Buying Property in Hungary : Overview of Contracts and Documents

Peter,  Friday, 8 November 2013


This article is part of a series of 8 articles about buying property in Hungary. The other articles in the series cover the following topics:

When you’re looking for property to buy in Hungary, probably the greatest drawback is administrative and bureaucratic procedures. The country has a lot of rules and regulations when it comes to property. Thought most of them apply to everyone, there are a number of specific provisions dealing with the acquisition of property by foreigners. A little explanation can help to get through the legal maze of Hungary.

The most important aspect to know is that Hungarian law sets clear rules towards the acquisition of property as an EU member state. For customers from other EU countries it is a lot easier to by real estate in Hungary than other nationalities. Though far from impossible, third country citizens may need legal advice and help from local experts when dealing with property acquisition. Probably the most important thing to bear in mind is the fact that legal assistance is necessary for all kinds of contracts related to property. When agreed on a price and property, the buyer and seller plus the legal representative of both parties should come together. A lawyer has to be employed during the whole process and in order to draft the contract which needs to follow private contract regulations. If desired, the two parties can set up a contract on their own and get official stamp on it by a local notary. This way costs can be reduced but it is not recommended to do so without good knowledge of Hungarian legal affairs. After it has been written, the lawyer needs to countersign the document to become official and valid. Without this step, the real estate in question can’t be transferred from one party to another. In most cases the seller needs a deposit to be paid at this point, which is usually 10% of the property value.

The first step towards the purchase has been made. Of course, at this point the fees of the real estate agent and the lawyer have to be paid accordingly. Legal fees are around 0.5-1% of the property value plus 27% VAT. After all of this is done, the contract has to be forwarded to a local land registry office within 30 days. To complete the transfer of property, the permit for foreign residents has to be obtained.

As a matter of fact, it is important to know how procedure deals with the acquisition of real estate. The legal obstacle that potential buyers need to surpass is to get a permit issued by the Administrative Authority Office (Közigazgatási Hivatal). All non-Hungarian nationalities need to obtain the document, even EU citizens. The procedure usually requires 2-3 months. The possible conditions of getting the permit are as follows: the acquisition doesn’t go against public interest, the property is meant for a company’s use, secondary properties require at least five years of permanent residence in Hungary. As for the administrative and practical part of the process some documents need to be obtained to even start the process. First, you have to make a certified copy of your passport. Official copies can be obtained from a notary anywhere in Hungary. Second, you need to have a contract for either selling or buying the property in question. Maybe the most important document is the original copy of the title deeds, which has to be valid and actual, meaning that it wasn’t issued later than 30 days before the application. The last document is the application form for the process, which has to be filled in accordingly.

Expect that the whole process to cost 50.000 HUF or more not including the lawyer or the notary. Additional costs may apply during the process, but strict legal supervision is highly recommended. The notary usually asks for 0.25-1% of the total property value. The Administrative Office can reject the application in condition that the buyer’s/seller’s country doesn’t guarantee the same code of conduct for Hungarian citizens. Note that foreign citizens who have been residing for more than 4 years in Hungary don’t have to apply for the permit in question.

To get around the process, most lawyers advise that foreigners should set up a company based in Hungary and this way the permit can be obtained automatically. For the whole process 1-2 days are sufficient and the cots can be written-off easily. Bear in mind that owning a company in Hungary may involve additional costs and necessities in the future. Exploiting this option can only be followed if consulted with a lawyer or solicitor.

When the purchase permit has arrived the buyer should get in contact with the seller as soon as possible. The closing of the procedure takes approximately one week if all conditions are met. Before signing the Closing Statement, the whole price of the property has to be transferred to the seller. This declaration states that all transactions took place and the rights of possession have been transferred to the buyer. At this point the official business is concluded. As for the administrative part, the registration of the change in ownership usually takes around six months to be completely verified.  

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