Tuesday, 27 October 2026
Romania’s urban planning reforms promise faster approvals and greater administrative efficiency, but legal uncertainty could still complicate development and investment decisions. In an interview with CIJ.World, Răzvan Gheorghiu-Testa, founding partner and head of real estate at Țuca Zbârcea & Asociații, examines the practical risks facing developers and investors, from planning permissions and land valuations to taxation, electricity infrastructure and cooperation with public authorities.
CIJ.World: Romania has introduced significant changes to its urban planning framework. Are these reforms genuinely making development easier, or are new administrative problems emerging?
Răzvan Testa: It is definitely too early to reach a conclusion. Romania has needed a comprehensive update of its construction and urban planning legislation for many years. Much of the previous framework dates back more than two decades, including construction authorisation legislation introduced in 1991 and the principal urban planning legislation from 2001. The intention behind the reform is positive. It seeks to consolidate legislation, simplify procedures, improve predictability and introduce greater digitalisation. These are important objectives in a market where permitting delays and uncertainty have repeatedly discouraged investment. However, introducing legislation is one thing; ensuring that it works consistently is another. Certain provisions already appear inconsistent or incorrectly drafted. The Ministry of Development has issued clarifications, but ministerial explanations cannot replace legislative amendments where the wording itself creates legal uncertainty. The legislation was developed through consultations involving businesses, professional organisations and legal advisers. We participated through AmCham, alongside other law firms, submitting proposals, some of which were incorporated. I do not believe the framework needs to be rewritten, but several provisions require correction because they affect fundamental development rights.
One important issue concerns the percentage of land occupation, known as POT, and the floor-area utilisation coefficient, CUT. These indicators determine development capacity, including how much land may be occupied by buildings and the permitted floor area. The POT definition includes uncovered outdoor swimming pools and playgrounds, access ways and uncovered parking, although these are expressly excluded from the gross built area used for CUT. A literal reading reduces the buildable area. Although technical, such discrepancies can significantly affect development density, land valuations and project feasibility. An even more serious concern involves superficies rights, which allow investors to construct and own buildings on land belonging to another party. These arrangements are widely used in real estate development and particularly renewable energy projects. The wording of certain provisions raises questions about whether holders of superficies rights over privately owned land can apply for building permits.
This is a matter of interpretation rather than an established prohibition, but the uncertainty is problematic. A restrictive interpretation could undermine a legal right expressly recognised under Romania’s Civil Code. Although the Ministry has indicated that the provisions should not be interpreted restrictively, clarification alone may not eliminate the legal risk. We still need to see how consistently local authorities apply the Ministry’s interpretation, and the wording should ideally be corrected. The implications extend beyond renewable energy to other property sectors. Nevertheless, I remain cautiously optimistic. The reform contains positive elements and appropriate objectives. We will probably need at least another year of practical experience before determining whether it has genuinely made development easier and more predictable.
CIJ.World: Which projects face the greatest risks during the transition, particularly where permitting uncertainty could affect financing, valuations or transactions?
Răzvan Testa: The transitional arrangements are among the first matters developers and their advisers should examine. Questions arise over which legislation applies to procedures already initiated and which authority has jurisdiction to issue particular approvals. Planning procedures already initiated remain subject to the legislation in force when they began, and existing urban planning certificates remain valid. Where permitting competence changes, the new authority issues the permit unless the application was already filed with the former authority. Urban planning documentation is another major concern. Developers need certainty over whether a zonal urban plan, or PUZ, is required, whether a detailed urban plan, or PUD, is sufficient, or whether another planning mechanism applies. Urban development operations generally require a PUZ. Detached, semi-detached or terraced individual houses on the same plot require a PUZ or PUD. PUGs older than seven years must be updated within three years, potentially changing assumed development capacity.
This directly affects investment calculations. Permitted density, building height, land occupation and authorised uses determine what can be developed and therefore influence land values. An investor purchasing land on the assumption that a particular development density will be permitted may discover that additional planning documentation is necessary or that different parameters apply. Such changes can fundamentally alter the financial viability of a project. Consistency between municipalities is equally important. A developer operating in Bucharest, Cluj-Napoca, Timișoara and Iași should reasonably expect national legislation to be interpreted consistently. Local planning conditions naturally differ, but national administrative requirements should not vary unpredictably. When one authority demands documentation that another considers unnecessary, developers face additional costs, delays and uncertainty.
