How to buy property in Hungary as a foreigner?

Buying property in Hungary in general

In Hungary, the journey to home ownership, particularly for natural persons, is marked by a series of important steps, each ensuring compliance with local regulations and safeguarding the interests of all parties involved. The key milestones in property investment are 

• searching for the right property
• legal and technical due diligence
• drafting and signing a contract which must be countersigned by a lawyer or civil law notary
• registration of the property at the Land Registry, a step that legally solidifies ownership. 

To officially register ownership of a property in Hungary, it's necessary to engage a lawyer who is a member of the local bar association, or a barred civil law notary. Typically, lawyers charge around 0,5-1% of the property's purchase price for their services, whereas notaries often command higher fees.

The cost for registering a property is quite affordable, only 6,600 HUF, provided there is no mortgage associated with it.

Buying real estate by foreigners - basic rules

The purchase of real estate by non-Hungarian nationals is governed by specific regulations. These include the Housing Act, officially known as Act LXXVIII of 1993, which sets out rules for leasing and disposing of residential properties. Additionally, the process is also guided by Government Decree 251/2014 (X. 2.), which specifically addresses the acquisition of non-agricultural and non-forestry land by foreigners.

As only foreigners are subject to authorisation to acquire property, we first need to establish who qualifies as a foreign legal entity or natural person:

• Foreign legal entity: legal person or entity without legal personality not having its seat in a Member State of the European Union, in a State party to the Agreement on the European Economic Area (Norway Liechtenstein Iceland) or in a State governed by an international treaty to which they are a party (Switzerland);
• Foreign natural person: a natural person who is not a national of a Member State of the European Union, a State party to the Agreement on the European Economic Area or a State which is a party to an international treaty with which they are regarded as a national.

In other words, a company or an individual who is established in or a citizen of a Member State of the European Union or any other equivalent country is not considered a foreigner but a national.

Check whether you need a property acquisition permit using our calculator below:

EU citizen buying property in Hungary

Buying a property in Hungary for an EU citizen is not a complicated process, if one is buying a simple property for residential purposes. Citizens of an EU country, of a state party to the EEA Agreement (e.g. Norway) or of a state that is a party to an international treaty (e.g. Switzerland) are not subject to the above-mentioned conditions, so they can buy property in Hungary without a permit from the government office.

Euro-Mediterranean Agreements and the Hungarian purchase permit

There should be no restrictions on capital movements between Israel, Egypt, Lebanon, etc. and the EU, including no discrimination based on nationality or investment location. However, specific provisions of this agreement do not prevent the application of existing restrictions on direct investments in real estate as of the agreement's effective date. This means that e.g. Israeli citizens are not exempt from the Hungarian regulation which requires government approval for foreigners acquiring real estate, a requirement that has been in place even before the relevant EU regulation from 2014. Thus, Israeli citizens must still obtain the necessary government permissions to purchase real estate in Hungary, similar to other non-EU nationals.

Do UK citizens need a property purchase permit as a foreign national?

As of 31 January 2020, the UK is not a member of the European Union and has not joined the EEA, so British citizens are required to obtain a government permit from the local authority (with jurisdiction) to buy property in Hungary. If a UK citizen obtained a residence permit, or any other legal basis to stay in Hungary before Brexit - the permit obligation may be waived.

What if a dual national is acquiring property?

No authorisation procedure is required for the acquisition of real estate by dual nationals. Dual nationals have the same status as Hungarian citizens.

How can you acquire ownership of a property if you are a Hungarian citizen living abroad without a Hungarian address?

It is also possible for a Hungarian citizen to buy a property without a Hungarian address as no "address card" or legal address is required.

What properties are affected by the restriction for real estate investments in Hungary?

The rules described in this article do not apply for agricultural and forestry lands, as these can only be acquired by a national or EU citizen under the relevant legislation. If you are buying a farmstead or any other land, where the topographical lot number starts with 0, please contact us directly for case specific information!

