The housing market in Bucharest consists mainly of apartments in blocks of flats in residential neighbourhoods located outside the centre of the city. Detached houses can be found in some areas, but are less frequent on the real estate market.
Most of the apartments on the Bucharest property market are either dating from the 70s-80s decades or were erected during a construction boom that occurred after the year 2004, when newer blocks were built in abundance in outer neighbourhoods of the city. The newer apartments usually have modern fixtures and cheaper utilities, and are more spacious than older ones, resulting in the age of the building being among the most important factors that influence the value of the square meter.
The prices are usually expressed in euro, although they must be paid in lei (RON), the local currency. A square meter in a Bucharest property costs between 700 and 2000 euros, depending on the age of the building, the neighbourhood, the furnishings and condition of the house or flat.
Foreign citizens residing in Romania (i.e. possess a residence permit) are allowed to buy residential property in the country in the same conditions as Romanian citizens. E.U. citizens that do not hold a residence permit in Romania are also allowed to buy residential property in the country.
Online listings are a great starting point for your search of a property in Bucharest. Browsing announcements can give you an initial idea of the housing market in the city and the prices at that specific moment, and enables you to screen out unsuitable properties before visiting them.
Newspapers are not a popular way of advertising property in Bucharest nowadays. Please refer to the online listings section above.
Some places such as cafes, grocery stores, bookshops, or bars may have boards in which people can post their advertisements. It is less common to find real estate ads there, but you might have more chances in places that cater specifically to expats or foreigners.
It is highly recommended to use the services of an estate agent if you are seeking to buy property in Romania. A real estate agent knows the peculiarities of the local housing market in the area you are searching, is aware of the latest apartments that were put on sale and will assist you in selecting a place that corresponds to your criteria.
Additionally, the agent will also help you navigate through the legal hurdles of buying an apartment as a foreigner, offer counselling in relation to the contractual clauses that are most advantageous and will put you in contact with legal advisors or accountants.
It is advisable to work with more than one real estate agency, in order to have a wider array of properties to choose from. A list of the real estate agencies in Romania can be found here.
Note, however, that the services of many real estate agents in Romania are extremely poor. It is crucial to select an agent that can be trusted and offers a complete range of services to foreigners, especially if you don't speak Romanian. Inquire your friends, work colleagues or any expat communities such as the Easyexpat Romania forum for recommended agents. In case you were relocated to Romania by your company, they might have a list of preferred real estate agencies.
After deciding upon a suitable property, you should make an offer through the real estate agent, who will be communicating it to the seller. The seller may accept it, decline it or decline it with a counter offer and the negotiations may continue over the price.
Once an offer is accepted, the agent will prepare a pre-sale agreement with the details of the buyer and seller and the details of the property, and will inform you of the documentation needed and the steps to proceed.
The pre-sale agreement should be signed in the presence of the public notary. Before signing the agreement, and always in the presence of the public notary, you have the right to verify the seller's original documents attesting his identity and the legal title over the building and/or the land underneath. The documents that you may ask at this point are:
The pre-sale contract will include information about the final selling price, the advance payment to be made, the payment method, the deadline for signing the final selling contract, and the deadline for handing over the property.
A commission of around 2% of the value of the property is usually requested by the agent once the offer has been accepted.
Before signing the contract, it is recommended to hand it to your lawyer or advisor for examination, in order to make sure you are acquainted with all the clauses in the document.
Note that in Romania all signed agreements must be ratified by a public notary. The notary will also be responsible for checking the legal title of the property sold, the land registry number, and ensuring the property is free from mortgages, pledges, liens or other liabilities.
The contracts will usually contain the following elements, as a minimum:
Payment is usually done in at least two instalments - the deposit amounting to 20-30% of the price and the final payment. In order to facilitate payment of large amounts of money, you may consider opening a bank account in Romania.
Note that although the price is expressed in euro, the payments are expected to be made in Romanian lei (RON), at the exchange rate at the date of the payment.
If you do not have sufficient funds readily available, you could contract a mortgage.
Not all banks in Romania offer mortgages for foreign citizens, and they are usually granted once you have a temporary or permanent residence in the country. Some banks, among which BCR, BancPost or GarantiBank do offer house loans for foreign residents, but it is best to inquire with other banks as well, as the range products offered by each bank can change.
The documents typically requested for a mortgage loan in the case of a foreigner are as follows:
The loan repayment period can vary depending on the value of the loan and your reimbursing capacity, but it is most commonly 20 to 30 years. Over this period, an interest is due, which usually has two components, a fixed one and a variable one.
The VAT rate currently applied to real estate transactions in Romania can be either the standard one at 24%, the reduced 5% rate or 0%, depending on a rigorous and detailed set of criteria outlined in the Romanian fiscal code. A Real Estate Transfer Tax is also due, which is computed as a percentage of the selling price that varies depending on the payment terms and the value of the property. In both cases, it is recommended to work with your real estate agent and a tax advisor in order to determine exactly which VAT rate and Real Estate Transfer Tax is due in your particular case.
Additionally the following types of fees are due:
Real estate tax in Romania is 0,1% per year on the value of the property.
Once drafted and agreed upon, the final contract is signed by both parties and the payment is made in the presence of a public notary. The property will then be registered with the land registry into the new owner's name.
The public notary will also register the contract with the local tax authorities.
Buying at auctions is an option if you are interested in buying properties at attractive rates. Auctions are usually organized by banks, for apartments where the owners were unable to repay their mortgage loans. Keep in mind, however, that there are numerous pitfalls associated with this practice in Romania. The auction is organized without the possibility for the prospective buyer to visit the property, and the houses are often still occupied by the previous dwellers and further legal action is needed to take physical possession of the property.
A 10% guarantee is needed in order to participate in an auction, as well as a written letter addressed to the auctioneer. You should be ready to make the final payment and all the related fees within 30 days after finalizing the auction.
Most auctions are found on the websites of the commercial banks. In addition, a great resource is the auctions section of real estate portals such as Imobiliare.ro.
Note that this practice is not for novice real estate buyers. If you decide to buy property at an auction, it is recommended to have a knowledgeable agent or lawyer assist you through the process.