Who Can Buy Property in Hungary?
Generally, foreigners are allowed to purchase property in Hungary with the exception of agricultural land and monuments. Depending on your nationality, you might need to apply for a license to be able to make the purchase. You don’t need a license if:
- You are a citizen of Hungary
- You are a citizen of an EU member state or Norway, Liechtenstein, Iceland or Switzerland
- You inherit the property
- You purchased the property under a Hungarian company
If you do not belong to any of the groups above, you will need to apply for a license from the local government office. The government office wants any purchaser to not have a criminal history and that they are allowed to enter Hungary.
Do the Research
Hungary has a lot more to offer than just Budapest (although that is where the majority of foreigners are purchasing property). Other areas to consider:
Debrecen - Hungary´s second largest city which is situated in the eastern part of the country. Debrecen offers a rich history, a lot of green spaces, and an interesting art scene catering to both tourists and residents alike.
Pécs - With a history going back over 2000 years and a favorable climate, Pécs has a lot to offer for many. It is renowned for its local wine and food culture with the Villány wine region nearby.
Determine your budget and goals - whether you are looking for an investment, a holiday home, or permanent residence. You can either engage a reputable real estate agency to help you with property search or search online:
Make sure to visit the properties you are interested in if at all possible to assess their suitability and condition. You only get the true feeling about a property if you are physically there.
Foreigners can obtain financing in Hungary through local banks, but keep in mind that interest rates might be not at all favorable at around 10%. Usually, loans are offered at 50-70% of the value of the property for foreigners so expect to make a substantial downpayment.
Make an Offer
Once you have found a property that you like, try to negotiate the price. In this stage, it is also important to engage the services of a reputable real estate lawyer to see through all the aspects of the purchase process. A structural survey is not mandatory but is recommended.
Finalize the Purchase
When an agreement is reached between the buyer and the seller, the lawyer will start the process of title search. When the title has been declared clear from encumbrances, the preliminary purchase agreement is drafted by the lawyer. At this stage, a deposit of 10-15% is paid by the buyer. Note that this agreement is binding. If the purchase permit is needed, it will also be applied for (usually with the help of a lawyer).
Finally, a sales agreement is signed and the remainder of the purchase price is transferred to the seller. The lawyer then notifies the land registry of the change and the title will be transferred to your name.
Property Buying Costs and Taxes in Hungary
|Transfer Tax||2% - 4%||buyer|
|Legal Fees||1% - 5%||buyer|
|Registration Fees||0.01% - 0.05%||buyer|
|Real estate Agent´s Fee||3% - 5% (+27% VAT)||seller|
|Costs paid by buyer||3.01% - 9.05%|
|Costs paid by seller||3% - 5%|
|ROUNDTRIP TRANSACTION COSTS||6.01% - 14.05%|
|Source: Global Property Guide|