The reform also introduces mechanisms intended to reduce administrative delays, including firm deadlines and tacit endorsement in certain circumstances. Local councillors can no longer amend a PUZ’s technical content. However, supporting opinions or endorsements required during authorisation must be distinguished from the final building permit. An authority’s failure to respond within a prescribed period does not automatically mean that construction has been authorised. My advice is straightforward: do not establish a land acquisition price based on development assumptions that have not been properly tested. Investors should determine what can legally and practically be constructed before committing to a transaction. Architects and technical consultants should assess planning parameters from the beginning, while lawyers examine ownership arrangements, legal requirements and administrative risks. Ultimately, development value depends not simply on the location or size of a plot but on what can actually be built.
CIJ.World: Brownfield redevelopment and building conversions are becoming increasingly important in European cities. What legal challenges do these projects present in Romania?
Răzvan Testa: Brownfield developments are generally more complicated than projects involving vacant land because several legal and technical issues must be addressed simultaneously. The first consideration is whether the investor intends to retain the existing use or change it. Converting an industrial facility into a logistics development may involve different planning requirements from maintaining its original function. Similar questions arise when converting office buildings into residential accommodation. The central issue is often the planning documentation. What approvals are required to change the property’s use? Is a PUZ necessary? Can the project proceed under existing planning parameters? Are additional restrictions applicable? These questions must be resolved before an investor can confidently assess development costs and feasibility.
Former industrial sites also present environmental challenges. Investors must establish whether contamination exists, what remediation obligations may arise and how these responsibilities affect the transaction. Heritage restrictions can introduce further complications. A former industrial property may not itself be classified as a historical monument but could be located within a protected area or near a listed building. This can determine which structures may be demolished, what must be preserved and which forms of redevelopment are acceptable.
Nevertheless, urban regeneration represents an enormous opportunity for Romania. Former industrial properties within major cities occupy substantial areas of land that could be transformed into mixed-use developments incorporating residential, commercial, office, hospitality and public spaces. Existing structures could sometimes be integrated into new projects, preserving elements of their architectural or historical identity. We have seen successful examples in Copenhagen and Amsterdam, where former industrial districts have become attractive urban neighbourhoods. Romanian cities have similar opportunities, but these projects require considerable preparation. Acquiring vacant land without environmental complications, existing buildings or heritage restrictions is generally much easier. The new planning framework should ideally make regeneration more predictable by clarifying the approvals and procedures required to transform these sites. If it succeeds, it could support an important phase of urban redevelopment in Romania.
CIJ.World: How are regulatory changes, taxation and foreign investment screening influencing property transactions and valuations?
Răzvan Testa: I would not say that investors are necessarily withdrawing from transactions because of these changes. Some regulatory developments are positive, particularly improvements to foreign direct investment screening. However, taxation and planning costs certainly influence investment calculations. Buyers are scrutinising permitting risks more closely and negotiating who bears them. Higher property taxes affect the operating costs of commercial buildings. In many office leases, particularly those structured on a triple-net basis, landlords recover property taxes and other operating expenses from tenants. Consequently, increases in property taxation may ultimately translate into higher occupancy costs.
This matters because office occupiers are examining their space requirements more carefully. Working from home may not be as widespread in Romania as in certain Western European markets, but it has changed how companies use offices. Even within our firm, the team continues to expand, yet our overall office requirement is lower than it would have been five years ago. A growing business no longer necessarily needs proportionately more space. For landlords, higher operating costs combined with changing occupier requirements can influence competitiveness and investment performance.
Residential development faces different pressures. The increase in the standard VAT rate to 21%, together with changes to preferential treatment previously available for certain residential purchases, has important implications for affordability. Transitional arrangements allowed qualifying transactions to retain the former 9% VAT rate, with the deadline subsequently extended to 30 September 2026. With that period now expired, developers targeting the broader residential market must reassess how taxation affects purchasers’ budgets and project feasibility. Luxury developers may be less exposed because their customers have greater financial resources. However, for developers serving households with more limited budgets, selling prices, construction costs, financing and taxation must all be carefully balanced.
