Unfortunately a lot of people have been badly informed in relation to buying in Romania by agents who jumped on the Romanian band wagon for their own gain without regard for their investors. These agents who usually are British & Irish or Irish and British reflect very badly on the opportunities available in Romania.

A lot of people who have already bought in Romania really now need to do their due dilligence as I feel as much as 80% of the foreign advisers/agents have either deliberately or negligently misadvised there clients.

Investment Romania will try to answer short questions of peoples interest so as to allow them to make an informed decision. We cannot write essays but can give guidance for your benefit.

Feel free to ask so as to get insight and also beware some things you currently believe may not infact be true.

Examples of current mistaken beliefs are.


1. Buying through a company does not mean you avoid paying Vat.

2. The law does not state you must set up a company.

3. The agent may not do a good snag list for you before completion.

4. You will not get 10% rental return.

5. The promised terms of your mortgage may not be as you presumed.

6. Your property may not have increased the promised 40% over the past 2 years.

7. Management fees for the property must be known before your agent signs your contract.

8. You will not avoid capital gains tax after 3 years.

9. At this time getting a furniture pack is not your priority.

10. Taking time to read this post and maybe clarifying your position is time well invested so that you will not be pressurised at completion


While some of you might be disturbed by this post and think there is no potential in the Romanian market you could not be further wrong. This is an exceptional market with great potential, but unfortunately some agents who are your own nationality have already taken the investment out of peoples investment.



David Howe

Investment Romania - Property Romania, Invest Romania, Investment Romania

We are in the process of purchasing in Greenfields and have been using some of the prompts on this list to reconsider our options. It is worth knowing for those of you who are linking in with the financial broker into the romanian mortgage, then my understanding of the mortgage product is as follows: that the interest rate quoted (6.2%) is for the promotional year only , and then increases to the EURIBOR + 5.3% where the loan's LTV is less than 75% - which ours would be. The bank will also levy a .05% commission charge each month onto the balance owing. The redemption penalties are also steep from day one. Given that the rental yields do not come anywhere near the original predictions, this will make for heavy ground after the first honeymoon year. I clarified this with the broker and they confirmed these fees today.

I agree that at this point in time, furniture packages have a minimal focus!

Happy to engage in discussion where needed

EURIBOR is currently about 4.7% and if plus 5.3% am i correct in saying 10% and if there is an additional 0.5% commission charge each month onto the balance owing this would equate to somewhere in the region of 16%?


Not sure I have this right, but based on your figures this is criminal and without taking into consideration penalty clauses for early redemtion or arrangement fees.

The other thing I wonder if you could clarify is whether it is a Romanian mortgage or the finance is through a subsiduary of the selling agent.



Rates in Romania are normally no where near this amount, hence the opportunity that is to be had in Romania.

we are being asked to set up a companyto complete our purchase at sydney development in tunari as romanian legisation with regards to ownership of land for foreign citizens has not changed & are being asked to pay a significant amount for this to be set up .any advice & is this necessary as we intend to rent out the property

This would only be a good idea if the company you are setting up is a subsiduary company of one you have in Ireland or else where. Otherwise to set up in your own name would in our opinon be economic suicide as all profits will be groosly diluted.

As regards to ownership and Romanian legislation you are mistaken in fact and law.


Please contact us directly if you require assistance in how to proceed.


David Howe

Investment Romania - Property Romania, Invest Romania, Investment Romania

Dear David

I have read your posts here and on your web site and have found them very informtive and helpful. I am considering buying an off plan at present in Banessa and was wondering if you could give me some pointers as I would obviously like to avoid the pitfalls that many seem to have fallen into.


What would you advise me as a first time buyer to avoid.


Thank You

Dear Roy


Thank you for your kind comments. I will attach some key points in my opinion, but please bear in mind this is for guidance only and no doubt I will have missed on other points which I would be obliged if others would add to.



1. Believe absolutely nothing you are told until you have verified it else where.
2. Under pain of death do not set up a company unless it is a subsidiary company of your UK or Irish company. Do not set up in your own name. The law does not state you must regardless what agents say.
3. Look at the development you are buying, is it only being sold to the foreign market?
4. Location is the 2nd most important factor of any property, value is the first. Are you getting both?
5. Is there going to be an over supply of rental properties.
6. Are the rental returns you are being told realistic.
7. If your projected rental return is over 6% be suspicious.
8. What are the maintenance charges on the property? These should be no more than 40 cents per meter. Anything above this will be a burden on resale.
9. Beware of borrowing. We have recently saw one companies lending fee jump from just over 6% to 16% after year one. Know your arrangement fee for mortgage, interest rate for 1st year and most importantly the 2nd year. What is the early repayment fee.
10. Beware of guaranteed rental return. You may get your 6% rental return for year one, but will be obliged take their furniture pack at an extortionate rate get this. This can amount to 4000 euro more than else where. Then they will take 15% management fee not to mention another 1 maintenance fee with effect you will be paying for your guaranteed rental return. An investor should be buying a property that the market guarantees not the agent.
11. If going on an inspection trip make a decision before you go that you will not make a decision until you return home and stick by this. If being pressurized to commit to purchase continue to repeat this statement and stand by it. If it is as good as you think, it will still feel as good when you go home.
12. What is the finish? What sort of heating is in the property, gas electric, mains gas or tank?
13. If ground floor bear in mind you will need a security door and security grids or shutters on the window and this is additional cost.
14. Ask to speak to previous purchasers with your agent so as to get an insight into their service.
15. Does the agent handle the property management or is it good luck to you once you have purchased.
16. Make sure you have a contract with the selling agent so they to will be liable.
17. Be aware may prices do not include VAT so can be deceiving.

I am a lawyer in Bucharest and I can assure you, you do not need a company to make your purchase. Anyone who needs legal assistance please feel free to contact us.

office@tarusiasociatii.ro

In addition to the below, it seems that some developments are being sold with collective sewage systems that must be emptied each month at a cost of 75 euro. Check if you are in the mains sewage system or this culd be another additional cost you have to pay.

hi

we are also purchasing in sydney, cuold you send me a personal email to contact you on?