BUYING PROPERTY IN BUDAPEST: THE PROCESSES FOR FOREIGNERS

If you are considering buying some property in Hungary, and Budapest in particular, you will be pleased to know that the buying process might be easier than you might have anticipated. In this article, we will explore the process to buy a property in Budapest for foreign investors.

​The rights of foreigners, and especially those from EU nations, and those of the Hungarian citizens are almost the same. All that you need as an expat is to have a permit, which will cost around 200 pounds and can be obtained from the district council. Obtaining this permit is considered to be a formality and will take a maximum of 6 weeks to be finalized. When talking about foreigners, we are referring to both EU nationals as well as non-EU citizens. However, it is important to note that this particular permit is required more from the non-EU nationals as compared to EU nationals. Reason being, since Hungary joined the EU, that is, back in 2004, it made it easier for the citizens from the fellow EU nations to invest in its property markets. This allowed EU nationals to own property wherever they want in Budapest since the country’s presence in the EU did put EU citizens on an equal footing and are treated equally as the Hungarian citizens. However, for the properties in rural areas, they are only available to Hungarians only at present. Below you will find the requirements for both EU and non-EU citizens for them to invest in the country’s real estate market.

For the EU nationals, once you’ve decided that you want to buy a property in the Hungarian capital, Budapest, there will a series of straightforward events that will have to take place so as to make you the rightful and legal owner. It is also important to note that in most of these process, you will definitely require a lawyer and a realtor company who will help you in every stage in the transactions. The realtors should preferably come from Budapest, as they are the ones to help you locate the ideal place to buy some property, considering that they know the city better.

• Once you have identified the property, you should negotiate since most agents over-value their listings in most cases.
• After the identification process is where the lawyer’s services come in with the Title searches. One point to note, the lawyer will not only represent the buyer but also the seller, even though the former will be the one to pay for the services. An architectural and/or structural survey of the property is also highly recommended.
• After reaching an agreement, the lawyer commences with the process of securing the approval of the local government.
• The lawyer then drafts the purchase agreement, that is, if the title is clear from any form of encumbrances. This document is then signed by the parties and the lawyer and is very crucial as it validates property transfer.
• A meeting of the buyer, the lawyer, and the seller is then arranged to sign the contract. This is done in the presence of all the parties involved and a representative of the real estate company you hired. At this point, the buyer is expected to pay at least 10% of the agreed-upon price as a deposit.
• After contract signing, the buyer pays the agents and lawyer’s fees, and thereafter the purchase agreement is submitted to the land registry office within 30 days.
• The permission process tends to take several days before the buyer receives the purchase permission from the administration office. After receiving permission, both the buyer and the seller sign the closing statement, which declares that the payment has been paid in full and that full possession is transferred to the buyer.

This entire process takes a maximum of 60 days to finalize, that is, from the contract signing day all the way to the closing process.

Now, with regards to the non-EU nationals, the process is a little bit different and may take a longer period to be finalized. It may take a few more weeks, but the good thing is, the entire process is bureaucratic, and hence you won’t need to stay here, in Budapest, or be present during this period. The Hungarian market is quite favorable towards foreign property investors, which makes the entire process swift and easy to execute, even though it takes time. So basically, the process is as follows:
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• First and foremost, the non-EU buyer will need a permit if he/she wants to invest in the country’s property market. Alternatively, the non-EU buyer can also set up a company in Hungary in order to purchase a property. In that case, no permit is needed. The company registration process is pretty straightforward, which takes about 1-2 days.
• If you still wants to buy the property under your own name instead of setting up a company, the realtors usually will help you to obtain the permit by appointing a partner local law firm to facilitate the process, once the property has been identified.
• After that, the buyer then gives a written offer, commonly referred to as a letter of intent. If reasonable enough to both the buyer and the seller, they will then proceed to sign the preliminary purchase agreement, where the buyer will deposit the first 10% as a down payment to secure the property.
• The realtors will then involve their lawyers who will handle all the legal/financial obligations with regards to the permit as well as the final purchase. It is important to note though that the lawyer’s fees will be paid by the buyer.
• If the process is finalized by the time you visit the country, then well and good, you will be able to sign the paperwork, if not, then you can authorize a local representative (i.e. power of attorney), to sign on your behalf.
• Most foreign investors shall receive the permit within 2-3 months. Once the permit is obtained, the lawyer will then draft the final sales and purchase agreement. Once it is reviewed and signed by both parties, the seller should then deposit his/her written consent to the lawyer with regards to the transfer of the property ownership, while the buyer should pay the remaining 90% of the purchase price to the seller.
• Once the seller receives the full payment, the lawyer will then submit the written consent to the Registry Office. It takes usually 3-4 weeks after the submission to receive an official order from the Registry Office reflecting the registration of the new ownership of the property.
• The buyer shall then register the utility accounts in his/her name in the local municipality.
• Also, as a non-EU national, the buyer will be required to pay 4% purchase tax, 0.75% accompanying services just in case you need extra bureaucratic services with the municipality, and as mentioned earlier, 1.5% legal fees for the lawyer.

All in all, whether you are an EU or non-EU national and you are interested in investing in the property markets in Budapest, Hungary, you are more than welcome to seize the opportunities. Budapest, just like its neighbouring cities in the EU, is one of the best destinations for property investors.
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