Patricia Holikova, Sunday, 24 August 2014
After Slovakia became a member of the European Union in 2004, the real estate market has been growing quickly in the country. One of the reasons for
such expansion was the fact that the market became open to investors coming from abroad. Legal restrictions on foreign ownership of real estate
properties have been lifted – with the only exception for forest and agricultural land.
According to the country’s Mining Act 184/2002 Coll., foreigners are not allowed to purchase nor receive such property as a donation. Nevertheless,
it is possible for foreigners to buy (or receive) agricultural and forest property in case that the person interested in the purchase pursued
business activities on the land for at least three years and at the same time is a temporary resident of Slovakia.
Regime of no restrictions applies to companies (or generally legal bodies), which have their seat registered in the country and they are thus legally
seen as Slovak residents. This opens a possibility for foreigners who can establish a company in Slovakia (which is rather easy) solely for the
purpose of investment into a property. Either way, directly or indirectly, buying any real estate property in Slovakia is nowadays possible for
anyone who is interested and has the required financial means.
Mortgages for Foreign Nationals in Slovakia
Concerning the financial terms, mortgages for foreign nationals are available in Slovakia. Banking sector in the country belongs to one of the most
stable in EU. Slovak financial institutions lend money to foreign investors under the standard European conditions. Most often, it is possible to
borrow as much as 70% of the item’s market price with the interest rates being around 4.5-7%. The whole process is not a daunting task and there are
also several companies which assist foreign clients with their mortgages. The application itself should contain personal documentation, including the
person’s passport, proof of residency, record of bank statements for six months, and a proof of employment and income.
The Process of Buying a Real Estate Property in Slovakia
It is possible to buy a real estate property in Slovakia without using assistance service. Even though, in general, it is recommended to buy property
through real estate agency. There are plentiful possibilities to choose from, since the real estate agents market virtually boomed during the last
decade. The serious agency should ensure a legal service for its clients, as well as preparation of documents which are needed for transfer of the
ownership. Hiring a lawyer for preparing the contract is an option, too.
The costs of whole process of buying a real estate property in Slovakia by a foreigner are relatively not high. Preparation of sales contract should
not exceed more than 700 EUR, administrative fees (including documentation from and for cadastre) mount to approximately 300 EUR, taxes are totally
around 130 EUR annually. In 2005, real estate transfer tax was cancelled in Slovakia, so the purchase itself is not burdened, even though the
property is still subject to income tax (which is currently 19%). The Income Tax Act rules this tax liability as the acquisition property price minus
the selling price. The act, however, designs other options where the seller is not obliged to pay such tax, for example in a case of permanent
residence in the given property for at least 2 years. Cost of the rental plan is around 200 EUR per year furthermore the rental profits undergo 19%
The process of buying a real estate in Slovakia is usually not as much hindered by bureaucracy as in other EU countries since bureaucracy in the
country was successfully cut by the reforms and is currently relatively low. After choosing a property, the purchaser is usually expected to secure
the property by paying a 10% of the buying price as a deposit which also serves as initial sum for the commencement of legal processes. If a buyer
changes his mind later, he receives the original amount of money back deducted by any expenses incurred by the agent. If no such expenses incurred,
the agent has obligation to fully return the deposit.
Subsequently, the property report is made and the final contract prepared. Both parties sign the contract and the remaining amount of money is paid
by the buyer. After this was completed, the documents shall be submitted to the Cadastral Registrar which discloses the new owner and reports any
mortgages or other legal servitudes connected with the property. Such documentation informs about the legal state of the property and serves as a
guarantee when properties are being sold. Nowadays, it is obligatory for seller to submit these papers to the real estate agency before having the
property offered for purchase. The papers are valid only three months after issuance and safeguard the buyers from unwanted legal disputes. Hence it
is recommended that the buyer asks for a copy of this document before paying remaining balance. Notary service is not required in this process.