Extending inland halfway across the
Balkan Peninsula and covering a large elliptical area of 237,499 square
kilometres (91,699 sq. mi.),
Romania occupies the greater part of the
lower basin of the Danube River system and the hilly eastern regions of
the middle Danube basin. It lies on either side of the mountain systems
collectively known as the
Carpathians, which form the natural barrier
between the two Danube basins.
Romania's location gives it a continental climate, particularly in
Wallachia (geographic areas east of the
south of the Transylvanian Alps, respectively) and to a lesser extent in
centrally located Transylvania, where the climate is more moderate. A
long and at times severe winter (December-March), a hot summer
(April-July), and a prolonged autumn (August-November) are the principal
seasons, with a rapid transition from spring to summer. In
the daily minimum temperature in January averages -7oC (20oF),
and the daily maximum temperature in July averages 29oC (85oF).
Romania lies on the Black Sea coast of south-eastern Europe. The
Carpathian Mountains and the
Transylvanian Alps divide the country into
three physical and historical regions: Wallachia in the south, Moldavia
in the northeast, and
Transylvania in the country's centre. The majority
of the people are Romanian (89 percent), but the Hungarian minority,
living in the Transylvanian basin, numbers some 1.7 million.
Romania and the EU
includes links to Romanian government sites and Tourist Information.
The property buying process in
Romania is largely unknown to foreign
buyers, yet it can be relatively simple and efficient with the
appropriate knowledge and preparation. Three people can make the buying
process simple, secure and successful for you: a professional estate
agent/property consultant, a
reputable solicitor/lawyer (ideally English
speaking) and the notary.
European Accession for Romania took place in 2007.Based on previous
examples; property is tipped to rise by up to 50%. Laws have previously
caused difficulties for foreigners from owning property in
in line with EU policy, this will soon be changed.
No. 312/2005 stipulates the conditions in which European Union citizens
(as well as non-EU foreign citizens), are able to purchase Romanian
land. This is article 4 of the above-mentioned Law translates: “The
citizen of a member state without legal residency in
stateless non-resident having residency in an European Union country and
the non-resident foreign legal entity (company) incorporated per the
stipulations of the EU legislations, are able to gain ownership on land
for secondary residences, respectively secondary headquarters, in a term
of 5 years after Romania has joined the European Union”.
Law differentiates depending on the type of land. For example the
persons or legal entities mentioned above can only gain ownership of
Romanian forests, agricultural land after 7 years from the date Romania
has joined the EU. (This last stipulation is not applied to foreign
farmers who are able to prove their statute as farmers in their home
Buying an apartment in Romania automatically implies buying the adjacent
part (a percentage) of the land on which the building stands upon. As a
result even if theoretically foreign European Union citizens would be
able to acquire apartments directly, practically it is not yet possible
without a Romanian company or without having at least legal residency in
the country (this is a more recent interpretation of the Law).
all property purchases it is necessary to form a limited company that
can own land and register yourself as a company director.
Choose and reserve the property of your choice.
Employ a lawyer; the lawyer will then go though the process of setting
up a company in the client's name (requiring all the information on the
reservation form) as well as three options for the name of the company.
Once you have
made the decision of which property you wish to purchase, a
solicitor will write the pre-contract in English and
the seller and yourself. The pre-contract will mention the price of the
property as well as the deposit payment.
company set up takes about seven to ten days. Once the company name is
reserved, the lawyer is able to set up a bank account in the company's
name. This bank account is essential as all payments to the developer
and any other costs will need to come out of this account to be
considered a cost (and therefore tax deductible for the company) this
account cannot be activated until the company is incorporated. A client
is not able to pay from a personal account if they are purchasing as a
company. If a payment is made from a personal rather than company
account they will be liable for VAT.
the company setup is complete, the client will need to employ an
accountant to manage the company's finances, submit tax returns etc. The
accountant will require all the company information: shareholders,
company name, fiscal number and a copy of the incorporation document. It
is important that the accountant has contact with the client's lawyer to
ensure that any further required information can be easily passed on.
the accountant and the company have been established and the client is
happy with the contract, the next stage is to sign the contract. This
needs to be done in one of two ways: the client flying to Romania to
sign the contract personally, or a power of attorney can be granted to a
contact in Romania, be it a friend, family member or the appointed
lawyer. This is a specific power to sign the purchase contract in place
of the client; it affords no further control. To create such a document,
the client will need to ask the lawyer to draw up the paper and inform
the lawyer to whom they would like to grant this power.
final step in the process is to sign the contract (with a notary present
sourced by the lawyer of the seller) at the office of the seller or the
notary office. Once this is complete, payment of the first instalment is
due and paid from the company account as detailed above.
deposit will be required to be paid when you sign the pre-contract. 25%
of the property price (minus 1,000 euros) will be required to be paid
cash when you sign the final contract.
