Guide to Buying Property in Hungary
The Hungarian Property Market
Of the ten newest members of the European Union, Hungary has the fastest growing
economy. As a result, those foreign nationals that took advantage of the liberalization
that has begun to occur in the real estate laws of that country have enjoyed a profitable
status over the course of the past three years.
Interestingly, the largest block of foreign nationals that are purchasing
property in Hungary are from Ireland. The remaining groupings of foreign
nationals tend to come from some of the other European Union nations.
The Hungarian national government has made a consistent and concerted effort to
attract foreign investment into that country. In this regard, the government of
Hungary has worked deliberately to liberalize the real estate laws in that country
to make real estate investment and other types of economic involvement in Hungary
more attractive to foreign nationals.
Investment Property in Hungary
Many foreign nationals have joined together with Hungarians in a whole host of different
types of real estate investment enterprises. These trans-national joint ventures
have been found in a wide array of different types of real estate holdings. For
example, multi-national partnerships have been formed in the industrial, commercial
and even residential real estate arenas.
Most real estate analysts that are familiar with Hungarian real estate market recommend
that a foreign national interested in investing in
real estate in Hungary should look to older properties in more established
neighborhoods or zones. This recommendation holds true whether a foreign national
is seeking to invest in commercial or residential real estate.
These real estate experts and analysts are reporting that the appreciation of these
older properties are appreciating significantly, after undergoing a modest amount
of rehabilitation after being purchased. Indeed, these analysts report that the
value of these older properties -- both commercial and residential -- are appreciating
upwards to 30% annually … an incredible return.
The Hungarian capital of Budapest has derived the greatest amount of foreign investment
in real estate in the past decade. Because the Danube River runs right through the
city, a river that is an important European waterway, the capital is a natural for
real estate and related types of investment.
Residential Real Estate in Hungary - Single Family Properties
When it comes to single family homes, as has been touched on previously, those homes
in more established neighborhoods -- older properties -- generally are more solid
investments for a foreign national. The value of these properties -- following even
only a modest amount of remodeling work -- rises a substantial amount each and every
year. Currently, the value of these types of house is increasing in value at the
rate of 27 to 30% each year.
There are some newer housing developments on the drawing board and under construction
in different parts of the country. While there are some attractive points to these
properties, as a rule, these homes -- once completed -- simply are not appreciating
in value as are the older residences.
Apartments in Hungary
The demand for
apartments in Hungary is very strong in this day and age. Foreign nationals
make up a considerable portion of the number of people who can be found purchasing
apartments in Hungary during the course of a given year. Additionally, and interestingly,
the Irish make up the most significant block of foreign nationals who are
buying apartments in Hungary.
For the most part, foreign nationals have be found investing and purchasing apartments
in the more major cities and urban areas in the country. With the entry of Hungary
into the EU, coupled with the strong economy of the country in recent times, a growing
number of foreign nationals are drawn to the company for economic and business reasons
and purposes.
In this regard, when foreign nationals are found to be entering Hungary for business
purposes, these men and women are taking to purchasing apartments for their housing
needs. In the brisk apartment market in Hungary, the costs associated with these
units is moderate when contrasted with similar apartments in other cities in Europe.
Indeed, apartments
throughout Hungary generally are classified as affordable when contrasted
with the overall residential real estate market in the European Union in the 21st
century
Holiday Property in Hungary
In many ways, the 21st century has represented the true dawn of the tourism industry
in Hungary. During the 20th century, tourism really was not a top industry in Hungary.
Indeed, not that many people around the world included Hungary on their list of
must-visit countries.
Since Hungary's passage from communist control, since Hungary broke free of the
Soviet yolk, there has been a significant increase in the number of people who now
are making Hungary a destination point for holiday travel. Many people are beginning
to appreciate the true historic splendor that is Hungary.
A number of foreign investors have come together in the development of resort properties
for travelers to the country. In addition, a growing number of foreign nationals
(again, with the Irish coming in at first place) have taken to buying apartments
which are being rented to travelers who intend to spend an extended period of time
in Hungary.
