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Everything you need to know is included in our Romania Property Pack
Romania is a popular choice for those looking to invest in real estate. It boasts beautiful landscapes, a fascinating culture, and kind locals.
However, purchasing property in a foreign country can be overwhelming, especially with all the rules and regulations involved.
Don't fret! This guide is here to make it simple for foreign buyers to comprehend how the property market works in Romania. We'll go over everything you need to know in a straightforward and uncomplicated way.
Also, for a more in-depth analysis, you can check our property pack for Romania.Can you purchase and own a property in Romania as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Romania for US citizens.
Foreigners, whether they are EU citizens or non-EU citizens, have the right to buy buildings in Romania without any significant restrictions.
This means you can purchase apartments, houses, and other types of buildings just like a local Romanian citizen.
The situation is a bit different when it comes to owning land. If you are an EU citizen, you have the same rights as Romanian citizens in terms of purchasing agricultural or forest land.
For non-EU citizens, acquiring land in Romania is more restricted. You might need to set up a Romanian company to purchase the land, as direct ownership of land by non-EU foreigners is generally not permitted.
There's no requirement to reside in Romania if you want to purchase property here. Buying real estate doesn't necessarily grant you residency rights. The process of buying property and the process of applying for residency or a visa are separate.
However, owning property can be a positive factor if you decide to apply for residency.
Typically, you don't need special authorization from a government institution to purchase property as a foreigner. The process is quite straightforward and similar to that followed by local buyers.
Also, there isn't a minimum investment requirement for purchasing property, which makes it accessible for various budgets.
The differences in property buying rights primarily hinge on whether you are from an EU country or a non-EU country. EU citizens enjoy more relaxed rules, akin to Romanian citizens, especially concerning land ownership.
Can you become a resident in Romania by purchasing and owning a property?
Romania does not offer a specific residency-by-investment program linked directly to real estate purchases, like some other countries do.
This means that simply buying property in Romania does not automatically entitle you to residency in the country.
However, owning property can be a contributing factor to your application for residency under other categories.
If you're interested in obtaining residency in Romania, there are several routes, but they are generally not tied directly to real estate investment. Common pathways include employment, starting a business, studying, or family reunification.
For non-EU citizens, starting a business or being employed in Romania are more common routes. In the case of starting a business, while owning property can be beneficial for your business operations, the investment in the real estate itself does not count towards the investment required for business-based residency.
Initial temporary residency permits in Romania are usually granted for one year and can be renewed. After living in Romania for a continuous period of five years on a temporary residency permit, you may apply for permanent residency.
This process involves proving your continuous stay and meeting other criteria like financial stability and not having a criminal record.
Permanent residents can apply for Romanian citizenship after maintaining their residency status for a certain number of years, typically around eight years.
However, this process is separate from your real estate investments and involves additional requirements such as demonstrating proficiency in the Romanian language and an understanding of Romanian culture and legal systems.
While owning property might not directly lead to residency, it can be seen as a demonstration of your ties to Romania and financial stability, which can support your residency application under other categories.
Thinking of buying real estate in Romania?
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Market indicators
You can find fresh and updated data in our pack of documents related to the real estate market in Romania.
By taking a closer look at the GDP per capita indicator, it becomes apparent that Romanian people have become 13.9% richer throughout the past 5 years.
As the population gets richer, they will likely want to buy more real estate, and that can drive up prices later on.
The platform Numbeo indicates us that rental properties in Romania offer rental yields between 2.6% and 5.3%.
These values for rental yields can be considered as "moderate", which means they fall within a reasonable range and are neither exceptionally high nor exceptionally low.
To know more, you can also read our dedicated article: is it a good time to buy a property in Romania?
The expat life
The life of an expat in Romania can be quite rewarding and full of adventure. The country is full of natural beauty, from the Carpathian Mountains to the Black Sea Coast, and plenty of cultural attractions. Expats can take advantage of the low cost of living and the high quality of life in Romania. There is a vibrant nightlife, plenty of outdoor activities, and a wealth of historical sites to explore. Expats can also benefit from the strong economic growth in Romania, which has seen the country become one of the fastest-growing economies in the European Union.
The people of Romania are known for their hospitality and friendliness. Expats can find a welcoming environment and plenty of support from both locals and other expats. There are numerous language schools, cultural centers, and other organizations that can help expats settle in and make the most of their experience. Expats can also enjoy a variety of international cuisines, as well as traditional Romanian dishes.
Though there are challenges, the life of an expat in Romania can be an exciting and rewarding experience. With its diverse culture, beautiful scenery, and welcoming people, Romania is an ideal destination for anyone looking for a new home abroad.
What are the best places to invest in real estate in Romania?
This table summarizes some of the best places to buy a property in Romania.
| City / Region | Population | Average Price per sqm (RON) | Strengths |
|---|---|---|---|
| Bucharest | ≈ 1.8 million | 5,000 - 10,000 | National capital, economic center, cultural attractions |
| Cluj-Napoca | ≈ 320,000 | 6,000 - 12,000 | University city, tech hub, vibrant arts scene |
| Timișoara | ≈ 310,000 | 4,000 - 8,000 | Cultural center, European Capital of Culture 2021, historic charm |
| Brasov | ≈ 253,000 | 4,000 - 8,000 | Transylvanian Alps, medieval old town, ski resorts |
| Constanta | ≈ 283,000 | 4,000 - 8,000 | Black Sea coast, beach resorts, vibrant summer nightlife |
| Iași | ≈ 380,000 | 3,000 - 6,000 | Historic university city, cultural heritage, green spaces |
| Sibiu | ≈ 170,000 | 4,000 - 8,000 | Medieval city, European Capital of Culture 2007, German influence |
Want to explore this further?
