, since the recession became predominant mortgages happen to be basically annihilated and belief in property being an investment has plummeted, the mixture of these factors makes resale nigh on impossible. Prices have came by as much as 25% and most owners are either facing a loss of revenue when they sold today or are into negative equity.

Consequently, clients who invested with the intent to flip on to make money suddenly all became landlords. Simultaneously almost every other off plan development completed and became habitable causing an exponential wave of recent properties to hit the market. Not many can now be resold and all sorts of are suddenly open to rent.

Sofia Demography – Who’s renting?

Like any populace, Sofia has a number of sectors and cohorts who are able to and cannot afford the new build properties that lots of foreign owners have invested in. Probably the most common enquiry originates from 25-35yr old couples seeking furnished one bedroom apartments in new serviced buildings within the ringroad and preferably near an underground station. Two bedroom apartments are in demand but typically take more time to rent and frequently the additional rental income generated by the extra bedroom does not yet warrant the additional investment it took to acquire it. However, this will alternation in tandem using the general standards of just living, tastes, desires and affluence.

Studios are certainly sought after from young professionals, they ought to continually be keenly priced and well finished as owners will encounter the highest competition in this category. Three bedroom apartments are rare and trends are not clear.

Wealthier student may also be a viable source of tenants; a 2 bedroom apartment can rent to six student and in some cases it has been established to boost more revenues than anyone family or perhaps a set of couples.

Sofia Properties to Let – Furnished or unfurnished?

90% of enquiries are for fully furnished apartments only. It’s a false economy not to furnish because tenants rarely stay more than 18 months and unfurnished apartments are usually empty for twice as long as the ones that are furnished. Tenants will invariably negotiate lower rates for unfurnished properties because they will need to invest into items themselves, thus between the months of lost revenue and lower revenues it’s financially viable to furnish. The only advantage to getting the tenant relocate their own furnishings are that they will become more inclined to remain longer and take good care of the apartment and its content, of course this is only true in some cases.

There is no need to spend 5,000 Euros on furniture, the fundamental essentials is going to be absolutely acceptable; fitted kitchen, double bed, wardrobe etc. In case your funds are tight then don’t buy a sofa, TV etc; have the agent market the home as ‘fully furnished’ using images from the essential furniture items whilst offering a negotiable rate with respect to the tenants full requirements. Some will get their own sofa, TV etc some prefer to pay slightly less and purchase their very own. For individuals who want the apartment as well as want these things included then the deposit and also the first month of rent can be used to fund these acquisitions so no further money is required from your pocket.

Deal with a real estate agent who also offers the ability to furnish in addition to rent, such as the pay over the top with this ‘one stop shop’ service. As a group of companies we own a real estate agency in addition to a furniture importer, as a result we provide to furnish an apartment, rent it, then recoup the expense from the furniture in the rental income that we create. The chance of getting a tenant to pay for the expense becomes ours and not yours.

Expats – Could it be true they pay more to rent in Sofia?

It is not worth believing marketing hype that suggests thousands of expats are relocating to Sofia with respect to multinational corporations, all need top quality accommodation and therefore are prepared to pay vast sums for it. The truth is quite different. Whilst you will find an increasing number of MNC’s now opening subsidiaries in Sofia, they’re just like aware of the marketplace prices as anyone else plus they aren’t ready to pay more in the future tenancy of an apartment. Most large companies either acquire ownership of properties themselves or agree low rates for bulk booking apartments, then allow their expat employee to furnish it to their own tastes / standards within a relocation budget. None of the process posses any scope for that owner to exercise further profiteering. If lettings agents pullout the ‘expat card’ like a advertising tool suggesting they can achieve more money in comparison towards the ‘rest of the market’, better to put the phone down and seek an alternate agent.

What rents property in Sofia as well as for just how much?