Not only are these apartments being developed in the urban areas of the country,
but a number of such developments have been undertaken in some of the more rural
locations of Hungary.
Many foreign nationals have found themselves attracted to the placid lifestyle and
serene beauty of these more rural regions in the country.
Specific steps to buying real estate property in Hungary
Hungary left the Soviet and communist era behind with a much stronger economy that
had other nations that formerly were kept behind the Iron Curtain. As a result,
Hungary has continued to enjoy an economic advantage over many countries in Europe
in recent years. Most financial analysts and economic experts maintain that Hungary
will enjoy a GDP that will exceed by 50% annually over what is being experienced
in other EU nations over the coming few years.
One sector of the overall Hungarian economy that has been experience significant
growth and activity is the real estate market. Thanks to efforts made by the Hungarian
government to liberalize and streamline its real estate laws, including those laws
that pertain to foreign ownership of real estate, more and more foreign nationals
are investing in Hungary.
Historically, foreign nationals could not invest in
real estate in Hungary. However, at this juncture, a foreign national can
invest as an individual in real estate in Hungary. With that said, prior to making
the purchase of real estate as an individual, a foreign national must obtain permission
from the Hungarian Land Registry to purchase real estate in that country. Again,
this step must be taken only if a foreign national intends to hold title to real
estate in Hungary in his or her individual capacity.
The process of preparing an application for the Land Registry is a simple matter.
With that said, there can be up to a month's wait before the Land Registry will
act on an application to purchase real estate.
Some foreign nationals forgo the Land Registry application process by establishing
a limited liability company in Hungary that can take ownership of real estate without
the requirement of registering with the Land Registry Office. A competent lawyer
in Hungary can complete the documents necessary to create a limited liability company
within a day -- and can have them filed immediately with the appropriate governmental
authorities.
Once a foreign national determines which route he or she will take in regard to
the purchase of real estate in Hungary -- with as an individual or through a limited
liability company -- the next step in the real estate sales transaction process
is the execution of a preliminary sales agreement. Generally the buyer is obliged
to post a deposit at this juncture, usually in the amount of about 10% of the overall
purchase price of the real estate. After the initial agreement is signed, the buyer
embarks on obtaining his or her financing while the seller makes certain that the
property is capable to being legally conveyed to the buyer, makes certain that there
are no legal encumbrances attached to the real estate. The seller must make certain
that the buyer can take possession and ownership of the real estate free and clear
of any impediment.
The last step in the real estate sales process is the execution of the final sales
agreement and the conveyance of the deed from the seller to the buyer. The deed
will then be registered with the Land Registry Office which will make necessary
changes in the legal records pertaining to the property to reflect the new ownership
of the real estate.
Overall, the real estate sales process in Hungary has become significantly easier
to undertake in the course of recent years. Whether one is proceeding as an individual
or through a limited liability company, a foreign national can purchase a wide range
of different types of real estate in the country in the 21st century.
Property Abroad always recommends using a
Solicitor or Lawyer
Further information on Hungary
Hungary Mortgages Options
When considering the options for a
Hungary mortgage on your overseas property there are a couple of choices to
consider:
- Do you consider raising finance on your existing property in the UK to cover the
whole cost of your purchase abroad? A good idea if the interest rate in the country
in question is a lot higher than it is here in the UK as you will pay a lot less
in monthly repayments.
- Do you secure a mortgage against the property from a local bank in the country of
purchase? This can be a wise option especially if the interest rate is lower than
our current UK interest rate. Most overseas mortgage / bank lenders will require
upto 30% deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are not living
or earning in that country as you may well lose out on exchanging money each time
to cover monthly expenses. Check out our
Foreign Currency page to see how you can save money in this example
- Some Builders and developers may well offer their own mortgage facilities on their
properties for sale. This can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare with the two options
above before making your final descision.
For more details on Mortgages in
Hungary visit our Mortgage page in Hungary section.
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