In the past few weeks, while taking a well-earned rest from Sofia Echo deadlines, I came across a house for sale deep in the heart of rural Bulgaria, and decided to buy it. I immediately negotiated a price and embarked on the purchase process. This experience has brought me up against yet another series of disincentives to investing in Bulgaria, which for me epitomises the nonsense that continues to stand between Bulgaria and economic development.

It is well known that while it is perfectly acceptable for a foreigner to buy a house in Bulgaria, for some reason it is against the constitution for the same person to buy the land on which the house stands.

In the minds of the legislators there seems to be no distinction between ownership and sovereignty. Maybe they believe that if Bulgarian land were to be owned by a foreigner, somehow it would lose its Bulgarian-ness. There is no pretence at economic rationale (such as if foreigners can buy, Bulgarians will be priced out of the market), because to provide a way around the law for anyone who is determined against all the odds to invest here, a 100 per cent foreign owned company can own land in Bulgaria. So my company will own the land, I will own the house, and the constitution remains inviolate.

Having neatly side-stepped this rather annoying problem, I was ready to confront the bureaucracy associated with buying property in Bulgaria. For this it is essential to rely on professional advice.

Stephane Lambert of Stara Planina Properties guides his clients through the maze that stands between the buyer and his dream property. Both Lambert and Stara Planina co-owner Andy Anderson were previously regional directors of the Beautiful Bulgaria project and so have plenty of experience in dealing with Bulgarian property issues, but even they can find the process daunting.

They became involved in promoting and selling Bulgarian property, after their company was featured on a UK TV programme about people looking for a holiday or retirement home. The idea behind the programme is that a couple, tired of life in England, want to get away from it all and buy "A place in the sun", in this case in Bulgaria.

A seaside villa near Varna could be theirs, or yours, for 50,000 euros and a country property around Veliko Turnovo typically costs less than 10,000 euros. But, while these prices are low (roughly 20 per cent of equivalent properties in Spain or similar second home/retirement countries), there are plenty of reasons to be cautious. As Lambert said, "Bulgaria requires a certain kind of patience and sense of adventure."

The patience refers to the issues that can be encountered in purchasing a property, everything from confirming that the building is legal and the spouse agrees to the sale, through to ensuring that completion protocols have been signed and registered with the municipality.

The sense of adventure applies to houses such as mine, in a peaceful but remote village. The house has an outside loo and no hot water, but there is electricity and, if you walk a little way down the road, intermittent mobile phone coverage. My property adventure also extends to inadequate ownership documentation and a disagreement between the current owner and a neighbour over an adjoining field that the owner thought was his to sell. Sorting this out is probably going to take a couple of months, but I am patient...

Many new properties also have characteristics apparently designed to discourage buyers. "The Bulgarian preference is definitely for brashness and size rather than well designed accommodation, and quality of finish on new property is often poor," said Lambert. "There may be `gold' taps, but they are probably fitted the wrong way around. Nevertheless, we manage to come up with properties that do meet client expectations."

With some of the more garish examples of bad taste, the trick is to imagine the house after you have spent some of the money you saved on the purchase fixing the taps and ripping the cheap, smoked glass mirror and false black marble effect tiles off the wall before replacing them with something more acceptable.

What kind of person is willing to take the Bulgaria challenge? The majority of Stara Planina clients are people nearing retirement, wanting to minimise the amount of money they have tied up in property. There are some younger people, looking for sun but wanting to avoid the well-known attractions of Malaga or Majorca. There is also some speculation, and investors are acquiring town centre properties, holding on to them in the expectation of future increased value.

What these groups have in common is that they consider property prices attractive. But property in Bulgaria is cheap for a number of very good reasons and it seems to me that it is highly unlikely that prices will rise significantly in the foreseeable future, even if the Government manages to address the bureaucratic barriers.

First, there is little market liquidity and no critical mass to set prices, therefore putting money in property is very risky. Houses with similar characteristics in similar locations can be priced very differently. Sales depend on chance encounters between willing buyers and sellers agreeing their own price rather than a property having a market value. Selling on is always going to be a problem.

Secondly, prices will be depressed because even the limited supply will continue to outstrip domestic demand for as far as anyone can see. Bulgaria's rural population is ageing and declining, and while there has been a lot of new build in the coastal resorts, many owners cannot afford to complete the project and are therefore desperate to offload. Foreign and second homebuyers are still few and far between and certainly cannot soak up excess supply.

Thirdly, Bulgaria is hard to get to and has to compete for investment against other countries with better physical and institutional infrastructure. All but the most courageous buyers prefer to be able to drive to their holiday home without crossing a series of non-EU borders, tend to value the minor conveniences of running hot and cold water and like to know that there is a decent supermarket within striking distance. It is also good to know that if things go wrong, for example a burglary or some challenge to your ownership, you can turn to the police and courts for reliable and impartial protection.

For all of these reasons, I regard my house as an expense not an investment. I bought it because it is a beautiful old house in one of the most charming villages I have ever seen, surrounded by truly impressive mountain scenery. The house has vines, an outhouse, a stream running through the large garden and, hopefully, a potato field. Who knows if it will it go up in value? I will simply enjoy my hideaway and take pleasure from the mischievous thought that there is a corner of a foreign field that will be, for the time-being at least and whatever the constitution says, a part of England.

Stara Planina's web site address: www.stara-planina.com.

James Blewett-Mundy is a business adviser based in Bulgaria. Tel: +359 2 953 1545. www.lionsbridge.com.