obtaining ownership

[guy]

Hi if you pay a deposit on a property, i understand if either side pulls out you are entitled to double back. But when can you take full occupancy? One site said you can pay in full and start renovations, another says you can not be legally entered onto the land registry until approval from the ministry of foreign affairs. Is away of avoiding this setting up a company or do normall joe public take the other route? I read you can save money setting up a company when you sell and buy, but there must be some hidden costs involved?

[Peter Ellis]

On the subject of deposits, if you pull out, you can lose your deposit. If the vendor pulls out, they have to pay you double.

Once you have paid in full, and signed the contract, the property is effectively yours. You become responsible for it and any services connected to it. Ultimate proof of ownership, however, is vested in getting your name in the Land Registry. This takes some time and yes, does involve getting a reciprocity certificate from the Ministry of Foreign Affairs that you need to present with your application to the Land Registry.
So far as renovations go, you could get on with these immediately but do bear in mind that if they are sufficiently extensive that planning permission is required, you can only apply for this once you are the owner registered in the Land Registry. If you want to start sooner, you will either need to get the currently registered owner to give you a Power of Attorney to apply for it in his name or, more expensively, form a company which, being a Croatian entity, does not need the MFA certificate and thus can operate immediately if you use it to buy the property.
We have heard some agents telling people that if they buy a new property with a company they can recover the VAT and offering to set up a company for them.
This is disingenuous as it is only half the story and meanwhile they earn a fee for setting up the company. If you set up a company and put it in the VAT regime yes, you can recover the VAT on a new property. However, you will have a liability to make regular returns and probably pay an accountant to do them. You will also have to charge VAT on your sales, which may make you uncompetitive when you sell.