The new airport, which will be located 166 km from Bucharest, will certainly help attract more foreign property buyers to the country. With the increased numbers of flights into the area, it is hoped that numbers of tourists will increase. This should increase not only property prices in the area, but also rental yields making the area attractive for property buyers who are looking to buy in Eastern Europe.

At present, the Romanian property market is not fairing too well. Experts have said that property prices throughout the country have dropped by between 20 and 30 percent and real estate fairs see property developers promoting a range of buyer offers – from furniture to extra parking spaces. Thanks to the drop in prices, overseas property investors who are willing to take a risk may see large returns on their investment if they choose to buy now.

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Developers have already moved in and property prices are already on the move upwards with many predicting prices to reach the heady height of a 30% return in 2007. New apartments are being completed in most of the major towns and cities, increasing the property range on the market.

However, at present, non-Romanian nationals cannot own land, although they are allowed to own property. This means that it may be necessary to form a company in Romania to ensure that you can own the land your building stands on. There is no VAT payable at present so a company should not set you back too much money.

The Buying Process

Once you have found a property you would like to buy, reserve it. It is wise to find a lawyer as soon as you can so that you can setup your company and a purchase contract can be reviewed. To setup a company takes around 1-2 weeks and once setup, the lawyer can set up a bank account in the company’s name – you will need this as payments to the vendor and other costs must come out of this account (note that any payments will be tax deductible anyway). If you are purchasing the property as a company, you will not be able to pay for the house out of your personal account.

An accountant will also probably need to be employed to look after the company finances (such as the tax returns). The accountant will need all the information that you have on the company – from company name and number through to shareholders and a copy of the incorporation. It is wise to give details of your lawyer to your accountant and vice versa to ensure any documentation either may need can be dealt with swiftly.

Once the company is setup and the contract is deemed acceptable, you will need to sign the contract. There are two ways to do this – you can either fly to Romania to personally sign the contract, or you can grant the power of attorney to someone in Romania who can then sign on your behalf. When granting the power of attorney, we advise specifying the powers of the third party and limit them to signing the contract and no more. Your lawyer should be able to help you draw up a suitable power of attorney. Once the contract is signed, payment of the first installment is due from the company account.

Taxes and Fees

It is wise to budget around 8% for additional purchase fees and costs. The notary fees will be around the 2% mark with a transfer tax of between 0.5% – 3%. The buyer is expected to contribute to the estate agents fees of 6%. This is normally split 50/50 with the vendor, however check with your specific purchase.

You will also need to pay building tax. For companies, building tax is between 0.5% – 1%. If the building has not been revaluated in the last three year, you may face a bill of up to 10%. You may also be liable for land tax which is set at a fixed rate per square metre, however the rate and applicability will depend on where you buy your property.

If you are planning to rent the property out and it is owned by our company, the income rental will be taxed at 16% on all profits. However, remember that expenses incurred from the property and rental income are tax deductible.

If you sell your property at a later date, you may be liable for capital gains tax. Capital gains tax is set at 16%, or 10% if the property has been owned for two years or more.

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A PriceWaterhouseCoopers report showed that if Romania enters the EU in 2007, house prices in the country are expected to go up four-fold in the next 10 years and the resulting economic economy strengthened.  The A Place in the Sun analysis of Romania highlighted:A PriceWaterhouseCoopers report showed that if Romania enters the EU in 2007, house prices in the country are expected to go up four-fold in the next 10 years and the resulting economic economy strengthened.  The Place in the Sun analysis of Romania highlighted:

1. Potential Increase on Investment: 414%
2. Average Rental Yield: 11.0%
3. Average House Price: 25,000 euros

As interest in Romanian property increases, massive regeneration and infrastructural investment is predicted. EU accession property investors are also attracted by the much lower cost of living – most services and products are more than 50% cheaper than their European equivalents. 
Romania is also becoming increasingly popular as a holiday destination – it has a pleasant climate as well as a rich archeological and architectural heritage and fascinating history. It also has spectacular sceneries including mountains, beaches, beautiful rivers and waterfalls, phenomenal rock formations, national parks and sanctuaries for natural wild life. Romania is easy to reach from London with flights taking only 2 hours to Bucharest.

If you like to see a list of properties for sale in Romania, please click here
If you would like to find out more about buying property in Romania, we suggest the following books:

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