Buying property in Hungary

Things to know about the process

Hungary is still quite a traditional country, so the first step of buying property is a verbal offer. Below you find information on negotiations, the contract of purchase and running costs that you have to bear in mind when buying property.

Buying property in Hungary

Negotiations usually begin with a verbal offer. This means you or you agent will tell the owner how much you are willing to pay for his or her property. If the owner accepts your offer and you agree on all the other details of the transaction, then you consult with a lawyer in order to draw up a sale and purchase agreement. A deposit of 10% of the purchase price must be paid when the agreement is signed. Property prices that sellers ask are often negotiable – it is not unusual to negotiate a discount of 10-15% off an initial asking price.

The purchase contract

The purchase contract must be signed by all parties (seller, buyer, beneficial enjoyers) in presence of a lawyer. The agreement will be made official by the embossed seal and countersignature of the lawyer’s notary.

The lawyer’s fee is usually 1% + 20% VAT, in all 1.2% of the purchase price. The lawyer is always brought in by the purchaser, who also pays the fees. Nevertheless, the lawyer has to pay attention to the interests of both parties in the transaction.

Foreigners who need to obtain a purchase permit must submit the sale and purchase agreement to the Administrative Office. When the purchase is approved, the lawyer can submit the registration application to the Land Registry Office ( Földhivatal ). Both procedures each take approximately 30 days to complete.

Costs

There are quite a few costs associated with making a property purchase in Hungary, in most cases they are payable once the purchase contract has been singed:

Tax on purchase of real estate: Generally 10% of current market price. When purchasing a house or flat for living purpose, 6%. For agricultural land 2.5% of current market price.

Land registry fee: € 40

Notary fee: Shall only be payable in case of a borrowing agreement. The fee depends on the amount of the loan: from HUF 15,000 to HUF 35,000.

Lawyer’s fee: This is usually 1.2% of the purchase price (1% of the cost of the property plus 20% Value Added Tax). This is a binding fee to be paid by the purchaser, payable in any case once the services have been rendered.

Dues: Determined by the government; the exact costs depend on the age and price of the property

Withholding tax: In case of buying a property in order not to live there combined with the intention to sell it within 15 years – whether you the buyer is an individual or acting on behalf of a company - you are obliged to pay withholding tax. Its amount is the 100% of the property’s value for 5 years, from the 6th year this amount decreases by 10% every year. (Accordingly: in the 6th year it is 90%, in the 7th year it is 80% …etc.)

Be aware that any fees and costs written down in the purchase contract are payable in any case – whether you decide to go through with the purchase or not.

Negotiations usually begin with a verbal offer. This means you or you agent will tell the owner how much you are willing to pay for his or her property. If the owner accepts your offer and you agree on all the other details of the transaction, then you consult with a lawyer in order to draw up a sale and purchase agreement. A deposit of 10% of the purchase price must be paid when the agreement is signed. Property prices that sellers ask are often negotiable – it is not unusual to negotiate a discount of 10-15% off an initial asking price.

The purchase contract

The purchase contract must be signed by all parties (seller, buyer, beneficial enjoyers) in presence of a lawyer. The agreement will be made official by the embossed seal and countersignature of the lawyer’s notary.

The lawyer’s fee is usually 1% + 20% VAT, in all 1.2% of the purchase price. The lawyer is always brought in by the purchaser, who also pays the fees. Nevertheless, the lawyer has to pay attention to the interests of both parties in the transaction.

Foreigners who need to obtain a purchase permit must submit the sale and purchase agreement to the Administrative Office. When the purchase is approved, the lawyer can submit the registration application to the Land Registry Office ( Földhivatal ). Both procedures each take approximately 30 days to complete.

Costs

There are quite a few costs associated with making a property purchase in Hungary, in most cases they are payable once the purchase contract has been singed:

Tax on purchase of real estate: Generally 10% of current market price. When purchasing a house or flat for living purpose, 6%. For agricultural land 2.5% of current market price.

Land registry fee: € 40

Notary fee: Shall only be payable in case of a borrowing agreement. The fee depends on the amount of the loan: from HUF 15,000 to HUF 35,000.

Lawyer’s fee: This is usually 1.2% of the purchase price (1% of the cost of the property plus 20% Value Added Tax). This is a binding fee to be paid by the purchaser, payable in any case once the services have been rendered.

Dues: Determined by the government; the exact costs depend on the age and price of the property

Withholding tax: In case of buying a property in order not to live there combined with the intention to sell it within 15 years – whether you the buyer is an individual or acting on behalf of a company - you are obliged to pay withholding tax. Its amount is the 100% of the property’s value for 5 years, from the 6th year this amount decreases by 10% every year. (Accordingly: in the 6th year it is 90%, in the 7th year it is 80% …etc.)

Be aware that any fees and costs written down in the purchase contract are payable in any case – whether you decide to go through with the purchase or not.

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