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Buying

There are restrictions on non-Hungarian residents from purchasing property in Hungary, but these can be overcome via one of two ways.

The first is for the potential buyer to apply for a permit as a private individual; this will involve making an application to the local municipality requesting permission to purchase the specific property. The permission can be refused under very rare circumstances, but most often it will be granted within three months for new buyers in Hungary. The second method is to form a local Hungarian limited liability company, which will then purchase the property. It is recommended to use this method if you intend to invest in multiple properties, whilst if you only wish to purchase one property you would be best advised to simply apply to the local municipality for permission.

As with all property purchases, it is essential to research the area thoroughly. You may wish to employ an agent to do this for you and to help guide you through the local customs/regulations. In Hungary an agency will usually receive their fee from the seller or property developer, but you should be aware that some agencies will charge the buyer a finders fee of approximately 4%, therefore, this should be clarified beforehand.

Once you have located a property in which you are interested, you should approach the seller with an offer. In Hungary the property will be on the market for a fixed price. There is some room for negotiation, but it is not commonplace for the price to be reduced by more than 5%. It is even less likely to receive a price reduction if you are seeking to buy a new build property.

As soon as you have your bid accepted, you will want to ensure that the property is taken off the market. In order for this to happen you will likely make a payment to the seller of approximately €1500 which will go towards the sale price. The reason for this is due to the speed with which the Hungarian property market moves. You need to be able to move quickly with the financing otherwise another buyer could engage you in a bidding war.

If you are buying a new build property from a developer, they will often provide you with a legal advisor to help with the purchase process; however, it is advisable to appoint an independent legal advisor. It should be possible to obtain a lawyer that will speak your language as well as Hungarian who will be able to progress the sale and advise on tax issues. If necessary you could give a lawyer power of attorney to act on your behalf if you are intend to leave the country, but if you need to form a company it will be necessary to be located in Hungary to formalise the requirements and set up a Hungarian banking account.

The purchase contract is two-fold. The first pre-contract involves the payment of a deposit equal to 10% of the final property price and is usually payable within 7 days. If the seller should default on the sale you will receive the deposit back in double. The second part of the contract involves full payment of the remainder of the purchase price. This is usually due with 45 days, but this can be altered subject to contract and any work that may need to be carried out on the property.

You should expect to see, as a minimum, the following in your contract:

- Payment terms
- Net and gross price of the final purchase price of the property
- Size, address and land registry details
- Proportion of the complex (should you be buying off plan)
- If the property is purchased off plan, you should have a completion date
- Details of penalties levied if the property is not completed on time
- Any noteworthy additions with regard to the purchase

You should also have details of floor plans and technical specification of the property as part of the contract.

If you are buying a resale property you should arrange for it to be surveyed. This is particularly important because much of the resale properties were built during the old communist regime and very little or any of them were maintained to any degree. On the other hand, new build properties should be of a good standard and they should come with a 10 year warranty.

The fees that you should expect to pay in conjunction with your house purchase are as follows

- Purchase permit €255
- Legal fees are usually 5% of the final price
- Notary fees will be €2-3
- Stamp duty will range from 0-6% of the final purchase price depending on the price of the property
- Company stamp duty of 2% of company capital
- Accounting fees for VAT returns and annual reports of a company will be approximately €50 per month
- Formation of a limited liability company would cost €1,025 plus capital of €12,190 (this can be offset towards the price of the property)

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