Britons considering buying property in eastern Europe have been issued with a warning. Currently three property investors in ten think eastern Europe is the place to invest to get the best returns over the next ten years, but buying overseas property is rarely as simple as it seems. “It’s a good idea for buyers to consider higher risk, high return properties to go alongside low risk investments that make up the bulk of a successful housing portfolio,” said Anthony McKay of the Inside Track Group, which commissioned the survey.
“In Croatia and Bulgaria, though, inexperienced investors are putting their life savings on the line in the hope that they can make a fortune. I fear many people may end up bitterly disappointed because they are not aware of the complications within this market.” Inside track recommends that people thinking about investing in any foreign country ask some key questions first.
These are: Will the re-sale value be more than the purchase value? Will the property be desirable to rent? Will the asset be safe? “For the Croatian and Bulgarian markets, the answer is likely to be ‘no’ for at least one of these questions,” said Mr McKay. Inside Track points out that before it recommends any country to property investors, it analyses the political stability of a country, its legal system and also the transport and banking infrastructures. Potential problems for people investing in eastern European property
- There is no legal organisation that regulates home ownership in Croatia, leading to a lot of confusion the country’s land registry system can allow the person selling a property not to be the owner
- Some properties in Croatia have been built without appropriate permission In Bulgaria, investors must establish a limited company before they can purchase land
- Tax regulations in Bulgaria can be extremely confusing
- The average wage in both Croatia and Bulgaria is low, meaning most locals cannot afford to rent new build properties, and investors are limited to foreign tenants only