Investing in real estate is often seen as one of the safest choices. But, as with any investment, the real value lies in preparation, knowledge, and strategic decisions.

In Bulgaria, the property market offers exciting opportunities, but it also comes with its quirks, some of which are not immediately obvious to buyers, especially foreign investors.

Here are 10 of the most common pitfalls market participants encounter and how to avoid them.

1. Legal Risks When Buying Property in Bulgaria

Property encumbrances remain one of the most common traps for buyers, especially in deals made without a thorough legal check.

Notarial deeds, legal claims, mortgages, injunctions, or unresolved inheritance disputes can block not only the purchase but also future resale or development.

Even if everything appears fine during an initial viewing, the real picture often emerges only after checks with the Property Register, cadastre, and local municipality.

Our advice: Always request a detailed legal history of the property. Pay attention not just to ownership, but also to registered encumbrances, users, or imposed restrictions. Work with a real estate lawyer before signing any preliminary contract.

2. Off-Plan Property in Bulgaria: Risks and How to Avoid Them

Buying a property off-plan may seem appealing - the price is usually lower, and there are more options in terms of floor and orientation. But the risks are real: delays in construction, lack of developer financing, unclear timelines for obtaining Act 15 and Act 16, and no real penalties for delays or changes in specifications.

Many buyers enter these deals based on a "brochure" and verbal promises, without protection from an official contract.

Our advice: Choose developers with a proven track record. Demand a preliminary contract with fixed deadlines, penalties, an exit clause, and a clear property description. Ask questions like: "What happens if the developer fails to obtain Act 16?"

3. Unclear Clauses in Preliminary Contracts

Not all contracts protect the interests of both parties. Some preliminary agreements include clauses that allow the seller to extend deadlines at their discretion, change terms, or impose penalties that apply only to one party.

Such clauses are often overlooked by buyers signing under pressure, thinking it’s “just a formality.” But the contract is your main form of protection.

Our advice: Never sign a document without legal review. A professional contract review will save you money, time, stress, and legal disputes. Whenever possible, request reciprocal penalties and binding deadlines.

4. Administrative and Legal Requirements

The Bulgarian market is known for its bureaucratic hurdles, especially with properties pending regulation, buildings needing legalization, or deals involving complex ownership.

Buying a property doesn’t always mean immediate access to construction, renovation, or even utilities. Changing usage, connecting to infrastructure, and obtaining permits often takes longer than expected.

Our advice: Before finalizing a deal, check what’s needed to use the property as intended, be it living, renting, or business use. Include timelines and conditions in the contract tied to obtaining the necessary permits. Work with a consultant familiar with local administrative procedures.

5. Lack of Transparency

The Bulgarian property market is among the least transparent in the EU - public registers are incomplete, real market prices aren’t always traceable, and transaction histories are hard to access.

Investors, especially foreign ones, often rely on unofficial information, while listed prices in property portals rarely reflect actual market levels.

Our advice: Base your decisions on research, not listings. Use companies with access to current transaction data and partners who can provide realistic estimates of return and market value.

6. Unfair Practices

The market still suffers from underregulated practices, especially in real estate brokerage.

Buyers and investors often face fake listings, misleading photos, outdated prices, duplicate listings, no formal commitments from brokers, or even hidden fees.

This not only complicates the process but also undermines trust in the entire sector.

It’s common for multiple brokers to be involved in a single deal, with no clear contracts or accountability, leading to conflicts of interest and delays.

Our advice: Work only with registered agencies under written contracts that clearly outline services, fees, and responsibilities. Ask for written confirmation of exclusivity and proof of right to offer the property.

7. Properties With Illegal Status

One of the least understood and most overlooked risks is buying a property with illegal status. These are buildings constructed without a permit, but which are not subject to demolition under certain conditions (e.g., built before 2001).

The problem? These properties cannot be mortgaged, are hard to insure, and cannot be legally renovated or repurposed. They’re often not officially registered in the cadastre, complicating any form of investment management.

Our advice: Always verify whether the building has a construction permit and occupancy certificate. Don’t rely on explanations like “everyone in the neighborhood is in the same situation.” If the property has tolerated status, assess the risks carefully and consult a lawyer.

8. Complex Tax Obligations for Foreign Investors

One of the most common surprises for foreign investors is the tax landscape, which is not always clearly explained in advance. It includes:

• Differences between tax and market valuation

• 20% VAT on new construction

• No VAT on resale properties

• required declarations with various institutions

• potential double taxation without bilateral tax protection

  
  

This can lead to unforeseen costs, missed deadlines, and legal uncertainty without proper planning.

Our advice: Consult an accountant or advisor experienced with foreign clients before finalizing your deal. Look into double tax treaties and optimize ownership structures (personal or company-based).

9. Unpredictable Changes in Urban Planning

Local authorities in Bulgaria can modify general and detailed urban plans (OUP/PUP) within their jurisdiction.

The issue is that such changes often happen without sufficient public notice, which may unexpectedly affect your property.

An investor might buy a property for residential development, only to later find it rezoned for infrastructure, industrial use, or something else that limits its value or use.

Our advice: Check for active or planned changes to the local urban plan before buying. Monitor public records, attend public hearings, and for larger projects, consider legal representation at the local level.

10. Financing Challenges for Non-Residents

Non-residents (especially from outside the EU) face tougher mortgage requirements than local citizens:

• 30–50% down payment required

• Need to prove income generated in Bulgaria

• Complex document legalization and translation

• Limited number of banks working with foreigners

  
  

This makes financing difficult or even impossible, putting foreign investors at a disadvantage.

Our advice: Plan your financing ahead of time before signing anything. Use mortgage consultants experienced with foreign clients who can help navigate bank requirements, product options, and document coordination.

How Vaisman Investment Group Can Help You Avoid These Pitfalls

Each of the above risks can be avoided with the right preparation, partners, and strategy. At Vaisman Investment Group, we don’t just monitor the market. We’re active participants on the investor’s side.

• We help clients conduct full legal and technical due diligence.

• We assist with legal review of contracts to protect your interests.

• We work with trusted developers and subcontractors for off-plan purchases.

• We provide in-house and partner support for tax planning, administration, and financing, including for foreign investors.

• We offer transparency, up-to-date market data, and access to off-market opportunities that aren’t publicly listed.

• And most importantly, we view your investment not as a transaction, but as a long-term commitment that should grow in value over time.

  
  

If you're considering real estate investment in Bulgaria and want an experienced partner who thinks like you do, get in touch. We’ll walk through your project step by step and show you what a sustainable approach in action looks like.