Do you need a lawyer to buy real estate in Romania?
When purchasing a property in Romania, engaging a local lawyer can be essential to navigate the legal requirements and ensure a successful transaction.
One important document they can assist with is the Purchase-Sale Agreement (Contract de Vânzare-Cumpărare), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Romanian lawyer can also help with conducting a Property Title Search (Căutare Cadastrală) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Moreover, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Romanian laws and regulations.
What are the risks when purchasing a property in Romania?
We've got an article dedicated to the risks associated with purchasing property in Romania.
The main risk associated with buying property in Romania is the risk of title fraud.
This is because there are still some areas in Romania where fraudsters can take advantage of the lack of a reliable public records system by registering false deeds of sale. This can mean that a buyer may end up with a property that is not legally theirs.
Another risk is the risk of overpricing. This is due to the lack of a centralised property market in Romania, meaning that prices can vary significantly from one area to another. As a result, buyers should be sure to research the market carefully before committing to a purchase.
Finally, there is the risk of legal complications. Since Romania is still in the process of transitioning to a market economy, there are still some areas where it can be difficult to navigate the legal system. This can mean that buyers may find themselves in a position where they are unable to resolve disputes or enforce contracts.
Everything you need to know is included in our Romania Property Pack
What are the required documents for a real estate transaction in Romania?
When buying a property in Romania, the documents needed are as follows:
1. Proof of Identity - an identity document such as a passport or national identity card is required.
2. Proof of residence - a document such as a utility bill or bank statement, confirming your address in Romania.
3. Proof of income - documents such as salary slips, tax returns, or bank statements, to confirm your financial situation.
4. Title deed - this document is issued by the Romanian Land Registry and is the legal proof of ownership of the property.
5. Notary documents - these documents are prepared by a notary public and are required for the transfer of the property.
6. Building permit - this is a document required for any construction works that have been done on the property.
We review each of these documents and tell you how to use them in our property pack for Romania.
What are the key steps to develop a successful negotiation plan with Romanians?
When negotiating to purchase a property in Romania, it is important to understand and respect Romanian culture, which is a blend of traditional values, warmth, and strong community ties.
Romanian culture emphasizes the importance of personal connections and building trust. It is recommended to approach negotiations with a friendly and open attitude, taking the time to establish a rapport with the seller. Building a relationship based on trust and mutual respect can greatly enhance the negotiation process.
Direct communication is valued in Romanian culture. It is advisable to express your intentions and expectations clearly and honestly. Being straightforward and transparent in your negotiations can help establish a solid foundation for a successful property purchase.
Patience is key when negotiating in Romania. Decision-making can take time, and it is important to demonstrate understanding and flexibility. Avoid rushing the process and be prepared to engage in thoughtful discussions to reach mutually beneficial agreements.
Familiarizing yourself with the local real estate market and legal procedures is crucial. Conduct thorough research on property laws, regulations, and any associated costs such as taxes, fees, and administrative expenses. This knowledge will empower you during negotiations and ensure a smooth transaction.
Additionally, embracing Romanian culture and showing an interest in its traditions, history, and cuisine can create a positive impression. Demonstrating respect and appreciation for the local culture can foster a harmonious relationship with the seller and contribute to a pleasant property buying experience in Romania.
Do banks offer loans to foreigners in Romania?
Yes, foreigners can obtain property loans in Romania. The Romanian banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
When seeking a property loan in Romania as a foreigner, you can benefit from the "Prima Casă" government program aimed at supporting first-time homebuyers, which provides preferential interest rates and reduced down payment requirements.
Banca Transilvania, BRD - Groupe Société Générale, and Raiffeisen Bank Romania are among the Romanian banks that have the potential to offer mortgages to non-resident individuals.
Romania offers mortgage rates on a 20-year term ranging from 5% to 9%, which are considered average.
What are the taxes related to a property transaction in Romania?
Here is a breakdown of taxes related to a property transaction in Romania.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Stamp Duty | A tax imposed on various legal transactions, including the transfer of property ownership | Varies from 0.5% to 3% of the property value | Buyer |
| Capital Gains Tax | Tax on capital gains from property sales | 10% on the net capital gains (difference between sale and cost prices) | Seller |
| Property Tax | Annual tax on the value of property owned | 0.08% to 0.2% of the cadastral value of the property | Owner |
| Rental Income Tax | Tax on rental income generated from the property for non-resident | 10% on the gross rental income for non-residents | Owner |
| Property Transfer Tax | A tax imposed on the transfer of property rights | 3% of the property value, only if the value exceeds RON 450,000 | Seller |
| Value Added Tax (VAT) | Tax on the sale of new properties | 5% for any new residential property under 120 square meters | Buyer |
What fees are involved in a property transaction in Romania?
Below is a simple breakdown of fees for a property transaction in Romania.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Registration Fee | Fee for registering the property transfer in the Land Book | Around 0.50% to 2% of the property value | Buyer |
| Notary Fee | Fees for notary services during the transfer | Ranges from 0.44% to 2.20% of the transaction value | Buyer |
| Real Estate Agent Commission | Commission paid to the real estate agent involved in the transaction | 4% to 6% of the property purchase price (split between buyer and seller) | Seller and Buyer |
Buying real estate in Romania can be risky
An increasing number of foreign investors are showing interest in Romania. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.