Buying property in Hungary: Key Property Facts
Types of tenure: all property in Hungary is freehold.
Forms of ownership: There are two ways to proceed for prospective investors:
- The buyer can apply for a permit as an individual, which means submitting an application to the local authorities to acquire the property.
- Foreign buyers can establish a local Hungarian company, usually a limited liability company. This is preferable if the purchaser wishes to acquire multiple properties.
Restrictions: In order to buy property in Hungary as an individual, foreign nationals (with the exception of EU citizens purchasing a property as their principal residence) must first obtain a permit, which can take up to two months. Each purchaser is allowed to acquire only one property, unless buying through a Hungarian limited company.
Property rights: On the issue of property rights, the Heritage Foundations states: “The judiciary is constitutionally independent, and the government respects this in practice. The threat of expropriation is low. The courts are slow and severely overburdened, and a final ruling on a contract dispute can take more than a year. Protection of intellectual property rights has improved, but more needs to be done.”
Mortgage finance: Mortgages in Hungary are for the most part taken out in Swiss Francs, but there are mortgages in Forints and other currencies available. Interest rates on Swiss Franc mortgages have tended to be cheaper than for other currencies in the past few years. The typical loan-to-value (LTV) is 70 percent for resale property and 80 percent for new-build, though there are 100 percent mortgages offered in some circumstances. In general, loans are cheaper to individuals than they are to limited companies (see Forms of ownership) and can be paid back over longer periods e.g. 20 years for individuals compared with 10 years for companies.
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Issues and risks: The hangover from 50 years of communist rule is that title registration is often out of date, so the only way to be 100 percent certain you legally own your Hungarian property is to take proper care that:
- You obtain the title deed to the property.
- You register this with the official Land Register.
Registering the title deed makes it legally binding with regard to any interested third party.
Regulations: The ownership right is the absolute right over land. However, there also exists the concept of iura in re aliena (rights over another’s property), for example ufustruct—the right to use another person’s land and gain profit or benefit from doing so, as long as there is no damage done to the property. These rights can be established by law, by contract or some are created by a court decision.
Some of these rights can be registered in the land register. In general, the registered rights are enforceable against any third party. “Use right” registered in the land register are differentiated from “lease right”, which can be established by contract but may not be registered. There is an ongoing reform of the Hungarian Civil Code including land law. Furthermore, there is also an ongoing draft law before the Hungarian Parliament to unify three existing Hungarian laws: the Lease Act; the Condominium Act; and the Flat Cooperative Act.
Key Property Markets
Budapest is without doubt one of the world’s most stunning cities. Investment and restoration in the city is ongoing; its historical treasures are constantly being refurbished and renewed, with new buildings springing up each year. Budapest is sometimes referred to as the “Paris of the East”, but comparable high-end properties there are actually a fifth or less of the cost of those in Paris or London, and a quarter of those in Dublin. Budapest is on the way to becoming one of the biggest economic engines of Eastern Europe and is unique among European capitals in its return for capital invested in property, be it residential or commercial.
Lake Balaton is the largest lake in Central Europe and a popular regional tourist destination, often affectionately called the “Hungarian Sea”. The major resorts around the lake are Siófok, Keszthely and Balatonfüred. Siófok is known often as the “Party Capital of Hungary” and attracts many young partygoers in summer thanks to its numerous large discos. Keszthely is the site of the famous Festetics Palace and Balatonfüred is a historical bathing town home to the annual Anna Ball. The high tourist season extends from June until the end of August, with average summer water temperatures of 25°C making bathing and swimming very pleasant. Many resorts have artificial sandy beaches and all beaches have step access to the water. Other tourist attractions include sailing, fishing and other water sports. It is also worth visiting the lake in winter, when you can go fishing through ice-holes, skate, sledge or ice-sail on the lake.
Transdanubia (Western Hungary) is divided into three provinces: Central Transdanubia, Western Transdanubia and Southern Transdanubia. They provide a variety of beautiful attractions, from medieval towns and villages, baroque and renaissance palaces, castle ruins, healing spas and natural landscapes of forests, lakes and wetlands. Property prices in this region are very low compared to other areas of Hungary. With tourism increasing, this region demands consideration for property investments.
Other Hungary property guides:
- For statistical, demographic and economic data, see the Hungary Property Guide: Fact Sheet.
- For information on the purchase process and financing, see the Hungary Property Guide: Buying and Financing Guide.
