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.
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:
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 neighboring cities in the EU, is one of the best destinations for property investors.
As you probably may know, real estate investments can be tough to navigate, especially if you lack the know-how on how to get started. In the real estate sector, there are several pitfalls that could make you lose money fast, especially if you are a first-time real estate investor. By fulfilling your due diligence plus a little guidance, surely you can easily steer clear from the common mistakes mostly made by first-time investors. The following are the most common mistakes that hinder successful property investments in Budapest:
Poor planning – If you are planning to venture into the real estate business in Budapest, you need to have a plan, and not just a plan, a good plan. Property investment can get pricey, and therefore, deciding to buy a house on a whim is poor planning, regardless of how good the deal is. Without proper research and planning, you might find yourself paying more money than you should have on a house that you didn’t need or even a low-quality house. So, when buying a house in Budapest, think about the upkeep, maintenance, and the cost of fixing it up, as well as all the hidden costs associated with property investment. Truth to be told, property investments are quite big, and when you are foreign investor looking to invest in the Hungarian capital, you should ensure that you carefully consider all the essential aspects related to the investment, and more importantly, ensure that you have a good plan.
Not doing enough research – So, here is the thing, there are several nuances that come with owning and selling property in Budapest, and this is what makes property investments to be quite complex. Depending on the property, being aware of the zoning laws or requiring permits for landscape changes may be a necessity. The property you are looking to buy might be located on a disaster-prone environment or a floodplain, which will have an impact on the insurance premiums you will have to pay. As well, the property might have insect infestation or perhaps someone died in that particular house (you may never know). You see, all these details are crucial and since they may not be included in the agreement between you and the seller, there is need to do more research on the property before committing money into it. Not doing enough research on the property you are about to buy maybe one of the worst mistakes you can ever make as an investor, particularly considering that you will be spending money in a foreign country. What’s more, you are new in Hungary, Budapest in particular, you know nothing about the real estate market there, therefore, you need to do a deep dive on the market and the property you are about to buy. This will help you determine whether there are any structural changes that need to be carried out on the property. Also, researching the market in Budapest will help you understand the value of your investment.
Hiring the wrong people – This is another mistake that foreign investors make when buying properties in Budapest. Property investment involves a number of processes and is quite complex, which means that you can’t do it all by yourself. You will need to hire a team of experienced realtors to help you get the best deal possible and in an ideal location within the city. These are the people with the knowledge that you desperately need, and by hiring the right people, you are guaranteed of a successful investment. Now, the problem comes when you hire the wrong people. By hiring the wrong people, you risk losing your money and your property. As well, you may end up paying more than you normally should. So, when doing more research on the properties and the real estate market in Budapest, remember to also research the real estate agency you want to hire to help you with your transactions.
Having a get-rich-quick mentality – Many investors, both local and foreign, have this believe that property investments lead to instant wealth. To be honest, this is far from the truth. This investment takes time and money before they can give you good returns. It will take great patience from you if you are to get anything from your investment, especially if you are considering investing in Budapest. You may find yourself holding your property for a while before selling so as to get better returns. Therefore, as a foreign investor eyeing the Hungarian market, you should take your time and also ensure that you put in extra hard work, and then, the payoff will be worth it. Remember -success takes time- so don’t rush it.
Spending too much – This is a habit that is most common among foreign real estate investors. Due to the desperation of owning property in Budapest, foreign investors will pay a lot of money to ensure that it happens. These kind of purchases are dangerous as you can lose your money in an instant. Anything making you pay more than you anticipated for your property should be avoided in all ways possible. You may find that there are some costs that the realtors forgot to disclose in your initial agreement that eventually emerges. Therefore, in the event there are too many problems with the property that requires you to spend on, you should avoid buying that particular property since you will end spending more money than you had planned for initially.
Ultimately, for you to succeed in the Hungarian property market, it is necessary that you play your cards right. Ensure that you have a good plan in place and also make sure that you do your research diligently and thoroughly. Property investments are quite costly, and when done right, they will generate good returns in the near future. Simple mistakes can cost you a lot of money, so make sure that you avoid them at all costs. Take appropriate steps and you will be headed in the right direction – towards successful real estate investments.