75% will be transferred by the bank to the seller once the final selling
contract is signed.
Budget around 5 to 8% of the purchase price for additional costs and
fees, including the notary (1.5 to 2%) and a transfer tax (0.5 to 3%).
In Romania, as a buyer, you may be expected to contribute towards the
estate agent’s fees of 6 per cent, which are often split 50/50.
You will need
to raise the cash or re-mortgage a property or properties in your own
country as mortgages are currently not available yet to foreigners.
Non-residents are taxed on their income from Romanian-sources. Married
couples can file tax returns jointly or separately. No allowances are
available for non-resident taxpayers.
Income Tax. Income from all sources are aggregated and taxed at a flat
rate of 16%.
Rental income earned by non-residents is taxed at a flat rate of 16%. A
fixed deduction of 25% of the gross income is allowed to account for
income-generating expenses. Taxpayers may also opt for itemized
deductions of all expenses.
landlord in Romania has the legal obligation to pay the taxes levied on
income from property, except in the case of a foreign landlord, when the
tax is withheld and paid to the state by the person paying the revenue,
meaning the tenant.
01 January 2008, taxpayers who earn rental income from more than five
simultaneous rental contracts can only be taxed under the direct method
(gross income less itemized deductible expenses).
Individuals who sell Romanian property are liable to pay transfer tax,
levied on the sales proceeds. The applicable tax rate depends on how
long the property was held by the owner and how much the actual sales
3 years ownership;
Up to 200,000 (€56,965) 3%. - Over 200,000 (€56,965) 2%.
Over 3 years
ownership; Up to 200,000 (€56,965) at 2%. - Over 200,000 (€56,965) 1%
local property tax is levied on buildings, payable by the owner. The
applicable tax rate varies between 0.25% and 1%, depending on the
building’s location and property value. If the building has not been
revalued during the last three years, the applicable tax rate varies
from 5% to 10%.
local and tax is levied on land in
Romania, payable by the owner. The
tax rate for urban land ranges from RON0.001 and RON0.59 per square
meter for land in urban areas. Land outside urban areas is taxed at a
fixed rate of RON1 (€3.51) per hectare.
Income and capital gains earned by corporations are taxed at a flat rate
of 16%. Expenses incurred that are directly related to obtaining income
can be deducted from the gross income.
control exists in the private sector. Rental amounts can be freely
negotiated between landlord and tenant. The rent can be indexed to
inflation; such clauses are common. Progressive annual increases in rent
can be lawfully stipulated in the contract.
Failing this sort of clause, the rent can only be increased if the
contract’s duration is greater than one year. In the case of contracts
above a year, the landlord may go to the courts to ask for an increase,
citing a practical reason, such as (e.g.) a large unforeseen
depreciation in the national currency.
Parties may agree on the amount of a deposit, which must be held at the
landlord’s bank, as agreed in the contract. At the end of the contract,
the landlord may deduct expenses for repairs or works incumbent on the
tenant, and for unpaid services.
agreement automatically terminates at the end of the contract, without
the need for further notice. In case of a contract unlimited in time,
the Civil Code gives both parties the right to cancellation, under the
condition of the observance of time limits imposed by local customs.
contract can be terminated before the agreed term by the tenant with a
notice of a minimum of 60 days, or by the landlord if:
- The tenant did not pay the
rent for three consecutive months
- The tenant did not comply with
the contractual provisions
Tenants may only sublet with previous written permission from the
landlord, and under the conditions set by the landlord. Sub-letting can
be expressly forbidden in the contract.
The average number of Days to Evict Tenant is 273.
Financial Crisis 2008/09:
rising by as much as 50% in 2007, house prices in some districts of
Bucharest fell in the first quarter of 2008. Although estimates of the
price crash range from 10% to 25%, the general consensus is that the 5
year house price boom is over.
While property prices have been constantly raising, since 2002, prices
of old apartments in
Bucharest jumped by about 160% from 2005 to 2007. In some parts of
Bucharest, the increases were much higher.
Demand for Romanian properties rose in anticipation of EU accession in
January 2007. A year after, investors were disappointed with the rate
promised reforms are taking place. Corruption is rife and largely
ignored or tolerated by the government.
Foreign buying had been enormously important in pushing up house prices,
as Romanian property was a significant bargain in European terms.
Romania was advertised alongside Bulgaria as the land of opportunity for
British and other foreign buyers.
Investors who took euro denominated loans to join the housing boom are
now affected by higher interest rates and the depreciating Romanian new
lieu (RON). The ECB raised rates key rates four times from 3% in Sep
2006 to 4% in June 2007, where it remained until now. After appreciating
strongly from RON34.2 per euro in 2004 to RON 3.2 in mid-2007, the
currency depreciated to about RON3.70 in the first quarter of 2008.