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Budapest Investment FAQs
Property Investment Budapest, Property for Sale

1) Since I don't have a lot of cash, I would like to get a mortgage in Hungary. How much mortgage can I get?

As a foreign investor, it is very easy to get a mortgage up to 80%. Of course, we are going to assist you in obtaining a mortgage in Hungary.

2) How can foreigners purchase property in Budapest?

There are two options for foreign investors to buy property in Budapest: The buyer can apply for a permit as a private person. In order to get this permission, you have to submit an application to the local authorities to acquire the properties. This procedure will cost you about €250.The other option is to establish a local Hungarian company, normally a limited liability one. This option is recommendable if the buyer wishes to purchase several properties.

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3) What are the respective pros and cons of buying as a private individual or as a company?

If you buy your property as a private person, there is always the tiny possibility that the solicitude will be denied, although it is very unlikely. Normally, it will take up to 3 months. In case it will be denied, you can still establish a Hungarian company to purchase the property. The only real disadvantage of buying as an individual is that you are limited to purchasing just one property.

One big advantage of buying property in Budapest through a company is that it saves time and you will be able to write off any expenses relating to the property, for example travel, purchase stamp duty, renovation costs, utilities, etc. Furthermore, no purchase duty has to be sold, if you acquire a property through a company, since the company can be sold along with the property. However, an important disadvantage is that you the company will require an accountant and that an annual report has to be given.

4) Please explain me the buying process, step by step

As soon as you have decided that you want to purchase a certain property, a Hungarian lawyer has to draft the purchase agreement. In order to show that the property is "off the market" you have a pay a deposit - the amount depends on the kind of property. Normally, it is about €3,000.

Usually, with regards to the purchase agreement, you have to pay the property in 2 main periods. The first one is normally within a week or 10 days after signing and is often about 10% of the purchase price. The rest is due on completion, which can be paid in several stages, depending on the developer.

Read more about Hungarian Property buying proccess here.

5) What to I have to do in order to establish a company in Hungary?

Establishing a company in Hungary is a very smooth and easy procedure and just takes a day to be done. First of all, the company's Articles of Association needs to be signed in front of a lawyer*. As soon as you have given all the relevant details about the company such as its name, address, etc. The founding costs of a Limited Liability Company are €12,000. Once you have signed the articles are signed in front of a lawyer, you have to open a bank account. Finally, all the paperwork (including authorizations, invoices, etc. must go to an accountant who will take care of the administration and prepare the required accounts.

*Note: It is not necessary to be in Hungary in order to sign the articles. You can sign the agreement at any Hungarian embassy. However, it will take more time this way.

6) What are the legal costs of establishing and running a company?

Besides the initial €12,000 for establishing a company, the initial fee for your company is about €1,000 plus 25% VAT. Furthermore, you have to pay an annual fee of €40 plus 25% VAT, for accounting and tax purposes.

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7) Do I have to register for Hungarian social security if I am the managing director of a Hungarian company?

No, it is not necessary. A company does not even need to have employees; it can operate through subcontractors.

8) What are the additional expenses when buying a property?

All in all, these expenses are approximately 8 to 10% of the sales price.

6% purchase duty (stamp duty) - this is paid 6 months after closing. Note: there is no stamp duty on newly built apartments below HUF 30m (approx. EURO 120 000)

1.5% solicitor's fee

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9) Which properties are the easiest to rent out and / or sell at a later date? Which districts are the best ones in Budapest?

If you are thinking about buying an older, classical apartment, please make sure it is renovated to the highest standards and it is centrally located. Central and rapidly developing districts in Budapest are district V, VI, VII, VIII, IX and XIII in Pest and I, II and III in Buda. Especially the encircling boulevard (korut) and Andrassy ut are the prime locations in Budapest, especially the centrally located districts VI and VII. District VI boasts the famous Andrassy Boulevard, Heroe's Square, the trendy Oktogon and Liszt Ferenc Squares with their nice cafes and restaurants, which is a favourite area among foreign tenants. The 7th district, the traditional Jewish Quarter behind the Great Synagogue, has seen tremendous investments recently with renovated buildings and parks. The universities are located in district VIII and IX and are therefore especially attractive for foreign students who are interested in renting in this area, especially along the blue metro line. The other side of the Danube (Buda) is best for purchasing and developing. If you have all this in mind when purchasing your property, the more it will appeal to "quality tenants" with money such as business people, diplomats and foreign students.

I you are thinking about buying a newly built apartment, you have to have in mind that it is, again, centrally located and well connected, close to any kind of transportation and near areas of interests for the tenants such as universities, offices, parks, etc. The advantage of purchasing a new development is that you normally will get more extended payment terms which make the purchase easier. Another advantage is that a new build property has 5 years of guarantee after completion.

10) What are the prices of flats per square meter in Budapest?

The prices depend on the kind of property. Land properties, such as Andrassy Palace range between €1900 and €4600. In good areas, you can find properties between €1600 and €2200, such as Pearl Gardens for €1490 per square meter in district VIII.

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11) What is the approximate income I can expect to receive and what annual yield can I expect from my investment in Budapest?

Well, the rental income depends on the type of property and its area. However, roughly you get €400 for a smaller apartment and about €700 for a bigger apartment. Approximately, the annual rental yield is between 6 and 9%.

12) What is the tax on rent?

If you are acting as a company, instead of a private person, you have a slight advantage regarding tax on rent. If the apartment is privately owned, it is 20% of the rental income when renting a residential property to an individual or a business. Foreign nationals must apply for a tax ID and issue an invoice to the tenant. As a company there is only an 18% corporate tax on any rental profits.

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13) What's the accepted management fee for a rented apartment

About 10% of the monthly rent.

14) What is the accepted commission when renting an apartment through an agency?

Normally, it is one month's rent plus 25% VAT paid upon signing the contract if the apartment is rented for a year.

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15) Since I have never been to Budapest, I don't know how to get to the hotel and to your office.

Anytime, we are going to pick you up at the airport and bring you to your hotel. If you want to have a rest at your hotel before going to have a look at our properties, we come back to your hotel to pick you up.

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