Buyer Beware corruption in Bulgaria, Spain, UK…

Could we be about to see the end of the road for the Bulgarian investment dream?

For an ex-Communist country that hardly featured on any investor’s radar just a few years ago, Bulgaria’s fortunes have skyrocketed in recent times, with hundred of thousands of investors and house-hunters drawn to its ski resorts and Black Sea beaches in the hope of starting a new life or cashing in on this much-hyped overseas property investment hotspot.

Thanks to widespread media coverage and extensive World Bank investment, Bulgaria has topped the lists of the world’s fastest growing property locations where sustainable income can be achieved for a fraction of the cost of most other European destinations. However, a UK newspaper has cast a cloud over the Bulgarian property horizon by claiming that rogue estate agents and in particular the Bulgarian mafia are targeting unwitting individuals seeking their dream homes in the sun, leaving people duped and financially devastated.

The Daily Express ‘Nightmare for Britons buying their dream homes abroad‘ article explored the situation in Bulgaria, where Britons made up nearly two-thirds all foreign investment last year and found many of them sitting on near-worthless bricks and mortar, not owning the land their houses were built on. The newspaper detailed the tragic case of a couple from Crewe in Cheshire, England, who had been overcharged for their Black Sea coastal property and allegedly falsely assured that the land was theirs after parting with their life savings. When Annie Dale-Davis and Geoff Eborall complained to the agent, they suffered intimidation, an arson attack and are now financially ruined, unable to sell in Bulgaria or ever buy anywhere else. They claim that the local mafia are now pressuring them to leave the country following their complaints. And they are not alone. The British Embassy in Sofia confirmed that it has been contacted by many Britons in varying states of emotional and financial distress, pleading for intervention and help after purchasing property through unscrupulous agents and developers.

Fears are growing that the sudden, massive financial injection seen by the country following such enormous foreign investment interest will actually work against it if nothing is done to halt the growing influence of the Bulgarian mafia, keen to cash in on the country’s flourishing, cash-rich climate and take advantage of unwitting, naïve and inexperienced buyers. Indeed, it has been revealed that grave concerns about the influence of the country’s mafia were expressed at the highest level before Bulgaria joined the EU earlier this year and that corruption had infiltrated all levels of Bulgarian society, with 100 contract killings carried out in the last seven years.

As part of the restrictions set in place which delayed Bulgaria’s EU accession Bulgaria was asked to make its property buying process more transparent and also tackle corruption by implementing anti-corruption legislation, drafted laws, assisting citizens affected by corruption, and latterly monitoring enforcement of new anti-corruption standards. Although corruption remains a problem the EU recommends against the postponement of EU membership.

Spanish property has also been tarred with corruption scandals and recently Spain’s image has suffered as the result of press reports of corrupt developers and dodgy construction. Falsification of property title deeds is also common practice in several holiday home markets and whilst authorities are trying to stamp it out, it has been accepted to some extent by locals simply as part of the property buying process.

Corruption exists throughout all levels of society worldwide from local planning approval in Spain to the cash for questions saga and even more recently cash for honors scandal in the UK, which has lead to some people branding New Labour as ‘corrupt to the core’ and demonstrates perhaps worse, that corruption happens at the very highest levels of society. The fundamental problem lies with money, power and its abuse making for a very powerful concoction.

What are your thoughts on corruption and property? Have you had experience of being asked to declare property below its true value? Are there any ways to stamp out the problem or it just part and parcel of buying abroad? Leave your comments below.