The purchase process
Basic steps to be taken when purchasing real property in Budapest
1. Decide on the type of apartment and the project you wish to invest in
2. You pay a registration fee of EUR 6,000 after which the chosen apartment is removed from the list of apartments for sale and “reserved” for you
3. We conclude the sales and purchase agreement
4. You pay the price of the apartment, less the registration fee
5. The apartment is registered as your property in the Land Registry of Budapest.
Details relevant to the purchase of real property in Hungary
Specifics of buying real property
The transfer of the title to the real property takes place on the basis of a written sales and purchase agreement, signed by both the seller and the buyer. Either party may be represented by a proxy acting on the basis of a written power of attorney authorised to sign the agreement on behalf of the principal.
Upon the transfer of the title to the real property, the change of owner must be recorded in the register of title deeds on the basis of the sales and purchase agreement concluded in written form.
It is important to know that for the registration of the buyer's ownership right by the Land Registry on the basis of the sales and purchase agreement, the agreement must be certified by the signature and stamp of a lawyer registered in Hungary.
How can a foreign national acquire real property in Hungary?
As a foreign national, you can buy real property in Hungary directly or via the intermediary of a business organisation established by you in the Republic of Hungary.
If you wish to acquire real property in Hungary as a citizen from outside the European Union or the European Economic Area, you must obtain authorisation for obtaining title of ownership to an independent real property (e.g. residential premises). There are no special requirements for issuing such authorisation. Nevertheless, in such cases we recommend you consult the services of a professional lawyer.
If you established a business organisation in Hungary, the restriction on the acquisition of property does not extend to the purchase of real property. In other words if the real property is purchased not by you, but by your company, there is no need to obtain authorisation for the acquisition of property.
What is the process of sales and purchase?
The process of purchasing a newly built apartment is generally initiated when the property itself does not yet exist, neither in legal or physical form. In such cases, the buyer can select the desired property based on the plans and conclude a preliminary agreement with the developer of the real property. In the preliminary agreement the parties commit to concluding a sales and purchase agreement for the selected real property at a later point in time and determine the basic substantive parts of the agreement. Pursuant to the general provisions of the preliminary agreement, the buyer must pay an advance payment on the purchase price to the seller at the moment of concluding the preliminary agreement.
Upon concluding the final sales and purchase agreement the parties define the schedule for paying the remaining part of the purchase price in greater detail, specify the details of the layout and internal design of the residential premises and the date of taking possession by the buyer.
The title to the real property can be registered when the residential premises and the multi-unit building have been completed, the developer has obtained all necessary official authorisations and the establishment of the multi-unit building and the residential areas has been registered in the Land Registry. In addition, the registration of the buyer's title to the property is subject to the developer's agreement, which is conditional on the full payment of the remaining part of the purchase price.
Upon the purchase of a completed apartment, the conclusion of a preliminary agreement is not necessary. If the purchase price is not paid fully upon conclusion of the sales and purchase agreement, the buyer usually pays a deposit to the seller, the amount of which is then deducted from the purchase price. The deposit serves as a guarantee for the parties fulfilling their contractual obligations. If the agreement is not satisfied due to the buyer's fault, the buyer loses the deposit. If the non-satisfaction of the agreement is imputable to the seller, it is obliged to pay twice the sum of the deposit to the buyer.
Upon fulfilment of above conditions (the final agreement is concluded, the seller agrees to the registration, authorisation is obtained for the acquisition of property, etc.) the lawyer, who compiled and countersigned the sales and purchase agreement, submits the documents to the Land Registry for the registration of the buyer's title to the property. The resolution on the registration or the rejection thereof is sent by the competent Land Registry to the buyer by registered mail. We would like to remind you that if you do not live in Hungary, you must appoint a person authorised to take delivery of the correspondence sent to your name by state organisations, banks, etc.
What main costs are borne by the buyer when purchasing real property?
When purchasing real property the buyer must pay a Stamp duty calculated based on market value of the real property to the state.
No duty is levied on the purchase of the primary residence if the market value thereof does not exceed EUR 60,000.
If the market value exceeds EUR 60,000 but is below EUR 115,000, then the duty charged is 4% of the amount exceeding EUR 60,000.
If the market value exceeds EUR 115,000, then a 2% duty is charged on EUR 60,000 and a duty of 4% is levied on the remainder of the purchase price, and the two sums added up.
Upon the purchase of non-residential property (e.g. garage, warehouse, etc.) the duty will be 4% of its value.
For authorisation to acquire real property, a stamp duty of EUR 190 is payable.
Upon registration of the title to the real property in the Land Registry a stamp duty of EUR 25-50 is payable, depending on the type of the transaction.
Services to be provided by an external lawyer’s office in connection with the purchase of real property:
Partial support of the real property sales and purchase transaction. This includes: legal advisory services, reconciling the wording of the sales and purchase agreement with the other contracting party, representing the interests of the principal, assistance in obtaining the authorisation for the acquisition of real property, performing the obligations of the person authorised to take delivery of correspondence;
Assistance in obtaining authorisation for the acquisition of real property;
Fulfilling the obligations of the person authorised to take delivery of correspondence;
Providing legal advisory services;
Opening and registration of business organisations. This includes: legal consultancy, compiling and countersigning the set of required documents, registration of the organisation with the Company Court.
