Since the European Union membership, buying property in Hungary became much easier. Still, there are some bureaucratic obstacles to overcome – both for future homeowners and property investors. This article will guide you through how to make a successful property purchase in Hungary.
Steps of purchasing property in Hungary
|1. Search and price negotiation||4. Contract signing|
|2. Preliminary contract||5. Land registry|
|3. Permit application||6. Stamp duty payment|
2 & 3: only needed for citizens outside the EU
Buying property as an EU citizen or non-EU member citizen
EU citizens can buy property in Hungary without any additional permissions needed. Purchasing a home is the same as for any Hungarian homebuyer.
Non-EU Member citizens must obtain a permit from the local government (Kormányhivatal). The intent to transfer the ownership of the property can be verified from the application.
This means for the application you need to sign the sale and purchase contract or a preliminary contract.
If you choose the preliminary contract, it is preferable to sign it with a lawyer but at least undersigned by two witnesses. Only after signing, can you submit the application to the authority.
Tip #1: The procedure and all of the needed documents are in Hungarian, in case you are unsure about the process or simply want to save time, contact a lawyer.
Unfortunately, the procedure takes around 45-60 days until closed, and there is no accelerated way to obtain the ownership permit.
Regarding the price, the permission costs 50.000 HUF per property. If you are a person with the right of free movement and residence or with permanent resident status and with a petition for citizenship pending, you only have to pay 10 000 HUF per property. The duty is charged at the moment of submitting the application.
Tip #2: In certain cases, establishing a company for buying property as an investment in Hungary is more advantageous.
If a non-EU member citizen incorporates a company in Hungary, no permit will be required, but overhead costs and accountant fees will arise.
Closing the property purchase contract with a lawyer
In Hungary, the sale and purchase contract must be countersigned by a Hungarian lawyer.
Usually, it is the buyer who chooses and pays the lawyer for signing the contract but the seller might insist on his lawyer as well, it is only a matter of agreement.
The lawyer consults about the details with the parties, drafts the contract, deals with the land registry procedure and can arrange the obtaining of the permit needed for citizens outside of the EU.
Lawyer fees are usually around 1% of the property purchase price, in general, the higher the value of the property the less percentage fee is negotiable with the lawyer.
Tip #3: Foreigners buying property in Hungary are easier targets for scammers, thus choosing a seasoned lawyer with a solid background is essential.
Land registry procedure
Once the contract has been concluded by the parties it has to be submitted to the land registry for the registration of the ownership.
Usually, it takes 60 days but there is an accelerated procedure that takes only 30 days.
The registration fee is 6.600 HUF but in case of urgency, there is an accelerated procedure for 16.600 HUF.
Tip #4: In most cases, lawyers take on the land registry process but double-check if this is included in the price and service pack of your lawyer.
Stamp duty on acquiring property in Hungary
Finally, buyers need to pay stamp duty for acquiring a property. In this case, no proactivity is needed as the tax authority (NAV) will automatically send a notification stating the amount and the deadline for the payment.
Homebuyers are required to pay a 4% stamp duty based on the purchase price.
There are many exemptions and allowances from paying stamp duty that depend on the particular contractual arrangement.
Tip #5: stamp duty can be reduced in case of buying and selling a property within three years. In such a case, only the price differential is the value basis for the duty and not the entire purchase price.
Cost of buying property in Hungary
To sum up this Hungarian property purchase guide, we have calculated the different fees in case of buying an average Budapest downtown flat.
|Property purchase price||200.000 €|
|Stamp duty (4%)||8.000 €|
|Legal fee (1%)||2.000 €|
|Land registry fee||20 €|
|Title deed||20 €|
|Extra fees for non-EU citizens|
|Certified passport copy||10 €|
|Total fees||10.205 €|