Foreign direct investment screening presents a more encouraging picture. Previously, notification requirements created considerable uncertainty, sometimes leading advisers to recommend notifications simply to avoid the risk of subsequently discovering that clearance was necessary. The increase in the relevant investment threshold from €2 million to €5 million should reduce the administrative burden for certain transactions. However, investments below that threshold are not automatically exempt, particularly where national security, public order or other legally defined considerations arise. The March 2026 amendments also expressly exempt qualifying intra-group restructurings and reorganisations that leave effective control and the ultimate beneficial owner unchanged, subject to the relevant investor and funding conditions.
Investors must remember that screening may consider the overall investment rather than merely the land acquisition price. A company might acquire land for €3 million but plan to develop a logistics facility requiring another €20 million. The transaction cannot necessarily be assessed solely against the initial €3 million purchase price because the wider investment programme may trigger notification requirements. Where clearance is necessary, it should be addressed early rather than after substantial expenditure has been committed. The process can take approximately two months, depending on the circumstances, and should therefore be incorporated into transaction planning. Foreign investment screening should protect legitimate national interests without becoming an unnecessary obstacle to international investment. I remain positive about Romania as an investment destination. The country offers opportunities across several property sectors, and greater regulatory clarity should support investment rather than discourage it.
CIJ.World: As data centres, battery storage and other energy-intensive developments expand, is electricity availability becoming as important as location when assessing land acquisitions?
Răzvan Testa: Absolutely. For certain developments, access to sufficient electricity capacity can be just as important as the location itself. We are involved in numerous energy-related projects, including photovoltaic developments and battery energy storage systems, working alongside colleagues from our energy practice. One important lesson is that an otherwise attractive development site may become commercially unsuitable if the necessary grid capacity is unavailable.
An investor might identify land with excellent road access, a competitive acquisition price, clear ownership and no significant legal complications. However, the investment calculation changes completely if the electricity network cannot accommodate the proposed development. Additional capacity might only become available after several years, or the investor may need to finance substantial network upgrades. Depending on the project, these costs could potentially reach tens of millions of euros. A grid connection approval alone is not enough: investors must verify actual capacity, the required works, their cost and the delivery timetable. Such obligations can significantly affect capital expenditure, construction schedules and expected returns. This is particularly relevant for renewable energy projects, battery storage facilities and data centres.
Although our firm has not yet been directly involved in developing a data centre, we have discussed potential investments with clients interested in the sector. Data centres require substantial and reliable electricity supplies, making grid availability fundamental to their commercial viability. I would therefore recommend examining electricity infrastructure at a very early stage, potentially before undertaking comprehensive legal due diligence on the land. Otherwise, an investor could complete an acquisition and subsequently discover that substantial additional investment is required. Traditional land acquisition assessments focus on ownership, planning restrictions, access and location. These considerations remain essential, but electricity availability must increasingly form part of the initial investment assessment. For energy-intensive projects, a good location without adequate power may simply not represent a viable development opportunity.
CIJ.World: Looking ahead over the next 12 to 24 months, which legal and regulatory risks is Romania’s real estate market underestimating?
Răzvan Testa: The market may be underestimating the cumulative impact of regulatory changes on development costs and investment returns. Consistency in the application of legislation remains crucial. There is considerable enthusiasm surrounding the modernisation of the planning framework, particularly digitalisation, simplified procedures and administrative efficiency. However, these improvements will have limited value if different authorities continue interpreting the same provisions differently. Without consistent implementation, developers cannot reliably anticipate the requirements, costs or timelines associated with their investments.
Another concern involves infrastructure-related financial obligations. The Code requires fiscal changes introducing local infrastructure taxes linked to PUZs that extend the built-up area, change uses or alter PUG indicators. Extending the built-up area requires an impact and cost study and depends on public infrastructure capacity. Outside PUG urbanisation areas, only the authority may initiate the planning documentation. Developers entering areas without infrastructure must fully fund it and demonstrate autonomous operation, or agree joint financing with the authority. The principle is understandable. A large residential project can place additional pressure on roads, public transport, utilities, schools and community facilities. If a developer introduces 1,000 apartments into an area, the surrounding infrastructure must accommodate the additional population. However, developers need to know their financial obligations from the beginning. Significant infrastructure contributions emerging late in the planning process can fundamentally change project economics. Investors must be able to establish whether they will need to finance road improvements, utility connections or additional public facilities. Such obligations require a clear legal basis and transparent administration.
