HUNGARY

Buying property in Budapest, Balaton

Buying Property in Hungary as a Foreigner
Hungary offers a range of attractive real estate opportunities to foreign investors due to its scenic landscapes, vibrant cultural history, and relatively affordable prices. However, foreign ownership of property is subject to specific legal conditions.

Can You Purchase and Own Property in Hungary as a Foreigner?

Foreigners, including non-EU citizens, can purchase property in Hungary, such as apartments or houses. However, certain regulations apply:
• Residential Property: You are generally allowed to purchase but must obtain a permit from the local government.
• Agricultural Land: It is much more restricted. Foreigners generally cannot buy agricultural land without obtaining special permission, which is often challenging to secure.

The permit process for foreigners usually involves scrutiny by local or regional authorities, taking several weeks or even months. Citizens of EU countries often have an easier process compared to non-EU nationals, thanks to EU agreements. Owning property does not automatically require residency, though it can support your case if you apply for a residency permit.

Residency Through Property Ownership
While Hungary does not have a real estate-based residency program (like the "Golden Visa" schemes found in other countries), owning property can bolster your residency application. Residency permits are generally granted for reasons such as employment, family reunification, or study. Purchasing real estate can show that you have ties to the country, but it is not a standalone path to residency.

To become a resident in Hungary, you must follow standard immigration procedures, which may involve proving financial stability, obtaining health insurance, and showing that you will not pose a public security risk. Residency can lead to citizenship over time, but that requires continuous legal residency and proficiency in the Hungarian language.

Real Estate Market Insights
Hungary's real estate market has been growing, with the GDP per capita increasing by 13.3% over the past five years. Rental properties in Hungary offer modest gross rental yields of 1.7% to 4.4%, reflecting a stable but not overly lucrative rental market.

Life as an Expat
Hungary offers a rich cultural experience with a relatively low cost of living compared to other European nations. Public transportation is efficient, and the country boasts a variety of historical and natural attractions. However, expats might face challenges such as language barriers, bureaucracy, and a healthcare system that may require private insurance coverage for foreigners.

Best Places to Purchase Property
• Budapest: Cultural hub and capital with historic architecture and a lively atmosphere.
• Debrecen: Second-largest city known for its education centres and festivals.
• Szeged: University town with cultural events and a picturesque riverfront.
• Pécs, Győr, Sopron, and Eger: Offer unique historical, cultural, and scenic advantages.

Legal and Transactional Aspects
Hiring a local lawyer is essential when purchasing property in Hungary to ensure all legal aspects are handled properly. They will assist with the Purchase Agreement (Adásvételi Szerződés), verify ownership through a Land Registry Search, and ensure that all taxes and fees are paid.

Risks When Buying Property
Some potential risks when purchasing property in Hungary include:
1 Dual Ownership: Buildings and the underlying land may have separate ownership.
2 Pre-emptive Rights: Local communities may have the right of first refusal.
3 Communist-Era Restitution Claims: Properties could be subject to restitution claims from the communist era.
4 Historical Heritage Protection: Restrictions may apply to heritage properties.
5 Leasehold Condominiums: Some properties may have a leasehold structure, limiting ownership terms.

Taxes and Fees

Here are some of the taxes and fees involved:
• VAT: 27% for new properties, with an exemption for existing properties.
• Property Tax: 3.6% of the market value annually.
• Capital Gains Tax: 15% on the net capital gain.
• Rental Income Tax: 15% on income from rental properties.
• Transfer Tax: 2% to 4% of the property’s market value.
• Legal Fees: Typically, 1% to 3% of the property value.
• Real Estate Agent Fees: 3% to 5% of the sale price, paid by the seller.

Foreigners Obtaining a Loan

Yes, foreigners can obtain property loans in Hungary, though you may need a valid residence permit and meet specific lending criteria. Some of the banks that provide mortgages to foreigners include OTP Bank, K&H Bank, and Raiffeisen Bank Hungary. Mortgage rates range from 6% to 10% depending on the terms and conditions.
By understanding these factors, you can successfully navigate the real estate market in Hungary as a foreign investor.

We can search, source, and provide the very best property options available for you before negotiating, securing and moving you in.

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