is a landlocked country in the
Carpathian Basin of Central Europe, with an area
of 93,030 km². It is bounded to the north by
Slovakia; to the northeast by the
Ukraine; to the east by
Romania; to the south by
Croatia; to the southwest by
Slovenia and to the west by
capital city, Budapest, is located in the north central part of the country.
Hungary has a continental climate, with hot summers with low overall humidity
levels but frequent rain showers and frigid to cold snowy winters. Average
annual temperature is 9.7 °C (49.5 °F). Average temperatures in the summer are
27 to 35 °C (81°F to 95°F) and in the winter, 0 to −15 °C (32°F to 5°F). A
small, southern region of the country near Pécs enjoys a reputation for a
Mediterranean climate, but in reality it is only slightly warmer than the rest
of the country and still receives snow during the winter.
Hungary in the EU including Links to Hungarian government sites and Tourist
For 95 percent of its population of around 9.9 million people the mother
language is Hungarian, a language distantly related to Finnish and Estonian. The
main minority group is Italians (2.1 percent), followed by Germans (1.2
percent), Slovaks (0.4 percent), Croats (0.2 percent), Romanians (0.1 percent),
Ukrainians (0.1 percent), and Serbs (0.1 percent) A large portion of Hungary’s
population is concentrated in Budapest (1.7 million). Although the population of
Budapest is gradually decreasing, there is a parallel increase in the population
of the surrounding small towns and villages in the conurbation. None of
Hungary’s other major cities (Debrecen,
Gyõr) has a
population greater than 250,000.
Legal fees for an individual are 1 percent of the
property price plus 20 percent local VAT (this might include the cost of
applying for the permit at the land authority). For a company, lawyers usually
prepare all the documents and hand them in to the Court of Registry for a fee of
approximately HUF150,000. Specimens of signature cost HUF1,500 each to
administer, with four originals required. The founding capital of a limited
liability company is HUF3 million. Other costs to consider are:
is the only property that is VAT chargeable in
Hungary. The current rate is
fees—Fees range between 3 percent to 5 percent, plus 20 percent VAT.
duties—These are charged at the rate of 2 percent on the first HUF4
million of the property price and at 6 percent for sums above that. Storage
and garages are always charged at a flat tariff of 10 percent.
charges—Are met by the purchaser and will include both the cost of
setting up a mortgage (if you go for this option) and the cost of
transferring funds across to pay for the purchase. The purchaser will pay
the bank charges involved in the transaction up until the monies reach the
arrangement fee—It is usual for the lender to charge a 1% arrangement
fee, plus another 1% every year of the mortgage.
Authority application fee—For purchase of property by a foreigner, this
is approx 200€
There are many ways to find your ideal property, but
it’s always advisable to work with an agent or company that knows the market and
can explain the pros and cons of each property to you. The agent can also guide
you through negotiations and prepare you for the transaction. Many new
developments are sold "off-plan" which means that they are currently under
construction. You need to ensure that the relevant terms and conditions are
included in the preliminary contract. Ask your legal advisor for assistance.
You will need to secure the services of a
lawyer in order to deal with all aspects of the purchase, including (if
necessary) the formation of a company to purchase the property. To safeguard
your interests, appoint an independent legal representative fluent in both
Hungarian and English. Your representative must ensure that your chosen property
has good title. Many title registrations are out of date which is a legacy of
the previous communist era. Particularly in the case of a new build, your
representative should ensure that the building has been constructed legally.
A buyer can grant his
lawyer a Power of Attorney in
order that the
lawyer can carry out some of the obligations of the buyer if the
buyer is unable to be present in person. Power of Attorney will enable the
buyer’s lawyer to:
- Sign the
preliminary sale and purchase agreement in the buyer’s name
- Sign the
final sale and purchase agreement in the buyer’s name
- Arrange a
mortgage on behalf of the buyer
- Open a bank
account on behalf of the buyer
the buyer at the handover of your property
To buy as a private individual you will need to:
- Appoint a
Hungarian legal representative.
- Use a
Notary Public to certify the buyer's identity and to initiate the permit
approval process. If the permit is refused (which is a remote possibility)
establishing a company is the next suggested option—see below.
notarisation can be done at any Hungarian embassy or consulate but opening
hours vary, and the price abroad for this service is much higher than doing
it locally. The costs associated with the procedure are approximately €250.
buy-sell agreement can be taken care of in your home country if time is an
issue. In this event the agreement is signed by you (the buyer) and then
mailed to your local legal representative in Hungary.
Pros of buying as an
- No set-up
- Don't have
to open a special bank account
- Easier to
exit the investment.
Cons of buying as an individual:
expenses are recognized
- No expenses
deductible when calculating income tax on rental income
- Receiving a
permit may take up to 60 days.
