According to the current Bulgarian legislation, foreigners can purchase only the leasehold, but not the freehold (the land) of a property. Therefore, all non-Bulgarians have to set up a limited company in order to purchase a property (the freehold). Even though, it might sound complicated, this is simply a vehicle to purchase the property and there are no requirements for the company to be operational. No one so far has been refused to set up a limited company, regardless of their financial or criminal record. Setting up a limited company is not required when purchasing an apartment since technically you own the leasehold only and not the freehold (the land).
The procedure of setting up a limited company takes between 3-5 weeks and costs €500 - €600. You will just have to choose a name for your company. With the business bank account application form you will also have to deposit a statutory capital of BGL3,500 (about GBP1,400), which however, upon completion of your purchase, you can withdraw back. These funds therefore will be “locked" only from the moment of the bank account application until the completion of your purchase (usually 3-4 weeks).
Once you decide you like a particular property, you make an offer and if successful you will have to put down 10% deposit with the solicitor. If you decide not to proceed with the purchase at a later stage though, your 10% deposit is not refunded. If the seller decides not to proceed with the transaction, or the results from the local searches do not allow the transaction, your deposit should be refunded to you in full. This is the standard practice in Bulgaria.
Since completion can be done only after the limited company is registered (3-4 weeks after initial application) you will have to either come back in a month's time for the completion or give your solicitor or anyone else you trust a Power of Attorney to complete the purchase on you behalf. At the completion, the remaining 90% of the agreed purchase price has to be sent to the solicitor's bank account.
Stoyan Raykov is manager of the UK-based agency http://www.bulgariaproper and can be reached for further information at info@bulgariaproper .