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Romania facts sheet on real estate property
BUYING PROPERTY in Romania
Romania is EU candidate country, expected to join during 2007.
*Why buy property in Romania.
Real estate property is used for living in, investing (houses to let, business), vacation or agriculture. Prices rose steeply during the last 2-3 years, especially in the capital, Bucharest. Prices are for up to 1.200 ?/sqm for a piece of buildable land.
* Where to look in order to buy property.
For buying property you have to contact a serious real estate agent or to conduct your own search by reading advertisements in the newspaper or websites. Estate agents charge only in case of success, some-times both the seller as well as the purchaser. Also real-estate specialised lawyers have good contacts with real estate agents.
* How to proceed for buying property?
You have first to establish your selection criteria (e.g. purpose, site, price, neighbour-hood, means of transport etc.). Then you perform your search for the objects (see previ-ous point) and make a short list of possible ones. The real estate agent or the lawyer will help in determining the legal situation of the object, which is recorded in a land register (avoid objects for which the legal situations not clarified, e.g. with conflicts be-tween former rightful owners and new ones). Because paperwork is intransparent and application rules are fluctuating, it is recommended to appeal to a solicitor or to a seri-ous real estate agent for handling it.
Parallel to the selection process, you have to look for a mortgage contract. Mortgage is offered by banks, eventualy by the real estate agent, in ? or in local currency, inter-est rates in local currency are lower than those in local curreny (ROL or RON, 1 RON= 10.000 ROL, both still valid; ! ? is fluctuating now around 3,6 RON).
For expensive objects it is recommended to consult civil experts who will evaluate the quality and price of the object.
* What legal arrangements are necessary?
A lawyer is not necessary, but is recommended for a foreigner. After having selected the object and obtained the mortgage contract, the transaction has to be legalised by a notary, who will also perform the transcription into the land register. Sometimes buyers insist to make a precontract.
* What taxes will be paid upon purchasing?
You have to pay taxes/honoraries to the state, and to the notary and eventually to the lawyer. The total amount of taxes rises to about 3% - 5% of the price of real estate (depending on the value of the transaction).
* What taxes will be paid later on?
You have to pay annual taxes to the state and to the local authorities. Their amount varies form site to site. Taxation rules are often changing. If you own several properties, taxation is much higher.
When selling the real estate before three years, you have to pay an added value tax upon the difference between the selling and the purchase price. The proposed rate, which has not yet been fixed for 2006, is 16%.
* Recently (14.11.2005) the law 312/2005 has been adopted, regarding new provisions on land ownership for foreigners in Romania. The law will come into force from the country?s date of accession to the EU. The law stipulates that the citizens of EU member states (non-residents in Romania), stateless persons domiciled in a EU member state (non-residents in Romania) and legal entities registered in a EU member state can own land in Romania in five years from Romania's accession date for lands for secondary residences or for secondary headquarter and in seven years from Romania?s accession date for the agricultural lands, forests and forested lands.
Others provisions regard the fact that the foreign legal and natural persons or stateless persons residing in countries other than EU member states can own land in Romania according to provisions of relevant international treaties, mentioning that these provisions cannot be more favorable than the one for citizens and legal entities from the EU.
However, any foreign natural or legal person can set up a legal person in Romania (a romanian commercial company) which has the right to buy any type of property (including land) whitout restrictions.
Romania is EU candidate country, expected to join during 2007.
*Why buy property in Romania.
Real estate property is used for living in, investing (houses to let, business), vacation or agriculture. Prices rose steeply during the last 2-3 years, especially in the capital, Bucharest. Prices are for up to 1.200 ?/sqm for a piece of buildable land.
* Where to look in order to buy property.
For buying property you have to contact a serious real estate agent or to conduct your own search by reading advertisements in the newspaper or websites. Estate agents charge only in case of success, some-times both the seller as well as the purchaser. Also real-estate specialised lawyers have good contacts with real estate agents.
* How to proceed for buying property?
You have first to establish your selection criteria (e.g. purpose, site, price, neighbour-hood, means of transport etc.). Then you perform your search for the objects (see previ-ous point) and make a short list of possible ones. The real estate agent or the lawyer will help in determining the legal situation of the object, which is recorded in a land register (avoid objects for which the legal situations not clarified, e.g. with conflicts be-tween former rightful owners and new ones). Because paperwork is intransparent and application rules are fluctuating, it is recommended to appeal to a solicitor or to a seri-ous real estate agent for handling it.
Parallel to the selection process, you have to look for a mortgage contract. Mortgage is offered by banks, eventualy by the real estate agent, in ? or in local currency, inter-est rates in local currency are lower than those in local curreny (ROL or RON, 1 RON= 10.000 ROL, both still valid; ! ? is fluctuating now around 3,6 RON).
For expensive objects it is recommended to consult civil experts who will evaluate the quality and price of the object.
* What legal arrangements are necessary?
A lawyer is not necessary, but is recommended for a foreigner. After having selected the object and obtained the mortgage contract, the transaction has to be legalised by a notary, who will also perform the transcription into the land register. Sometimes buyers insist to make a precontract.
* What taxes will be paid upon purchasing?
You have to pay taxes/honoraries to the state, and to the notary and eventually to the lawyer. The total amount of taxes rises to about 3% - 5% of the price of real estate (depending on the value of the transaction).
* What taxes will be paid later on?
You have to pay annual taxes to the state and to the local authorities. Their amount varies form site to site. Taxation rules are often changing. If you own several properties, taxation is much higher.
When selling the real estate before three years, you have to pay an added value tax upon the difference between the selling and the purchase price. The proposed rate, which has not yet been fixed for 2006, is 16%.
* Recently (14.11.2005) the law 312/2005 has been adopted, regarding new provisions on land ownership for foreigners in Romania. The law will come into force from the country?s date of accession to the EU. The law stipulates that the citizens of EU member states (non-residents in Romania), stateless persons domiciled in a EU member state (non-residents in Romania) and legal entities registered in a EU member state can own land in Romania in five years from Romania's accession date for lands for secondary residences or for secondary headquarter and in seven years from Romania?s accession date for the agricultural lands, forests and forested lands.
Others provisions regard the fact that the foreign legal and natural persons or stateless persons residing in countries other than EU member states can own land in Romania according to provisions of relevant international treaties, mentioning that these provisions cannot be more favorable than the one for citizens and legal entities from the EU.
However, any foreign natural or legal person can set up a legal person in Romania (a romanian commercial company) which has the right to buy any type of property (including land) whitout restrictions.
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