To buy through a company you will need to:
- Establish a
company in Hungary. The documents will give the name of the company, its
address, the scope of its activities, Articles of Association, etc. Have the
Articles of Association notarized and register the company at the Court of
- Once the
company is certified as “under registration”, a tax number will be issued
and the company is now allowed to operate. A few months later, notice of the
full registration will arrive, and the company details will be published in
a formal public record.
- Open a
company bank account.
- Appoint an
accountant to be entrusted with the books of the company.
Pros of buying through a company:
are recognized (flights, accommodation, legal and agency fees, stamp duty,
renovation costs, furniture, utilities and all associated services,
including the interest on the owner’s loan).
- There is an
option for selling the company, along with the property, later on.
- As a
Hungarian legal entity, a company does not require a permit to purchase.
Cons of buying through a company:
needs to submit annual reports.
- Company set
up takes longer to complete.
- Company set
up is more expensive.
- Need to set
up a company bank account with HUF3 million.
- In order to
withdraw the money from the company, dividend tax has to be paid.
The European Economic Area
(EEA) is made up of those countries who are full members of the EU, plus
Iceland, Liechtenstein and Norway. As an EEA national, you have the right to
live in any EEA country.
Hungarian law states that a non-European citizen must
apply for a permission from local authorities in order to purchase property in
Hungary. Once a property is selected, the buyer’s lawyer applies for the
approval first from the mayor of the Local Government (Önkormányzat), then from
the Administration Office (Közigazgatási Hivatal) in the area. If these two
bureaucratic organizations assert that the purchase “does not interfere with any
municipal or other public interests”, a permit is granted. Only then is the new
owner registered in the Land Registry, and only then does the actual purchase
contract come into effect.
Each of these two offices may take as long as 30 days to issue the permission.
Because of the time factor, the seller must be informed of the process before
the purchase agreement is signed, and the seller will maintain ownership of the
property until the contract is closed. If the buyer is a non-Hungarian citizen,
the validity of the contract is conditional upon the Administrative Office’s
permission for the purchase of the property.
Under normal circumstances the permission is always
granted to Western citizens. The following are needed for the permission
copy of your passport (you must have the copy notarized)
original copy of the signed and countersigned purchase contract;
original copy of the Title (tulajdoni lap) of the property, issued in the
previous 30 days
Approximately HUF60,000 for different official duty
stamps for documents submitted for you in the process (this is not the fee of
the real estate lawyer) NB. Since May 1, 2004, EU citizens who have been
continuously living in Hungary for at least four years have been able purchase
residential property in Hungary WITHOUT special permission. Opening a bank
account It is advisable to open a Hungarian bank account in order to facilitate
the purchase. The process is relatively simple, with only a passport and a spare
30 minutes required. Choosing a bank which offers English language telephone and
Internet banking facilities is advisable so that you can manage your account
from your home country.
Organising a survey:
Although a survey is not a compulsory part of the
purchase process in Hungary, it is nonetheless advisable for your own peace of
mind as well as giving you an idea of what to budget for in terms of renovation
and repairs. A survey is particularly advisable if you are buying a property
without a builder’s warranty. A full structural survey will usually cover all
the main issues. Important things to check include:
- The plan of
the land at the Land Registry and the plan of the building which should be
included with the property details.
- The land
boundaries and whether there is any construction work planned on the land of
any of the neighbouring properties.
- Don’t just
believe what it says on the plan or in the details. Check for yourself, as
any discrepancy could work to your advantage in any negotiations over price.
Making an offer:
In Hungary, the offer is given verbally, usually
through your legal representative. If the seller accepts, the parties agree on
the details and go to a lawyer together to draw up and sign the purchase
contract. The purchase contract In
Hungary, a contract for the sale or lease of
real estate must be in writing to be enforceable in court. A purchase contract
must be signed by the parties in the presence of a lawyer and must also be
countersigned by the lawyer.
If you have a Buyer’s Agent representing you, he will
monitor the content of the purchase contract and the purchase process on your
behalf. Prior to signing the contract, your Buyer’s Agent will also check if the
title is clear and work together with the lawyer on the preparation of the
purchase agreement. Since there is no written offer prior to the legally binding
purchase contract in Hungary, it is very important that the issues that all
possible eventualities are addressed in the contract. There is a lot more in the
contract than price and it is very important to cover small details such as:
- A detailed
description of the property including address, title details, condition etc.
- The actual
price to be paid to the seller for the property
bank account details
terms and conditions
- A statement
emphasising that the seller and the buyer will pay their own tax liabilities
- The fees
and commissions to be paid to the solicitor or agent
for refund of the payment price, should the situation arise
Majeure conditions, to protect against major unseen obstacles
parties can pull out of the sale/purchase
permanent contact information of the signature holders
jurisdiction details (for clarity over the resolution of future disputes)
- Details of
all rights and responsibilities
registry number of the solicitor
- The trade
registry number of the real estate company.
