Home Property in Hungary
How to buy a house in Hungary?
Here you will find the detailed information about real estate purchasing in Hungary:
- the right way to choose the property and to effect the deal;
- property taxes and duties that should be paid;
- everything about home loans in Hungary;
- home property management and renting;
- rental, commercial properties and related investment properties.
Real estate for sale
Most recent offers from house owners in Hungary and from real estate agencies. Advertisements with the fixed price and auctions are listed here.
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Real estate market in Hungary has suffered during the crisis, but recently has demonstrated a fast recovery rate. More and more investors are keen to enter the Hungary’s market. To some extent this is based on a great number of affordable real property, as well as increased interest towards European commercial property.
Hungary is a very densely populated country, which attracts investors to local service industries. And the resort zone surrounding Lake Balaton provides foundation not only for travel industry, but also for the luxury sector of Hungarian real estate market.
Hungarian market of affordable real property is pretty well-developed. Cheap houses and flats can be found in every region of the country. For example, a 60 sq. m. apartment in the resort zone near Lake Balaton can be purchased for just €24 000. A 50 sq. m. apartment in Veszprem region costs around €28 000. Apartment with an area of 48 sq. m. in the Somogy county is worth some €33 000. A 38 sq. m. apartment in Budapest, the country’s capital, can be purchased for €40 000.
Buying a cheap house in Hungary is also an easy task. A 160 sq. m. house in the east Hungarian city of Kisvárda with 1300 sq. m. of land costs €16 000. A small house with an area of 80 sq. m. and a land parcel of 2000 sq. m. located on the shore of Lake Balaton is worth some €20 000.
Houses and villas for wealthy customers are located primarily in the vicinity of Lake Balaton as well as in Budapest. For instance, a luxury house in the capital with an area of 180 sq. m. goes for about €1.2 million. A 500 sq. m. mansion can be purchased for €1.5 million. A real castle on the shore of Lake Balaton with an area of 1100 sq. m. costs about €2 million. A 2700 sq. m. castle with a large land parcel (340 000 sq. m.) located on the border with Slovakia is worth around €5 million. A spacious villa with an area of 1000 sq. m. on the shore of Lake Balaton goes for €6 million.
Hungarian real estate market is generated interest among the investors. This is due not only to improvement of country’s economic situation, but also to the steadily growing demand for commercial real property across all Europe. All the more so as local prices are more than affordable.
For example, a small shop on the shore of Lake Balaton with an area of 65 sq. m. is worth €28 000. A 53 sq. m. shop in the capital costs around €72 000. A decent restaurant in the resort zone of Somogy with an area of 330 sq. m. can be purchased for €145 000. A 320 sq. m. hotel near Lake Balaton goes for €160 000.
Speaking of the capital, a 90 sq. m. office costs some €220 000. A luxury restaurant in Budapest with an area of 800 sq. m. is worth around €500 000. Price for hotels in the capital may vary. A regular 2000 sq. m. hotel costs about €700 000, while an elite hotel with an area of 4000 sq. m. is worth not less than €5.5 million.
Sale and purchase agreement is signed by both parties in the presence of a Hungarian registered lawyer. All purchase transactions in Hungary require legal assistance. It is common practice to sign the principal agreement right away, with no preliminary contracts.
The agreement should include the following information about the object: address, area, technical specifications, the value and time limits of the deal, as well as liabilities of the parties or terms of real estate loan. Moreover, a detailed payment schedule is made, and foreclosure process is defined. According to ee24.ru experts, in actual practice only the address, cadastral number and area are specified. As from 2014, another document – the energy certificate – must be attached to the agreement (this is usually executed and reimbursed at a cost of €100 by a seller rather than a buyer).
When buying an apartment in Hungary in a house under construction, as well as in an existent house, it is necessary to obtain a license from district administration (municipality). This license is obtained by a lawyer within 1 month after the contract has been signed.
