Buying property in BUdapest: what do you need to know

Are you looking to buy property in Budapest as a foreigner? Well, you are among a growing number of investors looking to do so as well. There is a reason why foreign investors are attracted to this city this much. And before the end of this article, you will find what the reason is.

So, why Budapest?
This is the million-dollar question right here. So, Budapest, or as often referred to the ‘Paris of the East,’ is the capital city of Hungary, and is located right in the heart of Europe. It is a cosmopolitan city that has a rich cultural legacy. Over the last decade, the city has seen an increase in the number of people moving there. And truthfully, considering the city’s strategic location, affordability, culture, and history as well as the employment opportunities, you can understand why so many people are moving into the city.

As a result of this, the real estate market the city has transformed to become one of the most lucrative investment opportunities in Europe. The market now offers a great deal of investment yields as well as considerable value for money. And apart from the city’s strategic location, there are a number of other factors that have greatly contributed to the growth of the real estate market in Budapest. They include: the rising number of tourists coming into the country every year, the growing number of ex-pats across the city, and the fact that Budapest is the capital of student life in all of Europe.

An increase in the number of people coming into the city translates into an increase in demand for properties. Of course, all these people need to have roofs over their heads, which means that the need for properties will be expected to surge as we head into the future.

Should you buy or rent?
This is another crucial question that you need to ask yourself. See, responding to the rising demand for property in the city, the real estate market has attracted so many local and international property investors. The increasing number of tourists in the country has increased the demand for short-term lets in Budapest, as many of these tourists and visitors are considering to live in apartments rather than hotels. The ex-pats and student population increase have boosted the demand for long-terms lets significantly.

The low property prices, strong rental yields, and the weak currency have encouraged more and more investors to invest in the city’s property market. Also, due to the exponential growth of property values recently, the market has promised lucrative returns to the investors. But, a majority of these investors are in a dilemma, trying to decide whether to buy or rent property in the city. So, before making this decision, consider the following factors:
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• How long are you staying in Budapest? – if you are staying in the country for years, then buying a property will be a wise decision. If it is for a short period of time, then you should consider renting an apartment.
• Are you able to afford the rent of the property? – see, if you plan to remain in the country for years, then you should know renting a property is way expensive than buying it. The value of your home is set to increase over time, which means that when it’s time to sell the property, it will go for more than you bought it. As for renting, you will be losing money.
• Are you looking to transform the home to make it your own? – look, if you are moving with your family, and are planning to stay for long, then consider buying the property since that way, you will be able to design it however you want. No one is restricting is to do anything, as in the case of a rented property, you can decorate, and refurbish the home based on what your heart desires.
• Would you want to make some money when it is time to leave the city? – due to the rise in property prices, when you buy a property, be sure that you will be able to sell it at a very good profit when the time comes for you to leave. If this is what you want, then consider buying rather than renting.
• Would you like to renovate? – As you know, you can’t renovate a house that you are renting, because you don’t own it. So, if you would like to renovate the property, maybe when selling it or when you are moving in, buy it. That way, you own it and you can do whatever you want with it.

So, when you decide to buy, what should you consider?
So, after making your decision, and you’ve decided to buy, here is what you need to know:

The legal procedure – both EU and non-EU nationals are allowed to buy property in Hungary. For EU residents, their rights and obligations are similar to the Hungarian citizens. This means that they don’t need any permission when buying a property in the country. But as for non-EU nationals, they need to obtain approval from the local municipality.

Costs – in addition to the cost of the property, there is a 1.5% of the total cost on legal fees, a 4% stamp duty fees. There is also a 15% income tax on the annual rental income if you decide to rent your property. And as there is no property tax in the country, you will be exempted from tax if you decide to sell your property.

Mortgage – lenders in Hungary provides EU citizens with loans to fund their investments. But before you are given the loan, you are expected to make a 30-40% down, also you need to have sufficient monthly income. However, for non-EU citizens, it would be much harder to obtain a mortgage from local banks.
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