1. What is the “Prima Casă” (“First Home”) Programme?
2. What are the notorious “Constructor Instalments”?
3. Who will pay the notarial fees and taxes?
4. In order to get a loan, what should my length of service be?
5. What do we need to know about the 5% VAT?
6. What is the energy certificate? Where do I need it?
7. I can sell my own house! Why should I resort to a real estate agency?
What is the “Prima Casă” (“First Home”) Programme?
“Prima Casă” (“First Home”) is a special bank-based funding addressing young people with ages between 18 and 35. The only advantage of this loan is the advance payment of only 5%, as opposed to the standard real estate loans, for which the advance payment is between 15 and 20%.
There are very many persons who mistake this payment method for a payment system in instalments established directly with the constructor.
Because of the fact that the funds allocated to this type of loan are limited, the “Prima Casă” Programme may have extended standby periods. Lately, the funds have been exhausted in a matter of days. This is why an increasing number of Romanians have been opting for classical mortgage loans, even if they have to make a higher advance payment. Eventually, this option is better: if the advance payment you make is more significant, it is more convenient because, in this case, the value of the mortgage, as well as the value of the instalments, are lower. Moreover, nowadays, most banks apply the same interest rate for the loans taken through the “Prima Casă” programme and for the standard loans.
The New Concept Living real estate agency will provide a banking expert who will fully take care of your file. Our financial adviser will assist you in all matters related to the granting of a loan, he/she will help you identify the bank that best suits your needs, and will deal with the drawing up of the bank file. Once again, everything will be FREE OF CHARGE.
What are the notorious “Constructor Instalments”?
In the rather difficult period of the real estate market (2007-2009) when the lending conditions were tightened up, a new payment system was “coined”, which largely led to a break through the market deadlock. It endured even after the lending conditions were loosened and the “Prima Casă” Programme emerged.
This payment model is an attractive solution for those who do not wish to owe the bank for 25 to 30 years; however, it does not suit everyone, because of the significant advance payment and of the rather high monthly instalments.
You should know that the developers distribute the payments over shorter periods of time, usually over 2 to 5 years.
The clients who choose this payment modality do not want to or cannot get a bank loan. They do have, upon making the purchase, a large amount of money, but still not large enough to cover the entire value of the apartment.
The below categories of buyers prefer this option:
• the persons who work abroad and whose monthly income is high enough so as to pay a higher monthly instalment, which allows them to have their own housing in the country, within 5 years.
• The persons who have high monthly revenues and who prefer a system of instalments set up directly with the developer, much simpler than getting a bank loan.
Risks and downsides:
- the eventuality that the developer becomes insolvent, while the instalments are still in progress, when the buyers have not yet registered the apartments to their names.
- in case of outstanding payments, the developer may terminate the agreement very easily, without resorting to the foreclosure procedure, and thus remains the owner of the property.
- it requires a very high advance payment, and very high monthly instalments.
- the ease in conducting the purchase; no documents are needed in support of the monthly income - the applied interest rates are often lower than the ones employed by the banks.
“The devil is in the details” as the old saying goes. The New Concept Living real estate agency advises great caution upon selecting this payment option. We will be glad to assist you, providing you details concerning the selected developer and concerning any other legal details that you need to be aware of.
Who is to pay the notarial taxes and fees upon signing the sale-purchase agreement?
The taxes to be paid by the buyer are as follows:
- the notary’s fees associated to the transaction: the preliminary agreement, the sale-purchase agreement, the mortgage agreement, if applicable.
- the valuation report (if the purchase is conducted by bank loan)
Click here to access a notarial taxes and fees simulator.
The taxes to be paid by the seller are as follows:
- The transaction tax: 1, 2 or 3% of the transaction value, according to the date on which the property was acquired and according to its value.
- The expenses related to the documents needed to conclude the sale-purchase agreement: land register excerpt, energy certificate, survey, endorsed by the Land Registry National Agency (A.N.C.P.I.) (if applicable).
(Click here to access a transaction tax simulator.)
Our agents will also advise you concerning the documents needed for the sale of a property: cadastre documents, tabulation, land register excerpts, certificate from the Owners’ Association (if applicable), tax clearance certificate issued by the town hall, identity documents or power of attorney, where applicable.
In order to get a loan, what should my length of service be?
Banks require a minimum length of service with the last employer of at least 3 continuous months, and a total length of 12 months.
What do we need to know about the 5% VAT?
In 2008, the government of Romania approved an “anti-crisis” tax law. (Emergency Ordinance 200/2008). It allows real estate developers to sell the apartments at a VAT rate reduced to 5%.
Standard VAT (20%) case:
New apartment, total price 80,000 € + VAT = the customer pays 100,000 €
80,000 € go to the developer, 20,000 € go to the state.
Reduced VAT (5%) case:
The same new apartment, total price 80,000 € + VAT = the customer pays 84,000 €
80,000 € go to the developer, 4,000 € go to the state.
Practically, the state decided to take less from the buyers. The same law is valid today.
Limitations of the law:
- each Romanian citizen may benefit from this discount one time only.
- the purchased housing cannot have a useful area of more than 120 sq. meters
- the maximum value of the property is of RON 450,000
- the land on which the house is built cannot exceed 250 sq. m (including the footprint of the house)
- concerning the apartments, the undivided share associated to each property should not exceed the area of 250 sq. m.
What is an energy certificate?
The energy certificate (Energy Performance Certificate) is a document certifying a building’s energy performance and it is a mandatory requirement on the European Union territory for the sale or purchase of any property (whether old or new).
Such certification only takes one or two days from the submission of the complete file and it costs approximately 1 €/sq. m. Thus, for a two-room apartment, having an area of 40 sq. m, it will cost 40 €. This cost is covered by the seller.
Unfortunately, there are energy audit companies on the market which charge much higher rates, relying on the fact that the customers are not acquainted with the prices for such documents. The New Concept Living real estate agency will recommend reliable auditors, who charge the right price.
In Romania, most of the old blocks of flats are classified into the C or D energy class.
I can sell my own house! Why should I resort to a real estate agency?
Many people believe they can save a considerable amount of money if they attempt to sell the property on their own. This is as wrong as it gets!
A reliable real estate agency has plenty of valuable information which will help you sell faster, easier, and, oftentimes, at a better price. Being permanently connected to the reality of the real estate field, professional agents know what the market trends are and they know how to best present your property.
A reliable real estate agency deals with hundreds of requests on a monthly basis and it takes up tens of real estate requests every day. Professional real estate agents are trained to prospect the purchasing market, to negotiate with it and to materialize a transaction as soon as possible, in the best possible way.
And, let us not forget that real estate agents are always willing to do things that most of us do not have the time to do or which we do not enjoy as much: working on weekends, always answering phone calls, regardless of the time, and being polite, on top of all that.