It really depends on what and where, however any figures that are quoted from pre-recession data or experience are absolutely inaccurate and should be entirely dismissed. We all do repeatedly hear the assumption that 1 bedroom new build properties should be rented for at least 450 Euros Per month, however it was true when there were very few on the market so when the home boom was happening, today is really a different story. In each and every building you will find distressed owners who never planned to have their property and try to meant to flip it on. Now they can neither resell nor remortgage so their only options are to rent; in order to attract the tenants quickly and satisfy their very own financial repayments they have to offer attractive prices to secure income from their investment. This is also true for developers who haven’t sold the last of their stock, they have furnished unsold apartments and also offered them for rental at ‘below market values’. With the market flooded tenants are spoiled for choice, two or three distressed owners within the same building rivaling an equally distressed developer, prices fall and end result is a ‘buyers market’ that is where we are today.

Even though you get a tenant to signup in a healthy rate / profit they’ll soon learn that the same or similar apartment can be obtained for less in the same building (often adverts are put at receptions) and they will ask for a rent reduction or they give 30 days notice to maneuver out. It has happened often over the past 18 months and our bottom-line advice would be to now market at a rate that can’t be beaten, get it rented quickly and minimise months of lost revenue, then intend to boost the rates when mortgages and resales be realized on the market again.

Tips to remember:

Rental rates in Sofia are usually the lowest for just about any capital in Europe, however so might be the income and property prices.
Rental rates have dropped 30%.
Smaller apartments are simpler to let out and depending on the location and the quality of the build.
Better to rent in a lower than ideal rate for 12-18 months than try to get what you would like and also have it empty for 12-18 months.

Management of Sofia Properties – So how exactly does it work and it is it necessary?

There are two commonly available services; the placement of tenants only or the full management of your home. Typically, we are able to find tenants and put them inside your property, agree contracts, terms, deposits etc for half of the first month of rent. Thereafter the tenants will have to deal with you directly, you will have to be accessible and speaking Bulgarian to address problems, complaints etc. Full property management places the tenants for the similar fee plus 25 Euros Per month or 10% of the rental value, whichever is greater. Under this particular service you could have very little involvement with the property as you choose as everything could be taken care of for you.

Sofia Lettings Agents – Who to make use of and who avoid.

Some so called ‘lettings agents’ are structured only to get a flat fee every month of your stuff as the owner, often around 40 Euros / month that is chargeable prior to the flat is rented but for the amount of it being empty. This is an unnecessary cost for you and in reality these ‘agents’ have little intention or capability to get a property rented. Oftentimes these same agents are promising high rental returns, often claiming access to the ‘expats’ suggesting that 500 Euros Per month is plausible and they are always on the cusp of getting you a tenant. In truth, they’re only there to fleece foreign owners of their 40 Euros Per month and also have not provided an investment in promotional initiatives to properly market and represent properties for rental. Furthermore, such companies are profiting from the gross overcharging of furniture and kitchen packs, also claiming their necessity for the ‘expats’ they’ve access to.

It is a temporary strategy for such companies just enough landlords will find alternative agents who are able to genuinely offer a professional service in return for modest remuneration.

When it comes to our lettings division:

No tenants = free
We do not charge any fees whilst the property is empty
No registering subscription costs or charges
No marketing costs

Legalities and Contracts – What to do when the tenants don’t pay?

It is standard in Bulgaria to sign contracts for 12 months based on a 30 day notice period for both the landlord and the tenant. Unlike UK contracts the terms in many cases are without protracted break clauses. If your tenant does not pay within Fourteen days of the due date then the managing agent or landlord is eligible for request Police support to attend the property to change the locks. Unlike the UK the owner does not need to apply to the courts to have access granted post tenancy agreement, the law is aimed at protecting the rights of the owner and their property as opposed to the rights of the tenant that has not paid for something under contract. There is no ‘Deposit Protection Scheme’ provided by the Bulgarian government, deposits are retained through the managing agent and returned only once a complete inspection and inventory has been concluded.

Building of construction projects means erection of structures with bricks, armored concrete along with other construction materials. The making of infrastructure for passenger and freight transportation includes work processes associated with roads, bridges, airports, ports, etc. All types of construction apply similar construction methods therefore the following elements should be ensured prior to the audit:

The landowner or buyer of land upon which the infrastructure project is going to be constructed must have information on estimates and implementation projects presented for doing the work.

Data on landowners’ shares – land can be property of countless families and there is definitely an agreement to cover the land that allows for ownership of 1 or more apartments for each family as a means of payment for the land.

