Buying Property in Hungary as a Foreigner: What You Need to Know

The Buying Process for Foreigners in Hungary

The property acquisition process in Hungary is similar for both locals and foreigners, but foreign buyers must ensure they adhere to all regulatory requirements. Here are the key steps involved:

Searching for the Right Property: Begin by exploring the real estate market in Hungary. Whether you are looking for a residential, commercial, or investment property, it is advisable to work with local real estate agents who understand market trends and legal requirements.

Legal and Technical Due Diligence: Before committing to a purchase, it is critical to perform thorough legal and technical checks on the property. This ensures there are no hidden legal issues, such as outstanding debts or ownership disputes, and that the property complies with building regulations.

Drafting and Signing the Contract: Once due diligence is complete, the next step is to draft a purchase agreement. Under Hungarian law, a property purchase contract must be countersigned by a lawyer or civil law notary. Legal representation is crucial, as the lawyer will ensure that the contract protects your interests and complies with Hungarian law.

Registration at the Land Registry: After signing the contract, the final step is to register your ownership at the Hungarian Land Registry. This is a mandatory process that legally formalizes your ownership rights.

Legal Representation and Costs

Engaging a lawyer is a requirement when purchasing property in Hungary. The lawyer must be a member of the Hungarian Bar Association or a civil law notary registered in Hungary. Legal fees for property transactions typically range between 0.5% to 1% of the purchase price. While notaries may charge higher fees, the additional cost can sometimes provide extra assurance in more complex transactions.

Taxes and Additional Costs

In addition to the purchase price, there are other costs to consider when buying property in Hungary:

• Property Transfer Tax: A one-time property transfer tax is payable, typically at a rate of 4% of the property's market value.
• Lawyer or Notary Fees: As mentioned earlier, legal fees are usually 0.5% to 1% of the purchase price.
• Property Registration Fee: As noted, the registration fee at the Land Registry is a fixed cost of 10,600 HUF.

Additionally, if you are purchasing a property with a mortgage, there may be further registration and processing fees associated with securing financing.

Obtaining a Permit for Non-EU Citizens

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.

However, it is important to note that this exemption applies strictly to individuals who are citizens of the above-mentioned countries. Residency status, even if it is permanent or long-term, does not grant the same rights as citizenship. For example, non-EU citizens who hold a residence permit, such as family members of EU citizens, still require government approval to purchase property in Hungary.

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 Require a Permit to Purchase Property in Hungary?

Following the UK's departure from the European Union on 31 January 2020, British citizens are now classified as non-EU nationals. Consequently, UK citizens are required to obtain a property purchase permit from the relevant Hungarian authorities to legally buy property in Hungary. This permit is issued by the local government office with jurisdiction over the property's location. However, if a UK citizen acquired a Hungarian residence permit or other legal status allowing them to remain in the country prior to Brexit, they may be exempt from the permit requirement. It is important to verify your legal standing before proceeding with a property purchase to ensure compliance with Hungarian law.

What if a Dual National is Acquiring Property?

For individuals with dual nationality, the process of acquiring property in Hungary is simplified. Unlike foreign buyers, dual nationals are exempt from the authorization procedure typically required for non-Hungarian citizens. As dual nationals are considered to have the same legal standing as Hungarian citizens, they enjoy the same rights and obligations when purchasing real estate in Hungary. This eliminates the need for additional permits or approvals.

What Types of Properties Are Subject to Restrictions for Foreign Buyers in Hungary?

Foreign buyers looking to invest in real estate in Hungary should be aware that certain types of properties are subject to specific restrictions. Notably, agricultural and forestry lands are governed by separate legislation, which generally limits their purchase to Hungarian nationals or EU citizens. 

If you are considering the purchase of land classified under these categories—such as farmsteads or plots where the topographical lot number begins with "0"—it's important to consult legal experts for personalized advice and guidance tailored to your particular case.

The Process for Foreigners Acquiring Property with a Permit

In Hungary, foreign individuals or foreign legal entities must obtain a permit to acquire real estate. This process is managed by the Government Office of the capital city or the county where the property is located. The Government Office assesses the application and the supporting documents submitted in accordance with the relevant Government Decree.

