Hungary2invest / FAQ /

Frequently Asked Questions

Q: How can a non resident buy property in Budapest?

A: A non resident can purchase property in Budapest as a private buyer or alternatively by setting up a Hungarian Company.

Q: W hat are the major differences when purchasing as a private buyer or through a company?

Advantages as a private buyer:

    * Limited initial cost (only for perm its and law year fees)
    * Easier to liquidate property
    * No annual costs involved (book-keeping)

Disadvantages as a private person:

    * Possible rejection of perm it (although unlikely)
    * Subject to 25% personal income e tax
    * Few deductible expenses

Advantages of setting up a company:

    * All related expenses are deductible (travel, refurbishments, legal and management fees, stamp duties, and other relevant expenses)
    * Can property and company can be sold simultaneously, eluding a stamp duty charge for the buyer
    * Subject to only 16% capital gains tax

Disadvantages of setting up a company:

    * Initial cost of setting up a company (600€ )
    * Need to set up a Hungarian bank account
    * Requires an accountant and submission of annual reports

Q: W hat are the additional costs associated with buying a property?

A: Additional expenses include:

    * Law year’s fee: 1% + VAT through our company
    * Mortgage fee of OC ICS: 1% + VAT of the loan amount
    * Stamp Duty: please find m ore information in the attached Stamp Duty information sheet

Q: Is it possible to get a loan in Hungary?

A: One of the advantages of investing in Hungary over m any other markets in this region is the availability of a wide range of mortgage options for foreign investors.< br />Broadly speaking, a mortgage in Hungary is available in Hungarian Forints, Euros or Swiss Francs. The interest rate is approximately anywhere between 5.5% and 6.5% . Swiss Franc mortgages are available from 4.49% . Mortgages are typically available at 70–80% Loan-to-Value (LTV) ratio in Hungary. If it's your second Hungarian Property, mortgages m ay be available at a substantially higher LTV.

Q: How do I know if m y money is safe?

A: To ensure the safety of our clients’ money, all transferable funds are held in an escrow account (set up by the investor) and are not released to the developer until the completion and handover of the property/s.

Q: Do I need to visit Budapest to make a property purchase?

A: It is not necessary to go to Budapest to purchase property. M any of our clients have demanding schedules preventing them from visiting Budapest prior to their purchase. Clients have the option of signing the Sale and Purchase Agreement at the Hungarian Embassy located in the country of residence through a procedure called the “Apostille”. Our experienced sales staff w ill guide through this process.

Q: How long should I expect to wait before my apartment is rented out?

A: The selection of your property investment determines the pace of finding the right tenant. There is a current oversupply in the outer districts of Budapest which has resulted in high vacancy rates in those areas. How ever, the central districts of Budapest have maintained a high rental demand and attractive rental yields. With our selected properties you can expect to find the right tenant within the first 1-2 month of ownership.

Q: How long should I hold on to m y property to fully benefit from this investment?

A: Our selection of properties is designed to accommodate both short and long term investors. To discuss these options and much m ore, please contact our office and one of our experienced staff w ill assist you.

Q: Has the Budapest real estate market already seen its best days?

A: Although the Budapest real estate market has experienced incredible growth over the past 5 years, property prices are still distinguishly lower than those of other European Capitals. All properties in Budapest w ill not yield the same result. This is why the selection of properties is of paramount importance.