Change of law: Land ownership when relocating in Romania
As, from 1 January 2007, the Law will change in relation to EU citizens, whether natural persons or legal entities, who will be able to hold land (other than agricultural land and forests) directly, if it is designated as for the primary residence of the person or company. However, transitional periods will apply respectively for secondary and subsequent residences, until 2012 and for agricultural and forests until 2014. This will mean any other holdings of land during such period would need to be structured through a Romanian company. Persons or companies, which do not have EU nationality, will still be only be able to hold land in Romania by establishing a Romanian company.
As the regulations liberalizing the purchase of land by EU citizens and companies were only adopted in 2006 and have yet to be put into force, there is consequently no practice as to how they will be applied. In addition, the Romanian Constitution was not yet changed to allow ownership by non-Romanians, so there may be yet be legal complications, which will be encountered in this regard.
Until the practice of notaries, Land Registries and courts emerges in relation to the application of the law, therefore, we would recommend that the acquisition of land by EU citizens and companies should still be done through a Romanian company. This is because setting up a Romanian company will still always be a valid way, in which a non-Romanian can acquire and hold land in Romania. Equally, for persons contemplating the purchase of multiple properties in Romania or developing land or buildings or implementing a buy-to-let strategy, a Romanian company is still likely to be the most practical way to operate.
Costs in relation to the purchase of land
The costs of land acquisition have the following components:
1. Typically the establishment of a company costs GBP 700-900 for natural persons depending on the number of shareholders and directors. This includes approximately GBP 200-250 of expenses payable to the Commercial Registry and for the minimum share capital of RON 200.
2. Checking land title can vary depending on how many owners are involved and the length of their title. Typically, it is in the range GBP 500-1000 per title checked. However, if there are problems in the title, (Romania having had a difficult history in relation to returning lands taken from its citizens during the Communist era) the costs can be higher.
3. Preparing the pre-contract - Generally GBP 300-500 depending on how much negotiation is required between the parties on the terms of the purchase.
4. Preparing the final sale-purchase agreement GBP 300-350. This cost is optional if the notary prepares the final sale -purchase agreement.
5. All other fees relevant to the purchase including stamp duty, land registry and notarial fees should run to no more than 3% of the purchase price (details of the various notary fees, land registry fees and stamp/ authentication taxes are set out in the Schedule). If a buyer gets his or her own lawyer to draft the purchase agreement and be present at completion, the buyer will get a discount from the Notarial Fees.
Back to the previous page