Upon entering into an agreement the buyer makes a deposit of 10 % (sometimes 5 %) of the deal value (usually not less than €2000–3000). If the buyer does not fulfill the obligations under the agreement, a deposit is not returned. In case the seller does not fulfill his or her obligations, a deposit is returned at twice the amount.
Having obtained a purchase license from municipality, the buyer transfers the remaining amount to the account of a lawyer, who acts as guarantor of legal compliance. After that, the lawyer settles accounts with the seller.
Real estate registration
The final step of real estate acquisition in Hungary is registration of title in real property. The lawyer submits an application to the land management office for final registration in the buyer’s name. The ownership certificate is then available within 3 working days. According to official data, registration process can be accelerated fro 10 000 forints, which is about €33. Regular registration procedure takes 30–45 days.
According to our experts, the time period of 3 days is outdated – the accelerated program allows real estate registration within 15 days for €25 (as in Keszthely land management office). Regular registration of title in real property may be delayed for several months.
Hungarian real estate title can be registered before the end of construction of the actual building. After tenant builder has registered the object under construction in the register and obtained the required official authorization, and the buyer has paid the remaining amount under the agreement, the process of registration of rights to an apartment in Hungary may get underway. The buyer can get all information about any piece of real property (apartment, house or land) at the land committee, thus preventing any possible problems.
Hungarian real estate or land for building construction is available for both private individuals and legal entities. There is only one exception, applying to farm property and land, which are under the jurisdiction of government. Citizens of countries that are not members of the EU and the European Economic Area should obtain a special permit for purchasing Hungarian real estate from the respective district administration.
Foreign owners of companies located in Hungary are excused from this authorization and stamp duty payment. It is important to keep in mind the restrictions on the amount of foreign or domestic currency that may be imported into Hungary.
Hungary does not have a real estate tax, except for resort zones, such as Balaton or Hévíz. Tax rates are determined by local authorities based on real property remoteness from a resort. In Hévíz, this tax is 600 forints (or €2) per sq. m. a year. That is a house with an area of 200 sq. m. requires an annual payment of €400.
In Budapest, as in most parts of the country, there is no real estate tax.
Expenses for Hungarian real property are not limited to the assessed object value. Nevertheless, the process of real estate acquisition in Hungary is very simple – you will just have to consider additional expenses, which are though not that big to scare a buyer away.
Extra expenses for real estate purchase in Hungary:
- legal bills – 1–2 % of the total value;
stamp duty payment to the town council – 50 000 forints = €170;
- owner’s certificate payment – 6250 forints = €21;
- land title document, vetoing the previous owner – 6600 forints = €22;
- accelerated registration of title in real property within 3 working days after obtaining the purchase license – 10 000 forints = €33;
- notarization of international passport – 3000 forints = €10;
- DHL payment (e.g. for sending documents to the owner in Moscow) – 15 000 forints = €50;
- a single stamp duty in the amount of 4 % of the object value must be paid within 1 month following the assumption of real estate ownership;
- real estate agency fee of 3–5 % (may be more or less depending on a company).
Real estate insurance in Hungary
Real estate insurance is not mandatory in Hungary. It is required only in case you purchase real property using mortgage lending. However, it is strongly recommended to insure real estate against fire, robbery or any damage caused by a flood or a hurricane. Hungary is a country with high level of safety, but one can never be too careful.
The price of real estate insurance in Hungary is often higher, if you are not domiciled in a house or an apartment. Therefore, insurance of property with permanent residents is a lot cheaper. Hence it is recommended to pay special attention to the terms of sale and purchase agreement.
Hungarian income tax (upon buying or selling real property) makes up 25 % of the difference between the acquisition and purchase prices. However, this tax is not to be paid, if a piece of real estate has been owned for at least 5 years.
If real property has been owned from 4 to 5 years, income tax makes up 50 % of the earned revenue, in case of 3–4 years of ownership – 70 %, and in case of 2–3 years – 90 %. If the term of ownership is less than 2 years, the whole amount of revenue is taxed.