Budapest shows the highest residential property price growth in Europe during the last 12 months – according to property services company Knight Frankʼs report. The growth was 19 % from Q3 2017 to Q3 2018. Compared to the neighbouring capital cities, the average square metre cost of a property was still at least half as expensive comparing to e.g. Vienna or Prague, according to Deloitte Property Index.
The Hungarian National Bank reported that the annual growth rate of the property prices rose from 20,8 to 23,5 percent from Q2 to Q3 of 2018 in Budapest which might be considered that the price growth has not reached its peak, yet.
Buying a residential property in Hungary can be an excellent and productive investment both for foreign citizens and for foreign legal entities. Citizens of the European Union, as well as business associations and other organizations with their registered seat within the territory of the European Union are entitled to acquire residential property in Hungary under the same conditions as Hungarian citizens (except for territories qualified as agricultural or forestry land which are basically reserved for agricultural professionals of Hungary/EU natural persons). Therefore citizens, business associations and other organizations with or without legal personality of EU member states do not need any special permission to acquire ownership, while third country nationals have to obtain a special purchase permission from the competent Hungarian authority (Administrative Office).
The real estate purchase contract has to be prepared and countersigned by an attorney-at-law (which is the most common form of purchase contracts in practice) or prepared by a notary public (which form is quite rare in practice). It is crucial to be informed in advance concerning the legal status of the property by obtaining the property deed from the land registry, the easiest way of which is through an attorney.
Beside the land registry fee (roughly 20 €) and the attorneys fee (around 1 % + VAT), the costs you can expect to pay are on one hand, the dues (4 % of the property value but there are preferential rules in case an individual sells and buys property within one year) and on the other hand, in case the property is sold within 5 years from the purchase and the selling price is higher than the purchase price, income tax has to be payed (15 % of the revenue).
In case you are planning to buy property or wishing to sell your existing property in Hungary, please contact Nyiri Law Firm. In addition to the legal consultation, our tax specialist lawyers are well-prepared to provide information concerning the tax law implications of buying and selling properties in Hungary. Moreover, under the applicable Hungarian law, attorneys are entitled to carry out real estate brokerage activity, as well.
Should you have any questions or queries, do not hesitate to contact our Law Firm by clicking here.
