Rental Agreement in Bulgaria — Landlord’s Guide (2026)

What you will learn

• The legal framework governing leases under the Obligations and Contracts Act (ZZD).
• Which 12 clauses every lease agreement should contain.
• How to determine the security deposit amount and when to retain it.
• The obligations of the landlord and the tenant under Bulgarian law.
• How and when a lease may be terminated.
• Your tax obligations as a landlord — effective rate, quarterly advance returns, annual return.
• Practical tips for trouble-free property rental.

Legal framework — ZZD, Art. 228–239

Lease agreements in Bulgaria are governed by Art. 228–239 of the Obligations and Contracts Act (ZZD). Under Art. 228, a lease obliges the landlord to provide the tenant with temporary use of property, and the tenant to pay an agreed rent.

The key rules established by the ZZD are:

• Maximum term — 10 years, except for commercial transactions (Art. 229(1)). For persons who may only carry out acts of ordinary management, the maximum term is 3 years.
• Delivery of the property — the landlord must hand over the property in a condition suitable for its intended use and ensure the tenant’s peaceful enjoyment (Art. 230 ZZD).
• Repairs — minor repairs (light bulbs, taps, locks) are the tenant’s responsibility; major repairs are the landlord’s (Art. 231 ZZD).
• Tenant’s obligations — to pay rent, use the property for its intended purpose, and return it upon termination (Art. 232 ZZD).
• Termination — a fixed-term lease expires automatically without notice. An indefinite-term lease may be terminated with 1-month notice (Art. 233 ZZD).
• Tacit renewal — if the tenant continues occupying the property with the landlord’s knowledge and without objection, the lease converts to an indefinite-term lease (Art. 236 ZZD).
• Registration — a notarially authenticated lease registered in the Property Register binds future purchasers (Art. 234 and Art. 237 ZZD). An unregistered lease with a certain date binds the new owner for no more than 1 year (Art. 235 ZZD).

Understanding these provisions is essential to ensure your lease complies with mandatory rules and does not contain void clauses.

12 essential clauses in a rental agreement

A lease agreement in Bulgaria is formally unrestricted — the ZZD does not require a written form. In practice, however, an oral agreement is an unreasonable choice for the landlord. Below are 12 clauses every well-drafted written lease should contain.

1. Subject and property description

State the exact address, area in square metres, floor, cadastral identifier (if available), and a description of the furnishings. Attach a handover protocol with a detailed inventory and photographs of the property’s condition.

2. Rent

Specify the rent amount in EUR, the payment date (e.g. by the 5th of each month), and the payment method. We recommend bank transfers — they provide written proof of each payment.

3. Security deposit

The standard practice is 1–2 months’ rent. Define the specific conditions under which the landlord may retain the deposit, and the deadline for returning it after termination.

4. Term and notice

Set a fixed term (e.g. 1 year) with an option for automatic renewal. Agree on a notice period for non-renewal — typically 1–2 months before expiry. Bear in mind that if no renewal is agreed and the tenant continues in occupation, the lease converts to an indefinite-term lease (Art. 236 ZZD).

5. Rent indexation clause

Without an indexation clause, inflation erodes the real value of the rent. We recommend annual indexation linked to the HICP (Harmonised Index of Consumer Prices for Bulgaria, published by Eurostat) or a fixed percentage (e.g. 3–5% per year). Specify from which date the indexation applies.

6. Allocation of repairs

Include a provision consistent with Art. 231 ZZD: minor repairs (cleaning, light bulbs, broken locks, taps) — tenant’s responsibility; major and structural repairs — landlord’s responsibility. Define a threshold (e.g. up to EUR 100) below which costs are considered “minor”.

7. Utility costs

Specify explicitly who pays electricity, water, heating/gas, internet, cable TV, and building management fees. In most cases, utility costs are borne by the tenant.

8. Taxes and fees

By law, property tax and waste collection fees are owed by the owner (under the Local Taxes and Fees Act — ZMDT). You may agree that the tenant bears them, but the obligation toward the municipality remains with the owner. Be precise in the lease.

9. Subletting prohibition

Prohibit subletting without your express written consent. Without such a clause, the tenant may sublet the property to third parties, increasing the risk of damage and non-payment.