The process of foreigners acquiring property

The real estate acquisition permit procedure is carried out by the government office of the capital city and county where the real estate is located. In the course of the procedure, the Government Office shall examine, on the basis of the application and its annexes submitted with the data content annexed to the above Government Decree.

The Government office examines the following:

1. Can the identity of a foreign natural person or the identity of a branch or commercial representation of a foreign legal entity in accordance with the Branch Office Act can be credibly established? (passports, registration documents and other credible documents)
2. Is it possible to establish a clear intention to transfer ownership of the property in question? (sale and purchase contract)
3. Does the acquisition of the property harm the interests of the municipality?
4. Is the acquisition of the property contrary to the public interest?

If the investigation carried out during the procedure leads to a satisfactory result, the Government Office will authorise the acquisition of the property.

Harm to the interest of the municipality

A property purchase can be considered an infringement on municipal interests if it impacts the local government's public responsibilities, as legally defined. In such cases, the mayor, or in Budapest, the district mayor or the Lord Mayor, must inform the capital and county government office within 30 days of finding out.

However, even if this municipal interest is affected, the government office can still approve the property purchase if the buyer is an individual entrepreneur or part of a sole proprietorship, according to relevant laws. This is possible if the buyer intends to do business in Hungary, needs the property for their business, plans to regularly reside in Hungary, and the purchase doesn't conflict with public interest. Note that buying property for real estate brokerage isn't considered a business necessity.

If these criteria aren't met, the government office will deny the purchase if it goes against municipal interests.

Damaging the public interest

If an application for property acquisition permission were to negatively impact public interest, it would likely be denied by the government. Public interest is deemed harmed in instances where the applicant is a foreign individual with a criminal record, is facing expulsion, entry and residence bans, or has an outstanding arrest warrant.

For foreign legal entities, public interest concerns arise if the entity's branch or commercial representation is under restrictions due to the Act on Criminal Measures Applicable to Legal Persons. Additional concerns include having their tax number suspended or cancelled by the state tax authority, or if they are undergoing liquidation, compulsory liquidation, or winding-up proceedings as outlined in the Branch Act.

How to apply for a foreign ownership permit?

If you buy real estate in Hungary the application for foreign ownership permit can be submitted on paper for individuals, but only on e-paper for companies and companies represented by a legal representative. It is easier and much quicker to file via e-paper, so we recommend it to anyone with a client portal.

Don't have a client account? Follow our guide!

Deadline for obtaining a permit from a government office

The administrative deadline for obtaining a permit from a government office is 45 days for foreigners wishing to acquire real estate.

Procedure fee

For non-resident companies or individuals seeking to acquire real estate, an administrative fee of HUF 50,000 per property is required for the permit process. However, a notable exception applies to foreign individuals with free movement and residence rights or settled status, who are in the process of acquiring Hungarian citizenship. 

For these individuals, the administrative fee for the property acquisition permit is reduced to HUF 10,000. Discover more about the expenses involved in property purchases in our comprehensive article linked below!

What must be attached to the application?

The floowing shall be attached to the application for foreign ownership permit:

• Proof of payment of the administrative fee (as already stated above, an administrative service fee of HUF 50,000 - per property is usually payable to the competent government office)
• Passport or ID card / company certificate of branch or commercial representation (not older than 21 days or certified by a notary public)
• Contract for purchasing property (sale and purchase contract)
• Ownership certificate (not older than 21 days certified/e-certified)
• Criminal record certificate
• Power of attorney for a legal representative

Summary

When purchasing a property, whether it’s a quaint apartment in Budapest or a charming house by Lake Balaton, the purchase price is just one aspect of the transaction. Critical to this process is the involvement of English speaking locally authorized legal professionals who guide buyers through the complexities of the Hungarian property market. 

It is important that all foreign national clients are aware of the specific rules for foreigners acquiring real estate, including the licensing procedure and the steps required to obtain ownership of the property - especially if the buyer is a non-EU (e.g. British) national.

The cover image was created by Nikoletta Fazekas.

If you need legal consultaion or any help from a Budapest, Pécs, Szeged, Kaposvár, Eger or Salgótarján based lawyer, please call us at any of the contact details below!