THE BUYING PROCESS

While many restrictions upon foreign buyers have been removed, this is a very young market and there are still problems to be faced. However, now that Romania is a member of the EU, many of these obstacles are being removed.

Stage 1: Restrictions on foreign buyers

Foreigners who want to buy a property in Romania should be aware that they do not enjoy the same level of freedom as local buyers. In order to purchase land, you will need to set up a limited Romanian company. This is likely to be phased out within five years of EU accession, but for now it is a requirement. It’s a mere technicality and will only set you back by £300, but make sure you employ an English-speaking lawyer based in Romania to take you through the process. While you could complete this within one day, it is more likely that it will take between two to three months to process. There are no restrictions on buying property.

Stage 2: Financing your purchase

In 2006, the Romanian mortgage market was changed to allow foreigners to secure a mortgage in the country. However, while this may be possible in theory, in practice it is still early days and some banks may be rather reluctant. If you’re buying land, you may also have problems persuading a bank to lend to a company with no credit history.

Consequently, it is recommended that you secure your mortgage through a specialist mortgage company or by raising the money through remortgaging your UK home. It is possible to secure a mortgage in a variety of currencies and typically; you’ll be looking at 75% LTV.

Stage 3: Surveys

Many of the older Romanian buildings are structurally unsound and although getting a survey carried out isn’t something that is typically part of the conveyancing process, it is well worth doing.

Stage 4: The buying process

Before signing anything, ensure you have secured the best legal advice possible, especially as Romanian property titles can be defective. You also need to secure the services of your own lawyer as the notary in Romania is a neutral party.

Once you have found a property you like, the first step is to reserve it through a reservation contract. Once you have reserved the property, you can sign the preliminary contract. This binds both the buyer and the seller to the sale, so ensure that the property title has been checked and is clean before you do so. Should either side pull out, it will result in court action, which can be a costly and lengthy procedure.

Once the preliminary contract has been signed, you will need to pay a 10 – 20% deposit and then begin a thorough round of background checks on the property and secure all outstanding funds required to complete the conveyancing purchase.

Stage 5: Titles

Romania is a country fraught with problems when it comes to real estate titles. Under the dictatorship of Ceauşescu, land and property were confiscated and since his downfall, previous owners have been entitled to reclaim it – many cases are still in court. Consequently, potential buyers must ensure they do their homework and avoid buying a property with a defective title or with ownership which is under dispute. Employ a lawyer and get them to check everything from the property being in an earthquake zone to having more than one owner named or any outstanding fees against the title.

Checking the property’s background has been made difficult due to the poor health of the land registry system. While the government is striving to clean up the entire process, progress is painfully slow. Once you have completed the sale, the contract will be sent to the land registry office to transfer the property into your name.

Stage 6: Completing the sale

Once you are assured that your lawyer has exhausted the background checks on the property title and secured all the necessary paperwork – including either your company registration documents or your permission to buy – you can go ahead and sign the final contract in the presence of a notary. Once signed, you will need to pay the remainder of the balance of the property price.

Stage 7: Additional costs

Purchasing costs are lower than in many other Eastern European countries, roughly around 3 – 4% of the price of the property. Stamp duty is around 2% of the property price, estate agents’ fees between 2 – 6% and legal fees between 2 – 10%. Notary fees usually come in at around £200.