Indeed, investors and buyers in Slovakia are fortunate to be facing some of the world’s lowest transaction costs at purchasing and selling real estate.
Buying
While much will depend on the individual situation, obligatory costs are extremely low. This has not always been so – there were times not long ago when buyers were liable for a transfer tax (stamp duty) of 3% (previously levied progressively up to 20%). However, since 2004 Slovakia is one of the few countries that have fully abolished transfer tax on property transactions, bringing the costs of purchase down dramatically.
Let’s now have a look at the typical costs associated with a property purchase in Slovakia.
The only expenses all buyers have to pay for are land registry (Kataster) fees and notary fees for certification of signatures:
- land registry (approximately 40 GBP for regular entry or 160 GBP for accelerated entry; the latter being recommended)
- certification by notary (very low nominal fees)
When it comes to other expenses – in particular agent fees and legal fees – the scenarios are varied.
A buyer may use an agent working on his behalf (as is often the case with foreign buyers, and in particular investors, using the help of a sourcing agency to find a suitable property and guide through the process) in which case a fee is generally payable by the buyer (2-5% typically, though it may be more if other services are offered, such as mortgage arrangement, legal services, fit-out, etc).
In other cases (in particular local buyers looking for own residence) buyers will search for their home directly from estate agents’ listings. This means the agents are working on behalf of the seller and while the purchaser wil not be charged a fee, the agent fee paid by the seller is usually calculated into the sales price.
A similar situation applies to legal fees. Slovak buyers and sellers rarely use a solicitor in the transaction. As in most of continental Europe, the Slovak notary oversees the contract signing but is not involved in drafting contracts or ensuring they are fair to either party.
It is therefore advisable for foreign buyers to instruct an independent solicitor to work on their behalf. The fees for such legal service depend on each law firm as well as complexity of the transaction. (For residential property conveyancing an experienced law firm in Bratislava will typically charge 800-2,000 euro.)
Buyers taking out a mortgage in Slovakia will incurr additional expenses:
- an additional land registry entry (40 resp. 160 GBP)
- bank arrangement fees (paid to the lender; commonly 0.20-1% of value of the loan)
- in case a broker is used also mortgage broker’s fee (from fixed fee of around 300 GBP up to 1% of value of the loan)
- in some cases lenders still require a notary deed (speeds up repossession proceedings if needed; costs depend on transaction value but generally around 300 GBP)
Note: All notarial fees are set by law
Selling
And what about selling a property?
Most sellers will use an estate agent to find a buyer for their property. The agent’s fee is borne by the seller and varies depending on agent and sales price. It is commonly between 3-6%. (Small notary fees for certification of signatures will also be payable.)
Letting
As most investors will typically hold a property for a number of years before disposing of it, it’s important to understand what costs are borne by the owner/landlord in case of letting a property.
While it depends on individual agreement between landlord and tenant, typically tenants are liable for the following expenses (apart from rent):
- utility payments (electricity, water, gas, phone, etc)
While landlords usually carry the costs of:
- service charges (administrator fees, utility payments related to communal areas)
- insurance (approx. 100 GBP p.a. for a 100k GBP flat)
- property tax (very low, 20-30 GBP p.a. for an average flat in Bratislava)
- any repair, renovation and maintenance costs
- property management and letting services (letting only is charged at one month rent; full property management is only provided by a few agencies and typically varies between 15-18% of the monthly rent)
Naturally there are also taxes payable on income, however, they are not considered transaction costs and hence not part of this overview. (19% income tax is payable on any net income including rental and capital gains.)
Provided by: http://www.slovakiainvestmentproperty.com