Buying real estate for foreigners – Hungary
How to buy foreign real estate in Hungary?
In our series, we go through the regulations of some European countries on the purchase of real estate by foreigners. We only want to talk about buying apartments, houses, cottages and shops. We are not discussing agricultural real estate and industrial investment because it is much more complicated to regulate in every country and very bureaucratic.
In Hungary, it is really easy to buy a residential property if someone is over 18 years old. If you can pay the full purchase price, all you have to do is find the right house, agree with the seller, sign the contract, pay and you can already move. A multilingual real estate portal, such as Uniomarket, helps foreigners a lot in finding a property. I have already discussed in my previous writing the question of what is more advantageous if we buy from an individual or if we use an agent or agency, so here we skip this, but I confirm that I would prefer an agency or agent.
If you want to take out a loan and now move here, or do not want to settle here at all, we can recommend that you give preference to financial institutions in your own country, because it is quite difficult for Hungarian banks to take out a loan for a person living abroad.
In Hungary, all real estate is included in the “real estate register” where it is registered on the basis of “hrsz” (topographical number). Only those who are listed are officially recognized as owners. So if we request an extract from the register, we can find out not only the official details of the property (exact location, size, type of property) but also the main details of the owner and the rights related to the property obligations. We can also see if there is credit or enforcement on the property. If the apartment is part of a condominium, we should also look at the Memorandum of Association of the Condominium to inquire about additional obligations. Houses and dwellings always form a unit together with the land and can thus be purchased together, unless there are several houses or flats or shops on a plot. In Hungarian law, it is not customary to enter into a long-term (eg 99 years) lease only for agricultural real estate.
How to contract?
In Hungary, it is a requirement that only a lawyer or notary may enter into a valid contract of sale for the property. Therefore, their contribution and its cost to the buyer cannot be ruled out. Here is a list of notaries and lawyers. The buyer is also liable to pay the property acquisition tax, the amount of which is adjusted to the value of the property (not always the same as the purchase price). The value of the property is determined by the tax office on the basis of the purchase price and local average prices. If the property is purchased together with equipment, its value must be stated separately in the contract, because after its value the aquisitor have to pay the tax separately.
It is customary to pay a deposit in advance to secure the property for ourselves. A strict rule for this is that you also need a lawyer or notary for the contract and if the buyer breaches it and there is no sale because of it, you will lose the money paid. However, if the sellers miss the purchase, they will have to repay twice as much as they received in advance. The buyer will become the owner only when the agency has registered his name in the register. It is therefore important that the lawyer or notary sends the contract there immediately. The parties agree on the possession, but it is worth not paying part of the purchase price until you have moved into the property.