The Hungarian real estate market is interesting for investors. The pandemic is still playing into its hands: housing prices are rising – and in Budapest, and on Balaton, and at the thermal spas. Taxes here are low, and the deal can be done remotely. Is it easy for a foreigner to buy an apartment, house or land in Hungary? What are the rules, are there restrictions? We tell you in order.
Citizens of what countries have the right to buy real estate in Hungary
Foreigners can buy residential and commercial property in Hungary virtually without restrictions. Only transactions with agricultural land and facilities protected by the state are prohibited.
Non-EU citizens are required to obtain permission from the local mayor’s office to purchase. The request is formal, refusal can only be due to the presence of a criminal record in Hungary. Obtaining permission to buy is a licensed Hungarian lawyer, the process may take two to three months.
If the purchase is made in the name of a legal entity, this permission is not required. However, registering a company is not a quick and costly affair. In addition, the company will have to pay taxes and make accounting. Therefore, buyers often prefer to conclude the deal for a physical person and wait.
What rights a foreigner has after buying property in Hungary
Buying real estate in Hungary does not give a foreigner the right to a residence permit. Owners enter the country on general grounds.
More about how you can get a visa or residence permit Hungary – in our article.
After the purchase of the property the owner must pay taxes. There is no general tax on real estate in the country, but in some cases the need for payment appears. For example, owners of land and own houses pay land tax, in addition, in a number of municipalities there is a local property tax. As a rule, it appears in places where property is often rented. Tax rates are approved by local authorities.
In addition, the owner pays for utilities: HOA fee in an apartment building, as well as water, electricity, gas, internet.
A foreigner becomes a tax resident of Hungary if he lives in the country for more than 183 days a year, or has a center of vital interests (family, work), or his only permanent address is there. In this case, he pays tax in Hungary on all income received in the country.
Searching for property in Hungary
The easiest way to start your real estate search is to check properties online. Our online real estate catalog features apartments and houses in Budapest, as well as popular Hungarian resorts. You can leave an application to find a variant to your requirements. Also we recommend before you choose to read articles and news about the real estate market and the peculiarities of entry to Hungary.
Realtors and Lawyers
A licensed lawyer is an indispensable part of the sale and purchase transaction in Hungary. Theoretically one can do without a realtor, and many Hungarians do the buying and selling themselves, connecting only a lawyer. However, a foreigner who does not speak Hungarian and does not live in the country, to go through all the stages of the transaction on their own is almost impossible.
Realtor acts only as an intermediary, formally his work ends at the time of signing the contract, but in practice he accompanies the transaction until its completion, that is, until the entry into the cadastre of the name of the new owner.
A realtor is necessarily a legal entity, but does not need a license to operate. Most realtors work as franchisees of large companies. Typically, sellers enter into a non-exclusive contract with one or more agencies. The seller’s contract with the agency is the basis for putting the property for sale and is private in nature. It may specify the mandatory parameters of the transaction, such as the amount of the deposit for the object or the timing of payments. It also specifies the agent’s fee.
Step-by-step procedure for the real estate transaction
Step 1: Reserve the object
After choosing the object, the buyer or his agent make an application and send it to the seller. The application specifies the price of the property, the amount of the deposit, and the schedule of payments. At the same time, the buyer contributes 1% of the price of the object as a guarantee that his intentions are serious. The money can be deposited on the account of a lawyer or realtor. At that point, the object is taken off the market – it is reserved. After that, the negotiation of the bid begins. If the seller does not accept the terms and the parties do not reach a compromise, the warranty is returned.
If the terms are accepted, the parties commit. Now if the buyer refuses the transaction without a valid reason, he will not get the warranty back. And if the seller refuses, he will return the buyer’s money and on top of that pay him 1% of the price as compensation for moral damages. Before the deal, the buyer can inspect the home and negotiate with the seller to buy a garage, furniture or other furnishings.