10. Permitted use

Specify whether the property is leased for residential, office, or other use. Include a prohibition on changing the permitted use without your consent. This is also relevant in the event of a dispute over commercial activity in a residential property.

11. Penalties

Include a penalty for early termination (e.g. 1 month’s rent) and for late payment (e.g. 0.1% per day on the overdue amount). Penalties motivate the tenant to comply with agreed terms.

12. Insurance

We recommend the landlord maintain property insurance. You may include a clause requiring the tenant to insure movable property or take out third-party liability insurance.

Security deposit — how much and how

The security deposit is not expressly regulated in the ZZD, but it is established practice. It serves as collateral for the landlord against unpaid rent, damage, and unpaid bills.

Recommended amount: 2 months’ rent. One month’s rent is the minimum but provides weaker protection. Three or more months’ rent may deter prospective tenants.

Conditions for retention: Define exhaustively in the lease when the landlord may retain the deposit:

• Unpaid rent or utility bills;
• Damage to the property exceeding normal wear and tear;
• Early departure without notice;
• Missing items from the inventory in the handover protocol.

Return deadline: We recommend agreeing on a specific deadline for returning the deposit (or the balance) after termination — typically 14–30 days. During this period, the landlord inspects the property and raises any claims.

Interest on the deposit: The ZZD does not require the landlord to pay interest on the deposit. If you wish to attract quality tenants, you may offer interest or a clause adjusting the deposit when the rent is indexed.

Landlord’s obligations

As a landlord, you have the following key obligations under the law and the lease:

1. Delivery of the property in suitable condition (Art. 230 ZZD) — the property must be fit for its intended use. For residential use — functioning installations, no roof leaks, working locks.
2. Ensuring peaceful enjoyment (Art. 230 ZZD) — you may not enter the property without cause, disturb the tenant, or lease parts of it to third parties without agreement.
3. Major repairs (Art. 231 ZZD) — all repairs beyond minor fixes are at your expense (unless the damage was caused by the tenant).
4. Liability for latent defects (Art. 230(2) ZZD) — if the property has defects the tenant did not and could not have known about at the time of entering the lease, the liability is yours.
5. Tax obligations — payment of property tax and waste collection fees (ZMDT), declaring and paying rental income tax (ZDDFL).
6. Return of the deposit — after termination, if there are no grounds for retention, the deposit must be returned within the agreed period.

Tenant’s obligations

The tenant’s main obligations, arising from Art. 232 ZZD and the lease, are:

1. Payment of rent — in the agreed amount, on time, and by the agreed method.
2. Use for the intended purpose — the tenant may not change the property’s use (e.g. turn a flat into a shop) without the landlord’s express consent.
3. Minor repairs (Art. 231 ZZD) — cleaning, light bulbs, taps, locks, and similar minor fixes are the tenant’s responsibility.
4. Care of the property — the tenant must look after the property with the diligence of a good manager. The tenant is liable for damage caused by themselves, household members, or guests.
5. No subletting — without the landlord’s written consent, the tenant may not sublet the property.
6. Notification of damage — the tenant must promptly notify the landlord of any damage requiring major repair.
7. Return of the property — upon termination, the tenant must return the property in the condition in which it was received, accounting for normal wear and tear (Art. 232(2) ZZD).

Terminating a lease

A lease agreement may be terminated on several grounds:

Expiry of the term

A fixed-term lease terminates automatically upon expiry without notice (Art. 233(1) ZZD). If you wish to renew, include an automatic renewal clause with a specified objection period.

Notice for indefinite-term leases

An indefinite-term lease is terminated with 1-month notice from either party (Art. 233(1) ZZD). We recommend giving notice in writing (a notarial summons provides greater certainty).

Tacit renewal

If the tenant continues in occupation after expiry with the landlord’s knowledge and without objection, the lease converts to an indefinite-term lease (Art. 236 ZZD). This means either party may terminate it with 1-month notice. To avoid this outcome, send a written notice before the term expires.

Early termination

Early termination is possible:

• By mutual consent — through a written agreement between the parties.
• For material breach — e.g. persistent non-payment of rent. In the lease, you may define which breaches constitute grounds for unilateral termination and with what notice period.
• With a penalty — if you have agreed on an early termination penalty (e.g. 1 month’s rent), the terminating party owes the agreed amount.

