Legal procedure for purchasing a property in Hungary.
Outlined below are several ways to purchase and general information.

Property issues can be very complicated. If you are dealing with them in a foreign country, you have to be even more careful. Here, we try to give you some info about how the real estate issues are working in Hungary. Of course, the whole picture is a bit more complex, but we are ready to give you more information about that and also to help you in the process. Do not hesitate to contact us!

The process of buying real estate in Hungary

Buying property in Hungary is quite easy. Nowadays foreign nationals can also buy real estate without limitations (not counting in agricultural lands, which do have some restrictions). However the legal procedure has it's usual modus operandi and it's pitfalls, but with our investment services, you can avoid the hassle.

Firstly you will need a good solicitor, who will take you through the whole process for 1% of the sales price. After you have chosen the property and your solicitor has checked the owner's status at the Land Registry, you have to pay a 10-20% deposit and sign the purchase agreement which ensures the owner can not sell it to anyone else. Your solicitor will then file the contract of sale to the Land Registry and your name will appear as a "side note" on the ownership certificate, as the next owner. This is enough to prevent the previous owner from selling it or putting any mortgage on it. Once the total purchase price is paid you can take full possession, however, you are not yet fully registered. You can legally sell the property once your registration on the side note is confirmed. You have a choice of buying as a private individual or founding a company.

Buying as a private person

You have to apply for a permit from the Administrative Office of Budapest. They will answer within 30 days. If the answer is positive (99% of the cases it is positive), you can proceed and receive full registration. If the answer is negative (this happens quite rarely), you still can choose between setting up a company or filing a suit against the Administrative Office of Budapest, which you have a fairly good chance of winning.

Setting up a company

If you intend to purchase several properties and may be doing other business in the country, founding a limited liability company is recommended. It's a relatively easy procedure to set up a company. Setting up a limited liability company (Kft.) will cost around 180,000 HUF, including solicitor's fees. The procedure takes 3-5 days, and a sum of 3,000,000 HUF must be deposited in a Hungarian bank for at least 2 days.

The monthly cost of accounting is approx 20,000 HUF even if there is absolutely no activity in the company, because quarterly tax sheets and other reports must be regularly filed. A certified accountant must be appointed. The owners of the company may be private persons and legal entities as well. They can be domestic or foreign nationals too. It is possible to have only one owner, however, in this case an auditor must also be paid annually. Corporate tax is 16%.

The solicitor will need personal details, a Hungarian address (usually that of the purchased property), a name for the company, and areas of activity specified (real estate sale, management, services). After the Deed of foundation is concluded, the specimens of signature need to be signed in front of a public notary. Meanwhile a bank account needs to be opened for the company and the registered capital has to be deposited. With the certificate from the bank, the solicitor can submit the Founding Document to the Court. As soon as the company receives a tax number, a registration needs to be handed in separately to the tax authorities, the local municipality, the chamber of commerce (not compulsory), as well as the social security system.

All the files must go to an accountant who will take care of everything and warn the owner of legal changes and payment deadlines. A company registered in Hungary can immediately become the owner of property without having to apply for a permit. In case you decide to sell the property, closing a company is not advisable, for it is a long and complicated process. Solicitors and accountants recommend selling it at a nominal value (with the property). If the main activity of the company is buying and selling real estates and sells the real estate within 2 years following the purchase, transfer duty is only 2%. Otherwise the transfer duty is 2% following only the first HUF 4 million of the purchase price, above HUF 4 million it is 6%.

Before January 1^st 2001, founding a partnership (Bt.) was fairly common among foreigners, as it costed less to establish and maintain, however, new accounting laws make it just as expensive to maintain it as a Kft. The primary difference between a partnership (Bt.) and a limited liability company (Kft.) is that the full owner of a Bt. is fully liable if the company goes bankrupt, where in a Kft. the liability is limited until the amount of the registered capital. A Bt. requires at least two members. A Bt. does not require 3,000,000 HUF registered capital. You can decide which form of incorporation you will use.

Purchasing for investment purposes

Flott Invest International Real Estate Agency is a Budapest based real estate agency established since 1991, working in the field of sales, lease, property management, investment consultancy and reconstruction. Our services expand throughout the whole investment procedure from having the idea of purchasing a property, to the letting procedure.

We deal with residential real estate (both resale and newly-built), commercial properties, and developments in Budapest.
Our database comprises a wide selection of properties (flats, houses, block of flats, land, offices, restaurants) for development purposes as well. Since we mainly deal with properties for investment purposes, the properties purchased through our agency have always been easy to rent out. We are the specialists in buy-to-let constructions.
Our leasing division's client base consists of international banks, embassies, multinational companies, and a good number of "private expatriates" as well.
We can organize house hunting tours, assist with the legal procedure, and upon request, we reconstruct, lease and manage your property as well.

Fees

Commission fee of leasing: 12% +VAT of the annual rental fee (paid by the lessor)

Commission fee of selling the property: 4 % +VAT of the selling price (paid by the seller)

Renovation of the property: depending on the level of renovation and the condition of the flat.

Solicitor fee: 1% of the selling price

Transfer duty is 2% after only the first HUF 4 million of the purchase price, above HUF 4 million it is 6%. (If the buyer is a company and it's main activity is buying and selling real estates and sells the real estate within 2 years following the purchase, transfer duty is only 2% for the whole amount)

In case of purchasing a newly-built property the stamp duty is only payable above HUF 15, 000,000 of the selling price.

We do not charge the purchasers, our service is free for tenants and buyers and we are happy to provide investment consultancy free of charge.

WE STRIVE TO PROVIDE THE BEST INFORMATION TO YOU AND WELCOME YOU AMONG OUR CLIENTS.