Britons Now Prefer Urban Property to Country Estates in Bulgaria

As Bulgaria and Romania celebrate joining the EU, thousands of their citizens are expected to come to the UK in search of better-paid jobs. But what about the tide flowing in the opposite direction? Are British bargain-home hunters welcome there? And what possible pitfalls await them? Alex Spillius and Andrew Eames report.
 
Friends, Romanians, countrymen...

Bulgaria has always been cheap. This week it became not just cheap but also a member of the European Union. And that will lead to even more foreign homebuyers seeking bargains in the former communist state.

Over the past couple of years, British buyers have led the rush to Bulgaria, snapping up apartments on the Black Sea coast and in ski resorts such as Bansko. Now, the country's status as part of the expanded, 27-strong EU is likely to attract shoals of purchasers who will feel more comfortable about buying in a country they know little about.

Already, warnings of over-development are being sounded. Even Bulgaria's tourism ministry has complained that a glut of planning approvals for new hotels and apartment blocks in the mountains and on the coast risks damaging not only the environment but the tourist trade itself. That is leaving aside the Irish pubs, fish-and-chip shops and cheap souvenir stores.

It is also far from certain if promises of rental or capital profit given to buyers of apartments in Bansko and Sunny Beach - the main Black Sea resort - will be fulfilled, although with two-bedroom apartments priced at 40,000 pounds (60,000 euro), this is unlikely to deter potential bargain-hunters. Besides, Bulgaria still offers a remarkable range of properties, and new frontiers are opening up fast. Foreigners are buying to let in the capital, Sofia, and grabbing old houses in central mountain villages, mostly as holiday homes which they also let. In both locations, patience, preparation and realistic expectations will be well rewarded.

Among the pioneers up in the mountains were Annie Thomas and Tom Davies, who bought three years ago in the village of Mindya, near the medieval capital, Veliko Turnovo. Like many others, they were motivated first by the staggering cheapness of property advertisement.

They had lived and run a cafe on the Greek island of Paxos for years but found homes there unaffordable. After a few days' house-hunting, Annie settled on a property comprising a handsome, early 20th-century main house with a tiled roof, plus a back house and three barns. They paid 9,300 pounds (14,000 euro) and spent about 11,000 pounds on renovations, which left them with seven rooms, including bathrooms, a cellar converted into a study, and a loft over the barns.

Since they took up residence in early 2004, 10 to 15 other Britons have bought in the village, which has only about 600-800 homes. They have become ad hoc advisers to later arrivals.

"We love it here," says Annie, 66. "We have mountains, rivers and we are just 20 minutes from town. There is a good mayor and - I have to be careful here - no gipsies, who can cause problems. Villagers will accept you. The British find the level of acceptance here very high: the Bulgarians are easy people to live with."

By their own admission, Annie and Tom do things differently to most expats. They live in Mindya all year round, grow many of their own vegetables and struggle nobly with the language. Every year in mid-December, the local men ask Tom to assist with killing a pig or two - most households keep one, which is slaughtered to provide meat throughout winter. He attends but keeps a polite distance at the crucial moment.

Unlike some British buyers, they wisely stayed on site while their house was renovated. "My advice to anybody doing this would be to ask a lot of questions - don't be afraid because if you don't ask, they might not tell you," says Annie. They consider themselves lucky that the house was habitable when they bought it. The lavatory was in an outside shed and simply drained into the land. The builder they found locally dug them a cesspit.

Two villages up the road, in Cerova Koria, Bill and Jane Watson strongly advise hiring an architect and taking extra care in choosing your builder. They should know: they went through two in a few weeks because their work was substandard. The first put a new lavatory in the middle of a room. The plastering was shoddy. Walls were built on weak foundations. "You have got to be here and to demand to see examples of the builders' work before they start," says Jane, 38.

We met on the building site that will be their guesthouse. They originally bought a 1,500 square metre farmhouse - with outhouses and barns - for 22,000 pounds as a holiday home, which they planned to rent out. Then they got rather carried away, sold their house in Bristol, gave up their jobs as a logistics manager and boss of a car valeting company respectively, and put all their eggs in to a rather obscure Bulgarian basket.

It is no longer so obscure. Tourism is growing in the area, and the landscape is undeniably impressive: even in winter, it has an austere beauty that, in warmer seasons, becomes splendid and radiant. But the villages, while attractive, lack a certain quaintness. After the fall of communism in 1989, they were badly depopulated as the young fled rural cooperatives to seek work in towns and cities, and now only the old folk are left. There are few of the charming cafes, taverns or bakeries that make other southern European countries so desirable.

In short, it isn't Tuscany, though at those prices it wouldn't be. Nor will Bansko ever be Chamonix. But as a cheap and pleasant, long-term holiday-home location, Bulgaria has a lot going for it. That said, however, those aiming to make quick money from a resale or a handsome rental profit need to think twice.

Prices generally have appreciated by 30 per cent in four years, and are forecast to rise another 10 per cent this year, but anyone who bought three to four years ago and is looking to sell property on quickly will be chasing foreign buyers who are also being offered a variety of new developments.

In a country with an average wage of 150 pounds per month, the local buyers just aren't there, warns Natasha Copeman, of Asta Bridge International, which specialises in off-plan developments. But she predicts a rush of buyers, thanks to Bulgaria joining the EU. "Accession will give confidence to clients who have been sitting on the fence," she says. "Clients like to feel safe, especially someone buying overseas for the first time. The EU has already helped with regulation. Two or three years ago, they didn't have build guarantees - now, they are required by law."

Even after accession, foreigners will still have to jump the bureaucratic hurdle of forming a local company to buy land surrounding their property. It is an easy enough process with the right lawyer, who can be found through the British consulate and is often recommended by an agent. But again - as with builders - it pays to talk to buyers who have been down the same road.

For those looking at Bulgaria purely as a rental investment, agents are warning against over-optimism. "Take your time choosing and, if investing, don't believe the figures: be realistic about yields," says Ms Copeman.

Julian Georgiev, of Homes in Bulgaria, observes: "The drift is towards the city centres as the next fashionable development concepts are towards shopping malls, offices and modern, city-apartment living. This has started to attract the more investment-conscious UK buyer.

"The biggest pitfalls are the buyer being over-excited and under-experienced. Most buyers in Bulgaria are first-timers and have little or no knowledge and experience."

The rental market is still too immature to regard it as a safe banker, he says. The population of Bulgaria continues to fall and there will be an immediate exodus from the country upon EU entry, depriving the rental market of middle income lessees, at least in the short term. Eventually, however, EU membership is expected to bring multinationals and corporations with expatriate staff requiring good accommodation.

None of this bothers Annie Thomas and Tom Davies. They are confident that they would double their money on their property if they chose to sell. "But where else would we go?" asks Annie. "This is home now."