Sale of the property

If you sell the property during the lease:

• Registered lease (Art. 234 ZZD) — binds the new owner.
• Unregistered lease with a certain date (Art. 235 ZZD) — binds the new owner for no more than 1 year from the transfer.
• Unregistered lease without a certain date — does not bind the new owner.

We recommend registering the lease if you wish to provide long-term protection for the tenancy.

Landlord’s tax obligations

Rental income is subject to taxation under the Personal Income Tax Act (ZDDFL). The effective tax rate for individuals is 9%.

How the tax is calculated

1. Taxable income = gross rental income minus 10% flat-rate deemed expenses (Art. 31 ZDDFL).
2. Tax rate = 10% on the taxable income.
3. Effective tax = 10% × 90% = 9% of gross rental income.

Example: If you receive EUR 500 per month in rent:

• Annual income: EUR 6,000
• Deemed expenses (10%): EUR 600
• Taxable income: EUR 5,400
• Tax (10%): EUR 540 (i.e. EUR 45 per month)

Quarterly advance tax

Landlords must pay quarterly advance tax (Art. 44 and Art. 55 ZDDFL):

Quarter	Deadline for filing and payment
Q1 (January–March)	By 30 April
Q2 (April–June)	By 31 July
Q3 (July–September)	By 31 October
Q4 (October–December)	No advance payment; tax is settled with the annual return

Who withholds and pays the tax

• If the tenant is a legal entity or a self-insured person — the tenant withholds and pays the tax on the landlord’s behalf.
• If the tenant is an individual — the landlord declares and pays the advance tax themselves.

Annual tax return

The annual tax return under Art. 50 ZDDFL is filed by 30 April of the following year. From 2026, returns for income earned in 2026 are filed in EUR. For 2025 income declared in 2026, figures are in BGN (leva), but tax is paid in EUR.

Important: Airbnb and short-term rentals

If you list your property on platforms such as Airbnb or Booking.com, additional obligations apply:

• VAT registration under Art. 97a of the VAT Act (ZDDS) (when receiving services from a foreign platform);
• Potential patent tax (if the property qualifies as an accommodation facility);
• Tourism tax under the ZMDT;
• Social security contributions if the activity is systematic.

Practical tips

Our experience advising landlords shows that the following steps significantly reduce risks:

1. Notarial authentication of signatures. Although not mandatory, notarial authentication gives the lease a certain date and facilitates potential enforcement.
2. Handover protocol. Prepare a detailed protocol describing the property’s condition, furnishings, electricity and water meter readings, and photographic evidence. Both parties should sign it.
3. Registration of the lease. For long-term leases (3+ years) or high-value properties, registration in the Property Register is highly recommended. It protects the tenancy if the property is sold.
4. Rent indexation. Include an annual indexation clause linked to an objective indicator (HICP). Without indexation, at 5% annual inflation the real value of the rent decreases by 25% over 5 years.
5. Bank transfers for payments. Avoid cash payments — bank transfers create indisputable proof of each payment (or non-payment).
6. Property insurance. Property insurance covers risks such as fire, flooding, earthquake, and other disasters. The cost is negligible compared to potential damage.
7. Tenant screening. Before signing the lease, request references from previous landlords, proof of income, or an employment contract. This is not an intrusion into privacy — it is reasonable due diligence.
8. Furnishing inventory. When letting a furnished property, describe every appliance and item in detail in the handover protocol.
9. Written communication. Maintain communication with the tenant by email or messaging app — this creates a written record that is valuable in a dispute.
10. Legal advice. For higher-value properties or when leasing to legal entities (companies), consult a lawyer to review or draft the agreement.

Frequently asked questions

Conclusion

A well-drafted rental agreement is an investment in your peace of mind as a landlord. Include the 12 clauses described above, set a deposit of 2 months’ rent, prepare a handover protocol, and consider registering the lease in the Property Register.

If you need assistance drafting or reviewing a rental agreement, contact Innovires Legal. We will prepare a lease tailored to your specific needs and in line with current Bulgarian law.

This article is for informational purposes only and does not constitute legal advice. For specific cases, we recommend consulting a lawyer. The information is current as of March 2026 and reflects the legislation in force at that date.