Why Buy in Romania?
Arguably the most appealing feature of buying property in Romania is the value for money aspect. Property prices, although rising, are incredibly good value. Romania is full of stunning scenery and has a wonderful climate, and mountain views are all around. See videoIt is home to winter sports such as skiing and the mountains make this a real tourist attraction. The weather is mixed in Romania; you can expect to see a range of different weather patterns, depending on where in the country you are. Inland the weather is more continental, with cold winters and snow, but the summer is sure to be hot and humid.
The coastal regions are more temperate, and you will see mild autumns, cooler winters, mild spring times and warm, carefree summers. It is characterised by a lack of rainy dull days that you see in England. Whilst the cost of living is very attractive (around 25% of the cost of the UK), you need to keep aware of the way the culture works in Romania, for example when it comes to buying real estate; ethics are very different in Romania, and things which may be frowned upon or seen as wrong in the UK, are viewed very differently in Romania and is a part of their day to day culture. It’s definitely a good idea to do your research before you go, or get in touch with ex-pats who live there now to get a feel for the way the country is run.
Getting Started – is it possible for you to buy in Romania?
From 01.01.2012 all foreign non-EU citizens are ALSO able to purchase land in their personal name according to article 6 of law 312/2005 (in force since 01.01.2007). This article mentions that the conditions for owning land as a non-EU citizen cannot be less favourable than for those who are EU citizens. According to the same law art 4, any EU citizen is able to own land since 01.01.2012 (exception being agricultural land – extravilan) .
This also means that there is no obligation anymore for any EU citizen to show or have Romanian residence to own the adjoining land quota (which was the case before 01.01.2102). I do need to mention that interpreting legislation (or even applying it) depends on a good, well informed public notary. EU citizens are treated just like Romanian citizens & have no restrictions for buying.
I should also add the 5% VAT rule might apply when an individual buys a property from, for instance, a developer or even a company. As any company (e.g. developer, or foreign owner who has new property in his company) selling a property to a private individual, it has to invoice with the standard 24% VAT. But as a first time buyer in Romania, one can reduce the sales prices (which contains 20%) to a sales price including 5% VAT if the property meets certain criteria. According to Government Emergency Ordinance 200/2008, a modification on the Fiscal Code, individuals can buy with a reduced VAT rate if
- the property purchase price excluding VAT is less than 380.000 RON equivalent in EURO
- the usable surface space is < 120 square meters
- the adjoining land quota is not greater than 250 square meters.
- The 5% VAT rule (when as an individual buying a property from a Romanian company e.g developer) can be applied only once per person/family. As an example: a husband and wife can only benefit ones. If they are boyfriend girlfriend, and the girlfriend does not appear on the property title of the boyfriend, she also can benefit from the
5% VAT rule for a property she wishes to purchase.
Finance – how much does it cost to buy a property in Romania?
Here is a brief list of what you may expect in the way of purchase costs. Please be aware that these costs have changed dramatically over the last few years and you need to make sure exactly what they are when you buy.
At the time of writing they are as follows:
• Agent’s commission: When buying property in Romania the buyer and seller share the commission, which can be from 2 to 4% of the price per party. (We charge 2%). Be aware too that some agents also charge a daily viewing fee which will be refunded if you buy a property from them. We don’t charge this fee.
• State or Local tax: This is the equivalent of the UK stamp duty and is approximately 2 – 4% of the property price. It is set by the local municipality and may vary depending on the location of the property.
• Notary fees: The notary witnessing the purchase charges a fee of between 0.5% % 1% of the sale price. The fees are set by the government and depend on the purchase price of a property.
• Translator’s fees: As a non-Romanian, you are legally required to have all Romanian documents translated into your native tongue by a registered translator.. The cost of this will be approximately £50.
• Surveyor’s fee: This is optional and will vary but is usually not greater than €150 for most purposes.
• Value Added Tax: The sale of property for residential purposes is exempt from value added tax.
Additional info: some “brave individuals” thought they could build/buy many properties in a given year, renovate them, and then the next year sell them all at a profit. According to the interpretation of the fiscal code, many fiscal inspectors are now taxing VAT to those sellers who have made a continuous business out of it. Typically if an individual has a primary residence property and has a holiday home, and sells the latter, he/she wont have problems with the tax office even if the sales price of the holiday home exceeds 35.000 EURO. But if the same individual has 4-5 holiday homes, and sells them all in one fiscal year (the transaction value exceeding 35.000 EURO), VAT would need to be paid by the seller on each purchase. Therefore, instead of the seller going back to the buyer saying “You owe me VAT”, the buyer should be protected in all cases as one can never
know if the seller makes a business out of it. As mentioned, the seller in this example is an individual (as companies may sell as many properties as they want, for which they are being taxed anyhow -VAT and profit tax-)
Finding a property Romania – where should you start?
Find property in Romania with WhiteMountain.ro – the best place to search for property in Romania. From the shores of the Black Sea to the snowy peaks of the Transylvanian Mountains, Romania is a country with a stunning natural beauty and property to match! A great selection of villas, cottages, farmhouses and apartments in Romania mean that finding your ideal property has never been easier.
White Mountain Property lists the latest property in Romania.
To find out more on how to finance and find a property in Romania, search for EasyCredit in Bucharest (chap called Stefan Willems, highly recommended & no kickback to us involved!)
Legalities – How are estate agents regulated Romania?
Estate agents, al though not needing to be licensed are subject to the government regulations as set in Government Ordinance 178/2008, which were inserted in Government Ordinance 21/1991 (“Consumer Protection Act”).
Estate agents are not controlled by any auditing bodies in Romania. What you should check, however, is their qualifications and how long they have worked in the market. If you do decide to go with an agency in Romania always ask the basic questions: how long they have been in business? Can they provide satisfied customers for you to chat to? Are they part of any estate agency industry regulation?
Remember, you are NOT making a new best friend – leave that British reserve at the door and ensure that you satisfy yourself as to the integrity and the track record of the agents you choose.
Settling in to Romania – how can you make friends?
Life in a new country can be daunting, even more so when you move to a country which speaks a different language to your mother tongue. Why not become a member of the online forum – InterNations. The forum is especially for ex-pats, including those living in Romania. Aside from chatting over the Net they also hold regular get-togethers so that you can meet members. There are also many other ways to meet people; how about learning a few basic phrases in the Romanian language, things which you can use daily such as ”how are you?” or ”one coffee please.”
To find out more on legalities, moving and settling into your new home in Romania, contact us at www.WhiteMountain.ro. We will be happy to help.