Is there a solution to the problem of uninhabited buildings in Bulgaria?

Many countries around the world have a problem with unoccupied buildings. Bulgaria is no exception. According to data from the National Statistical Institute (NSI) based on the latest census, which took place in 2021, half of the country's dwellings are vacant.

In Sofia, on the other hand, the so-called "dark windows" amount to about 30%. At the same time, the number of new projects for residential buildings and complexes continues to grow. This creates an imbalance — on the one hand, we have a lot of empty flats, on the other hand, there is not enough supply on the market to meet the excess demand, and this drives up the prices of the available flats. This is the thesis of many property experts.

Is it possible that the introduction of certain mechanisms, such as the transfer of an unoccupied property with a 10-year contract to the housing stock of the municipality — once it has it — could lead to a solution to the problem of unoccupied housing? In fact, this unconventional idea was put forward by Arch. Yavor Panev in an interview with Dnevnik. According to him, the Barcelona approach to dealing with uninhabited housing — the community housing people from different social groups — would have an effect in Sofia.

The unconventional proposal has caused a serious backlash in society. Two days after the interview was published, the PP/DB coalition and Save Sofia announced that the idea did not come from their ranks.

"In connection with the speculation that has appeared in the media, the PP/DB and Save Sofia councillors in the municipal council would like to point out that they do not share the widespread opinion that uninhabited flats should be transferred to the municipal housing stock. They point out that such an idea is not in the coalition's programme and has never been discussed in the group. The new rulers of the capital stress that the solution to the problem of derelict buildings lies in stopping piecemeal 'urban planning' and linking building permit fees to infrastructure costs," says a position paper sent to Sega.

Only through fiscal policy can this problem be solved...

.... Such an opinion was expressed by Georgi Yankov, a partner in the Primo + real estate company, in an interview with Economic.bg.

The only normal solution for dealing with empty flats is tax policy. Simply owning a flat in Bulgaria is very cheap, and this has been commented on in Bulgaria for a long time," he says.

In a country where people believe in the principle of "my home is my fortress", he says, such methods would not only not work, but also go against people's property rights. He also cites the example of an area in the Israeli capital, Tel Aviv, where, before higher property taxes were introduced, the percentage of unoccupied houses was huge and the neighbourhood was very unwelcoming. But since the change in tax policy, things have changed.

"It's no coincidence that at various property discussions people comment on why people don't stop buying property. This is due to the fact that alternative investments have an extremely small share in Bulgaria, I am talking about stock markets and cryptocurrencies. And people just focus on real estate," Yankov says.

At the same time, however, Arch. Nina Manchorova, founder of the prefabricated house company Nomad Cabins, believes that there are no obstacles to the existence of such a model in Bulgaria.

"In England, social housing is a basic policy that they have and apply. How successful it is is debatable because they also have a serious problem with housing shortage, but it is something that is implemented. It's an interesting case whether it could work in Bulgaria, I don't see why it wouldn't," she says.

Housing for all

Another unconventional idea in the fight against housing affordability is to ensure that a percentage of homes in new developments are offered at below-market prices. Indeed, recent analysis by property companies shows that housing in the capital is becoming increasingly unaffordable for people, even though the desire to buy is there.

"To some extent, there are very good examples in the West, where when an investment project for a residential complex is developed, a percentage of the flats are earmarked for a lower-income stratum of society," says Arch. Manchorova.

According to Georgi Yankov, however, such an idea is not feasible either, and if a municipality were to impose such a measure on investors, it is unlikely that business would agree.

"If there are public-private partnerships, then let's say we can already think in this direction. For example, the municipality provides land, but says that the condition is that some of the apartments are sold at below market price".

At the moment, there are no concrete proposals from the government or local authorities to tackle the problem of unoccupied flats. But according to representatives of Flat Manager, a property management company that manages properties that are rented out on a short-term basis, one possible solution to the problem of 'dark windows' is to improve conditions and services in the country's rental market.

This is why they recently proposed a new platform for the Bulgarian market, which they believe will greatly simplify the process of finding tenants, thus encouraging many people who have homes but are not using them to come out onto the rental market and "breathe life" into the properties in question.

According to Nevena Borisova, part of the Flat Manager team, who commented to Economic.bg on the problem of empty homes, some of the 30% of empty properties in Sofia were not bought for investment purposes, but were inherited or have many owners who are difficult to bring together in one place to achieve a sale, for example.

"These houses need to be put on the market, but the question is how. A policy can be put in place if the home is not used for n years, to buy it from the council at a minimum value or to repossess it for a period of 10 years, but not to give it away for free and without a long-term strategy to integrate these marginalised communities," she says.