Another important issue concerns buildings constructed without the necessary authorisations or developed differently from approved plans. The new framework introduces a transitional period during which certain categories of unauthorised construction may be brought into legal compliance, subject to specific conditions. Owners have 12 months from entry into force, until 25 August 2027, to apply for a regularisation building permit. The former route through Land Book registration of unauthorised construction is no longer available. However, this should not be interpreted as a universal deadline applying identically to every unauthorised building.
Consider a building authorised for three floors but subsequently constructed with five. Under previous arrangements, regularisation was possible in certain circumstances if the applicable legal and technical requirements were satisfied. The new provisions appear to impose a more restrictive timetable for some cases. In my view, 12 months may be insufficient even to prepare the documentation and technical assessments needed to apply. The issue extends beyond minor alterations to private houses and can involve substantial buildings with significant deviations from approved development parameters. The financial consequences may also be considerable, with regularisation permit fees at ten times the usual level. There should certainly be consequences for disregarding construction legislation, but the procedures must remain realistic and capable of being completed within the prescribed period.
Owners who miss the deadline will generally lose the possibility of regularisation, subject to limited exceptions, and face administrative or court-ordered demolition at their expense where the applicable conditions are satisfied. However, demolition is not an automatic consequence of missing the transitional deadline. Each property’s legal circumstances must be considered individually. It remains possible that the deadline could be extended, but investors and property owners should not assume this will happen. The implementation of these provisions will be an important issue to monitor.
CIJ.World: Beyond legislative changes, what would make the greatest positive difference to Romania’s development and investment environment?
Răzvan Testa: I have always believed that local authorities should regard responsible developers as partners in the development of their cities. That is an aspiration rather than a description of what has always happened in practice. Public authorities must ensure that cities function properly, develop sustainably and keep pace with economic and demographic changes. Private investment is an essential part of that process. Developers create housing, commercial buildings, workplaces and other facilities while generating employment, tax revenues and opportunities for infrastructure improvements.
However, development must be coordinated with the wider needs of the city. The most productive approach involves open communication between investors and public authorities, supported by clear legal obligations and transparent procedures. We have seen examples in Romania where developers and municipalities have entered into agreements establishing each party’s responsibilities. These arrangements can involve improving roads, constructing roundabouts, providing infrastructure or contributing to public facilities. When obligations are clearly defined and connected to approved planning documentation, the process can work effectively. The investor understands what must be delivered, while the public authority ensures that development contributes to the surrounding community.
Unfortunately, we have also seen situations, particularly in Bucharest, where communication between investors and authorities has been extremely limited. Projects have consequently remained blocked, sometimes without meaningful benefit to the city or its residents. This is not necessarily a public-private partnership in the traditional sense of financing major infrastructure or public services. It is about practical cooperation around individual developments and recognising that both sides have legitimate responsibilities. There are developers with substantial investment programmes in Bucharest. Some of our clients have existing projects and future investments in Sector 1 representing close to €1 billion. From a public authority’s perspective, investment on that scale should create a strong incentive to engage constructively.
The objective should not be to approve everything without scrutiny. Development must comply with planning requirements and consider existing communities. However, the starting point should be a willingness to examine how responsible investment can proceed within the legal framework. There are also unresolved questions concerning the allocation of permitting responsibilities between Bucharest Municipality and the individual sectors. Certain transitional provisions have generated different interpretations, including among legal professionals. Until these provisions and their implementation are clarified, it would be premature to assume that all building permit responsibilities will transfer to Bucharest Municipality on a particular date.
Developers should not face fundamentally different administrative requirements simply because their projects are located in different sectors of the same city. Bucharest undoubtedly has serious infrastructure challenges, particularly traffic congestion. Anyone travelling through the city understands the scale of the problem. However, preventing development is not, by itself, a solution to inadequate infrastructure. A better approach is to coordinate development with infrastructure investment and establish clear responsibilities for public authorities and private investors.
Ultimately, Romania needs a planning system that encourages responsible investment while protecting the public interest. If the new framework creates greater legal certainty, consistent administrative procedures and genuine cooperation between municipalities and developers, it could make a meaningful difference to the country’s real estate market. The legislation provides an opportunity. The challenge now is ensuring that everyone involved uses it constructively.
