Romania has a young population that is feeding into the country's burgeoning self-confidence and revitalising a country that once struggled with interest rates as high as 154 per cent (in 1993) and high rates of poverty.

As a tourist destination, Romania has yet to reach the same levels of popularity as other Eastern European countries, but low cost airlines are flying into the capital, Bucharest, and there are signs that the sandy beaches, enchanting villages and low prices will tick all the boxes of British tourists looking for the next hotspot. Romania's coastal resorts like Constanta, Costinesti and Mamaia prosper in the summer and means holiday lets could offer good returns for buy-to-let investors, although the rental season is four months long at most.

Bucharest is currently riding on the back of a wave of multinational companies who are moving premises to the city, and demand is outstripping supply for long-term and
residential letting in the city.

The single biggest boost to the Romanian economy and political stability has been the assurance of EU membership in 2007. The country has managed to meet strict criteria and undergone dramatic reform to create a welcoming environment to foreign investors.

Economic growth since 2000 has averaged 4–5 per cent, rising to 8.3 per cent in 2004. Inflation in 2005 dropped to 7.5 per cent according to national statistics, and is expected to fall further to 5.8 per cent at the end of 2006. Unemployment in Romania is lower than in France and Germany, and in January 2005, Romania's new Tariceanu government shook up the existing tax system, meaning the country now has one of the most liberal taxation systems in Europe. The tax cuts have led a 12 per cent jump in household consumption, which was also boosted by a 15 per cent rise in wages.

While Romania appears to be climbing steadily into the consciousness of tourists and investors alike, and all indications point to it becoming an EU success story, there are still considerable risks involved. Other than allegations of corruption, a major issue is properties that were illegally seized by the Ceaucescu government in the 1970s and 1980s being reclaimed, so legal guidance is an absolute must.

Romania factfile:
Timezone: GMT+2–3
Exchange rate: GBP1=RON5.20 (July06)
Mortgage availability: Limited
Deposit required: N/A
Agent's fees: 2–3% legal fees: 2–10%
Capital gains tax: No
Peak letting season: June to August (coastal)
Average daily temps celcius (Jan–Dec):
1, 1, 4, 10, 15, 20, 22, 22, 19, 13, 8, 3  (Constanta)
Average property prices: 1-bed apart: £63,340; 2-bed apart: £154,361; 3-bed house: £77,632

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Article first published in August 2006