Property investments in Hungary, and particularly Budapest, have been quite popular among many foreign investors for many years. By itself, this fact alone is a perfect indicator for the stability of the Hungarian real estate market when compared to other European markets, and also for the business potentiality that the Hungarian capital offers global investors who choose to invest in the city. The main reasons which makes Budapest this popular in real estate investments includes: availability of international universities, its strategic location, that is, in the heart of Europe, its tourist attraction sceneries, low cost of living, easy processes of owning properties alongside an active encouragement from the government through incentives, as well as the constant appreciation of property prices.
Now, from a statistical viewpoint, the property rental market in Budapest is hugely active, which presents the investors with both short and long term rental benefits. In the last couple of years, there has been a steady and steep increase in property values, especially in the regenerated areas in the city, which in turn led to extremely high profits for property owners. A major factor that has contributed to this increase is the limited number of available rental properties in Budapest, which is also attributed to the small sizes of the city’s most central areas. Due to this, you will find that in the most sought-after areas of the city, there are no new constructions planned, resulting to a situation whereby, there is a high demand for rental properties in the center of the city on one side and a limited supply of the same on the other.
Being centrally located, the Hungarian capital, Budapest, is a lively cultural and business center and one of the largest cities in Europe and is occasionally referred to as the ‘Paris of Eastern Europe’, due to its extraordinary sights. Property prices in Budapest have increased over the last couple of years, as the country is trying to establish itself again from the global financial crisis that began in 2008. During this period, the city suffered from low-interest rates, lack of incentives to investors, both local and foreign, and also from low property supplies, which in turn soared the prices across the city. But the market has seen prices increment of around 20% since then and also promises a brighter future for property investors.
In all honesty, investing in the property market in Budapest has proven an intelligent decision to many investors, since it balances between low risk, stability and high yield. Foreign investors who invested in the real estate market in Budapest after the crisis in 2008 are today seeing a significant appreciation of property prices, which to them, might just be a bonus considering the fact that they rented their property the entire time during that period, since the rental market in Hungary, Budapest in particular, wasn’t affected by the micro effects that much. As well, on a regional collation, Budapest can be compared to cities such as Prague and Warsaw where the prices of properties are substantially higher. Therefore, when you look at it from the appreciation perspective, purchasing a property in Budapest is the best decision as it will bring you much higher returns when you sell it. Moreover, contrary to the other regions’ governments, the Hungarian government blocked the country’s borders during the most recent immigration crisis, thus guaranteeing a higher level of security and also a homogenized population, which are all favorable to property investors.
The other benefit is the presence of some of Europe’s most famous universities in the city, where foreign students attend to gain advanced degrees in areas such as veterinary, engineering, medicine, psychology, business management and many more. These professions take years to be completed and based on the country’s inflation, the tuition fees have increased in recent years, and so are the rental prices. This has led to more and more students buying properties in the city during their 3rd or 4th year into their degrees, which has enabled them to save on rental charges, finance their academic tuition, and most importantly, own a property in Budapest after they complete their studies. By them owning some property ensures the growth of the real estate sector in Budapest and Hungary in general, and the investors will have many clients to sell their property to. What’s more, from a risk management perspective, property investments in Budapest is a low-risk opportunity due to the massive economic growth experienced in the country.
On the downside, there are a few barriers to property investment in Budapest, and especially for new investors. They include:
So, in conclusion, we can say with the highest degree of certainty that buying a property in Budapest is the best investment move you will ever make as an investor. The property market in this city is at its best as the number of expatriates, tourists, students, and visitors who are coming to this city have risen in recent years. This has, therefore, increased the number of investors buying properties in Budapest, which makes the city the ideal place to invest in. As a matter of fact, the city is growing and pretty soon, everybody will want to own some property in it, and those who have moved the first and already have bought some properties will be the happiest and the luckiest people in the country.