Buying property in Hungary: what to look out for?

Buying a property in Hungary is a relatively simple and quick process.

However, there are a few rules to keep in mind to avoid unpleasant surprises.

Like every real estate market, there are specificities to consider. Legal and technical specificities, as in any market, but also specificities specific to the Hungarian real estate market, which has been the subject of particular attention from foreign investors for several years.

Buying a property in Hungary: European or non-European

First thing to distinguish: you are or are not a buyer from the European Union.

If you are from the European Union, you buy under the same conditions as Hungarian nationals.
Otherwise, you will need to submit a prior permit application. This is a purely administrative formality.

Please also note that it is not possible, whether you are a European citizen or not, to buy agricultural land, unless you consider setting up a Hungarian company.

Prospecting the real estate market in Hungary

The Hungarian real estate market has been the fastest growing European market since 2015. Budapest was still the European city with the highest growth rate (19%).

It's been a booming market for several years, so it's not surprising to find a good number of agencies offering properties.

However, caution is required.

Many agencies (especially large ones) inflate their prices, knowing perfectly well the international influence of Budapest and the strong foreign demand for investments.

We therefore cannot advise you to compare agency prices with official market statistics, district by district, neighborhood by neighborhood. It is important to know the market (sales volume, sales history over the last 12 months in a targeted neighborhood, etc.) in order to quickly spot good deals and not overpay for a property, even a renovated one.

Real estate in Hungary is in high demand

The importance of market knowledge is reinforced by the need for responsiveness. Competition from both foreign and local investors is high, so a lack of responsiveness is quickly punished.

Specific features of certain real estate properties in Hungary

Since Hungarian is a relatively complicated language, it is not always easy to understand the content of certain advertisements, especially when legal or specific terms (difficult to translate) appear.

Here are two situations that are regularly encountered in the Hungarian real estate market:

Bérleti joga: the right to use real estate

When you spot a property and the advert highlights the term "bérleti joga", it is not a typical sale.

What is being sold is the usufruct (the right to use the property) and the price displayed is therefore the price of this right.

The potential purchaser of this right will only be able to acquire the property (the right of ownership) after a minimum period and under specific conditions.

Furthermore, only Hungarian citizens are eligible. It is a social measure for people who do not have sufficient income to purchase the right to own property.

The right of pre-emption: a right of preference over real estate

Buying property in Hungary means loving Hungarian architecture, which is similar to that of Viennese and Parisian buildings. Therefore, it's not surprising to see the authorities benefit from a right of pre-emption (a preferential right) on certain properties.

There is a map of the streets and buildings affected by this measure, but it is best to inquire with the condominium manager about the location of the property.

In practice, this means that the administration can use its right of pre-emption for up to 60 days to obtain the property under the same conditions (price) as you.

Do your checks on the property

With the growth of the real estate market in Hungary, the number of real estate agents has also skyrocketed.

However – as everywhere – it is not reasonable to blindly trust the information given by the latter.

Always be sure to verify all information provided with a team or law firm.

For example: the condition of the co-ownership, the financial aspect of the fund, past and future renovations, etc.

Lawyers in Hungary: their skills and prices

In Hungary, the lawyer is the preferred intermediary. He or she is responsible for preliminary research (land registry, property verification, possible debts, etc.) as well as drafting legal documents.

We must distinguish:

The initial purchase offer for the property

ad hoc purchase offer setting out the essential conditions (characteristics of the property, price, deposit, date of signing of the final deed, etc.).

Please note that in the event of a subsequent withdrawal by the buyer, the deposit will be lost. Similarly, in the event of a subsequent withdrawal by the seller for a reason not attributable to the buyer, the seller will have to pay compensation equal to double the amount of the deposit.

The buyer is therefore well protected already at this stage.

The final sales agreement

The final deed of sale can be signed at any time. The parties are free to set the signing date and payment terms. This means there is complete flexibility.

For example, the parties may decide to sign the final deed within two weeks of signing the offer to purchase. They may also decide to pay a set percentage upon signing the deed and the remainder at a later date. The parties' wishes prevail.

Registering your property in the land registry

The law firm will handle the necessary administrative procedures. You will then receive the title deed. The land registry notice and the invitation to pay the registration fees (4%) will follow within 90 days.