During this procedure, the Government Office evaluates the following criteria:

• Verification of Identity: The identity of a foreign natural person, or the legal existence of a foreign branch office or commercial representation, must be established. This is done through passports, registration documents, or other official and credible forms of identification.
• Intent to Transfer Ownership: The applicant must clearly demonstrate the intent to purchase the property, typically evidenced by a signed sale and purchase agreement.
• Impact on Municipal Interests: The Government Office ensures that the acquisition does not negatively affect the interests of the local municipality.
• Public Interest Considerations: The acquisition must not be contrary to public interest, which is also reviewed during the process.

If all conditions are met and no objections arise during the review, the Government Office grants the permit for the property acquisition.

Municipal Interest in Property Purchases

When purchasing property in Hungary, the local municipality's interests are a key consideration. If a property acquisition is deemed to infringe upon the public responsibilities of the local government, it may be subject to review. The mayor, or in the case of Budapest, the district mayor or Lord Mayor, is required to notify the capital or county government office within 30 days of identifying such concerns.

In certain cases, even if municipal interests are at stake, the government office may still approve the transaction. This exception applies if the buyer is an individual entrepreneur or sole proprietor, and the property is necessary for their business operations in Hungary. Additionally, if the buyer plans to establish regular residency in the country and the purchase does not contradict the public interest, approval is possible. It’s important to note that buying property for purposes of real estate brokerage does not qualify as a business necessity.

If the criteria set forth by the relevant laws are not satisfied and the purchase is found to conflict with the municipality’s interests, the government office will likely reject the transaction.

Restrictions Based on Public Interest

When applying for permission to buy property in Hungary as a foreigner, it is crucial to understand that your application could be denied if it is deemed to harm public interest. This often includes situations where the foreign buyer has a criminal record, is under an expulsion order, has a ban on entry or residence, or is subject to an arrest warrant.

For foreign legal entities looking to purchase property, public interest concerns may arise if the entity is subject to sanctions under the Act on Criminal Measures Applicable to Legal Persons. This includes cases where the entity's tax number has been suspended or revoked by the tax authority, or if the business is undergoing liquidation, compulsory liquidation, or winding-up proceedings, as specified in the Company Code.

How to Apply for a Foreign Ownership Permit in Hungary

Foreign nationals looking to buy real estate in Hungary must obtain a foreign ownership permit. The application process differs slightly depending on whether the buyer is an individual or a company. For individuals, the application can be submitted on paper, while companies and individuals represented by legal representatives must submit the application via e-paper. The e-paper submission method is faster and more efficient, so it is the preferred option for those with access to a client portal.

If you do not yet have a client account, follow our step-by-step guide on setting one up to expedite your application process.

Application Processing Time

The government office responsible for processing the foreign ownership permit has an administrative deadline of 45 days for foreign nationals looking to acquire property in Hungary.

Application Fees

The fee for non-resident individuals or companies applying for a foreign ownership permit is HUF 50,000 per property. However, if you are a foreign national with free movement and residence rights, or if you have settled status and are in the process of obtaining Hungarian citizenship, the fee is significantly reduced to HUF 10,000.

For a more detailed breakdown of costs associated with property purchases, refer to our dedicated guide linked below.

Required Documents for the Application

The following documents must be attached to the foreign ownership permit application:

1. Proof of payment for the administrative fee (usually HUF 50,000 per property).
2. A valid passport or ID card for individuals, or a company certificate (not older than 21 days or certified by a notary public) for companies.
3. The signed sale and purchase contract for the property.
4. An ownership certificate (not older than 21 days, certified or e-certified).
5. A valid criminal record certificate.
6. Power of attorney if a legal representative is acting on behalf of the applicant.

Ensure that all documents are up to date and correctly certified to avoid delays in the application process.

Conclusion

When buying property in Hungary, whether it’s an apartment in Budapest or a house by Lake Balaton, the purchase price is only one part of the overall process. Equally important is navigating the legal and regulatory aspects of the transaction. Foreign buyers, especially non-EU nationals, must be aware of the specific rules and procedures involved in acquiring real estate in Hungary, including obtaining the necessary permits. 

Engaging an English-speaking, locally licensed lawyer is essential to ensure compliance with local laws and to guide clients through each step of the property acquisition process.

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