- What will
stay in the house and what will go
- When the
buyer will take possession of the property
- How long
the seller should wait for the buyer to get purchase permission?
- Whether the
seller will handle repairs before possession
- The value
of the deposit
- What should
be done if there are problems on the seller's end, for example the title
Paying the deposit: On the day of signing the purchase contract, the buyer pays a significant
amount (usually 10 percent of the purchase price) as a deposit to the seller.
The full balance of the purchase price cannot be paid until the buyer has
obtained permission to purchase. The lawyer’s and buyer agent’s fees (if
applicable) are also due on that day. The seller will pay the seller’s agent (if
a seller’s or listing agent participated in the process) at the same time. If
the buyer is a non-Hungarian citizen, the purchase contract will stipulate that
the seller maintains ownership until the contract is completed.
Because of the permission process, closing usually
takes place 60 to 90 days after initially signing the purchase contract. At the
closing stage, the balance of the purchase price is paid. Before closing, the
seller can still use the property, but has no right to sell it to others. The
buyer is obligated to notify the seller immediately on receiving the
purchase-permission from the Administration Office, and following notification,
must also transfer the balance of the purchase price. Closing usually takes
place within a week after receiving the purchase permit. The buyer and seller
will sign the closing statement, which is a declaration that the purchase price
is paid in full and possession is transferred. Utility meters will be read and
recorded, and the buyer is now ready to have all utilities signed under his
Special situations and exceptions:
When purchasing off-plan property, in most cases you
will first need to sign a preliminary sale and purchase agreement, and then, at
a later stage, typically three to six months prior to the handover, a final sale
and purchase agreement. Should you purchase only a few months before your
property is due for completion, you will only sign a “final” sale and purchase
Registration of title:
The buyer obtains full title when the property is
entered onto the land register. The registration procedure takes one to six
months from the time of filing the necessary documents at the Land Registry
office. A year after your purchase is completed it is advisable to check if your
name appears on the Hungarian equivalent of the title deed (tulajdoni lap).
The administration of real estate registers falls within the jurisdiction of the
regional land title (Land Registry) office of the area where the property in is
located, and of the Land Title Office of the Districts of Budapest in Budapest.
In the event of a dispute, real estate registration records are considered as
authentic proof of registered rights and recorded facts.
Rights to be recorded in the property register:
The following property-related rights may be recorded
in the property register:
rights, and, in respect of state-owned property, the organization
exercising the state's ownership rights and asset management rights
right of use for members of housing cooperatives
- Land use on
the basis of agreement or court decision
and the right of use
geodetic markings, land survey pilot areas, right of use for the placement
of power supply equipment, furthermore, cable rights, water line and mining
- Right of
first refusal and right of repurchase and purchase
- Right of
support and life annuity
- Right of execution
Hungary are typically taken out in
Francs, but there are mortgages in
Forints and other currencies available.
Interest rates on Swiss Franc mortgages have tended to be cheaper than for other
currencies in the past few years. The typical loan-to-value (LTV) is 70 percent
for resale property and 80 percent for new-build, though there are 100 percent
mortgages on offer in some circumstances. In general, loans are cheaper to
individuals than they are to limited companies (see Forms of ownership) and can
be paid back over longer periods e.g. 20 years for individuals compared with 10
years for companies. The mortgage fee is typically 1 percent of the mortgage
amount, payable on completion, and an additional 1 percent each year, which will
be added to the interest rate. Lenders require proof of income in all cases.
There are some self-certification mortgage products
available to buyers in Hungary. Mortgages for individuals The typical
limitations for mortgages to individuals for property in Hungary are as follows:
What is covered? Purchase of houses, apartments and freehold land are available
Type of loans available
Interest-only mortgages available for 3 or 5 years.
Maximum LTV (loan-to-value ratio)
- New-build and off-plan: 70 percent to 80 percent (depending on the
- Self-certification: 50 percent
- Re-mortgage: 60 percent 100 percent mortgage products are sometimes
available in the Hungarian market.
Maximum loan amount:
€500,000 or equivalent in other currency
Rates vary, but Euro mortgages are typically at a lower rate than Forint
mortgages, and Swiss Franc mortgages (by far the most popular mortgage currency
in Hungary) are at a lower rate than Euro mortgages.
Maximum term and age limit: 20 years maximum term (and not more than 68 years old at maturity)
Forint, Euro, Swiss Franc, U.S. Dollar
Mortgages for companies:
Hungarian companies can get limited finance subject to the following conditions:
- The company
has been trading for at least one year.
- The company
has complete balances signed by an auditor.
- The company
has a proof of income.
- The loan
will not exceed 50 percent of the LTV for a maximum period of 10 years.
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