Specific details about the work to become done should be prepared prior to signing the contract, including costs.

Tax personal number using the address from the building project.

Safety rules and employment contracts as well as collective employment contracts

Data about subcontractors for use and also the agreements specifying their responsibilities.

A budget accompanying the information about how the project is financed.

The term subcontractor signifies that the process of work is done through a contract signed using the supplier supplying the workers. The subcontractor has all of the responsibilities associated with the use of individuals, e.g. payment of social and health insurance contributions and income tax, etc. These payments should form part of the total calculations from the construction project, in line with the area of work the subcontractor will do. The subcontractor ought to be paid the entire sum for the work done and that he also needs to have data in the form invoices, made by different parties.

How about VAT issues?

VAT ought to be paid on the amount of work done throughout the particular month. Invoices between owner/constructor and subcontractor ought to be standard invoices given by tax administration approval and they should be issued every month. All invoices from other suppliers ought to be obtained right now of supply, e.g. when the cement, iron, bricks, etc. are sent. Other accounting data for example purchase and sale registers should be presented together with the stock inventory and materials already getting used in the work process. The information should be presented in the common way the bookkeeping is kept, although accounts may regard a specific construction project.

Whenever a construction contractor is engaged in more than one construction project, the accounts should separately reflect costs for every construction project, in order to determine the final total cost.

After the construction project, a crosscheck is performed to verify the amount taken care of VAT each month and the VAT to be paid within the final sale. The seller is not required to pay VAT on eventual sales for surface areas, assuming that this is a block of construction projects.

Here are some important issues related to construction taxable revenues:

Preparing a list of subcontractors for use for this construction project and if possible make a simultaneous audit of each subcontractor.

Each construction project is associated with a construction plan with quantity of floors, rooms, etc.

Asking the technical director of the construction project concerning the system used against theft and the kind of safety in the construction site (private guards, etc.).

After the construction project has finished, matching the entire quantity of windows, shower units and similar things with the respective invoices and send periodic references towards the respective tax office administering the suppliers to become able to compare the information throughout the next audit of suppliers.

If there is a contract allowing the transfer of property of some apartments to various individuals, for instance, simply because they owned the land, it is necessary to examine this content of each agreement to be able to determine the compensation value received through the landowners. This can serve as one of the orientations to consult when re-characterizing the sale price.

In addition to a detailed audit of monthly declarations on the progress of work done throughout the month, the two main following audits ought to be randomly conducted.

Since it is now a typical practice to use workers with no kind of documentation, it might be necessary, on the case basis, to surround construction sites with fences and interview the workers based in the site right now and afterward comparing all of them with employment contracts.

- Every individual within the construction site territory ought to be identifiable, with names, numbers, etc. This will match the information provided by principal contractors and subcontractors.
- The info from the state labor inspectorate in regards to safety measures and site to be audited will be necessary to produce maximum effect.
- After the inspectorate and auditors to become engaged in the audit are informed, they ought to immediately be sent to the development site in order to prevent different individuals from sending the info towards the sites to become audited and also the time of the audit.
- Merely a minimum quantity of staff should be engaged in this plan with no data should be provided as to when and where the audits will take place.

The 2nd exercise includes just the kinds of common investigation. Following the construction project has finished, the contractor transfers the property towards the investor financing the development project or to people who will either use or sell the apartments.

- Determining the market price for apartment sales and calculate the total possible sales through: – an investigator from tax office which shows his interest to buy an apartment block would think it is pretty easy to determine the real sale price – the worthiness received as compensation percentage of the total construction project (landowner/project surface area in m = sale price); – the value applied by domestic and international institutions and organization with good reputation (banks, institutes, organizations, public institutions, etc.).
- Thinking about the worth of the development project right now it’s finalized, calculate the profit level and make sure the profit is reflected in company’s accounts or individual sales of apartments by year.

A tax official should be suspicious when is noticed that sale prices for surface area of construction projects are massively in the thresholds established by VAT Law. Based on this law, when the levels of surface areas sold at this minimum price level are constructor’s own product or area of the asset inventory of a taxable person’s economic activity, they should not exceed the limit of non-public use, including normal family consumption, other employed persons, relatives and friend of taxable person.