Frequently Asked Questions

Why should I buy in Hungary?

• Widely tipped as a one of Europe’s property hotspots.
• Hungary joined the EU in May 2004
• EU accession is encouraging massive foreign investment / EU development aid
• Hungary property market set to benefit from European accession similar to Spain and more recently Ireland.
• Hungary is one of the most progressive of the former communist countries
• 10 to 15% capital growth over the past few years which is expected to continue
• Slowdown in the UK property market

1. UK investors seeking to diversify their property portfolios

• Growing tourist destination
• Proliferation of cheap flights to Hungary (EasyJet, Ryan Air, Wizz Air, Flybe)

1. In 2004 6.5m people embarked or disembarked at Budapest Ferihegy airport
2. 28% increase compared to 2003
3. Low cost carriers accounted for 15% of travel after only 1.5 years of operation

• Plans to join the Euro Zone after 2010
• Property prices low in relation to nearby neighbours: Vienna (only 2½ hours drive away) are 4 to 5 times higher than Budapest

Where should I buy in Hungary? BUDAPEST

• 20% of Hungary�s population lives there
• 60% of the country�s commercial activity takes place in Budapest
• Regional capital in terms of infrastructure and education
• Strong rental market with 5 to 8% returns
• Foreign direct investment concentrated in the capital. Well known companies such as General Electric, Vodafone and Nokia have located in the capital
• Beautiful historical city with two World Heritage Sites and rich historical background

What is Hungary like?

• Landlocked country in the middle of Europe.
• Borders seven countries (Austria, Croatia, Romania, Serbia & Montenegro, Slovakia, Slovenia and Ukraine)
• Geographically important � the capital of Central Europe?
• Population of 10,000,000
• Highly educated population
• Historically rich country with a unique language (Magyar)
• Has the largest inland lake in Europe, Lake Balaton
• Free from communism for 15 years
• Very European in terms of architecture and way of life
• Budapest is a modern and thriving European capital.
• Has well known brands such as Tesco and Mark & Spencer
• Audi TT�s are manufactured in Hungary!

What should I buy in Hungary? THREE OPTIONS:

• Off-plan / new built properties that can be reserved well before completion and benefit from capital growth during the period of construction.
• Old renovated properties, ready to be rented and benefiting from excellent central location and a buoyant rental market.
• With a significant number of 19th and early 20th Century buildings, there are a lot of apartments available requiring renovations. Buying to renovate presents an opportunity to instantly add value.
• Land suitable for property development
• Commercial property

Is it safe for me to buy?

• Hungary�s Land Registry is highly developed, particularly when compared to some other Eastern European Countries.
• Access Hungary�s new built properties are bank guaranteed and are constructed by very established developers with good reputations.
• Contracts on resale properties are not signed until a solicitor has checked the legal identity of the property.
• Hungary has a stable government that encourages foreign investment
• Following accession into the European Union in May 2004, Hungary�s legal system is being brought in line with EU regulations.

Can foreigners buy property in Hungary?

• Foreigners can buy property as private investor or by establishing a Hungarian registered company.

As a Private Investor

• Private investors can apply for a permit to purchase property from the local municipality (council).
• Most applicants can expect to receive a permit within 2 to 3 months.
• Purchase permits cost approximately �175.

As a Company

• Hungarian registered companies can be established to purchase property
• Particularly beneficial if buying multiple properties
• Formation of a limited liability company costs approximately �700.
• The process only takes one day, but you need to be in Hungary to open a bank account.
• Capital of approximately �8,500 must be deposited but this can be used toward the purchase price
• As a company you will need to submit annual accounts and you will therefore need to instruct a Hungarian accountant

What are the advantages of purchasing through a company?

• There are no limitations on the number of properties you buy through a company
• Expenses relating to the property are considered expenses and can be offset against any rental profit
• Stamp duty can be reduced to 2% (instead of the usual 6%) if you declare your intention to sell the property within 2 years of purchase
• Corporate tax is less than individual taxation
• It is possible to sell the company containing the property to an investor and thus avoids the buyer stamp duty on their purchase.

How do I proceed if I want to buy?

Off-plan purchase

• Negotiations on prices with developers are very rare and limited to occasions when clients choose to buy multiple properties(above 5).
• A reservation fee is taken within two weeks of verbal reservation.In the interim clients have the time and opportunity to liaise with solicitors, accountants, mortgage brokers, financial advisors and decide the form and financing of the purchase.If the reservation fee does not reach the developer's or Access Hungary's account at the agreed date reservations will be cancelled.
• After recieveing the resrvation fee the chosen Hungarian solicitor requests draft contract from the developer, arranges Power of Attorney with client, negotiates contracts, establishes Hungarian limited company if necessary. Contracts coming from developers are usually standard.
• Deposit payment happens when signing the purchase contract, 4 -6 weeks after reservation.Depending on the development and agreed paymet structure the deposit is usually 30% - reservation fee.
• Access Hungary commits to following through the above process with you.

Resale Purchase

• When price is negotiated you firstly instruct your Hungarian solicitor.
• After checking the legal identity of the property, you and the seller have to negotiate on the following: reservation fee, amount of the deposit amount (usually 10%), deposit type and completion date.
• You also have to decide the way that you choose to buy your property.
  You can purchase as a company or private person (see below).
• The time between you putting in an offer and completion can be anything from 2 weeks to a few months it depends on how you are buying, how you are financing and also on the seller’s position.
• Exchange however, happens pretty rapidly otherwise the property you have chosen could be sold to someone else.
• Access Hungary commits to following through that process with you.

How do I finance my purchase?

Each of our clients have different financial backgrounds and view their investment differently. It is up to the individual to decide what is the most suitable and tax efficient way of financing their purchase.

Access Hungary advises each client to discuss the purchase with their UK financial advisor and Hungarian and UK tax expert before making the final decision.

• Up to 70% mortgages are available on investment properties in Hungary
• Interest rates depend on the currency in which the mortgage is taken.
• Many of our investors choose to release equity in their existing UK property.
• Access Hungary can put you in touch with independent tax, mortgage and financial advisors with great experience in financing overseas property purchases.
• In order to speak to an advisor, please contact us .

What about solicitors?

• Access Hungary only recommends English speaking and reliable solicitors
• Access Hungary can provide you with contact details of reputable English speaking Hungarian solicitors.
• For all documents drawn up, the solicitor is responsible����
• If you would like to contact a solicitor prior to making your decision, please contact us .

What are the typical costs associated with buying property?

• Legal fees: 1.5% of the purchase price or a set fee of up to approximately £600.00 per property purchase depending on which firm is used.
• If purchasing through a Hungarian Limited Company the establishment of the company is approximately £600.00.
• Purchase tax (stamp duty): varies from 2 to 6% depending on the type and value of the property.

What about taxation?

• Access Hungary highly recommends you seek the advice of a tax advisor before you commit to investing in Hungary. The following provides a guide only.
• Capital gains tax on a property sold by a company is 16+4%
• Capital gains tax on a property sold by an individual is 25%
• With EU accession in May 2004, a double taxation agreement exists between Hungary and the UK.
• If you would like to contact a tax advisor prior to making your decision, please contact us .

What about renting my property?

• Typical annual rental yields are between 5 and 8% of the value of the property
• The law heavily favours the landlord in Hungary and evictions (where necessary) are swift!
• 12 months rents are not uncommon. One of the key benefits of investing in the city compared to holiday destinations.
• Rental management fees are typically 10 to 20% of the monthly rent.
• Typical rental agency fee for a 12-month rent is one month’s rent plus VAT (20%)

What happens to the property after I have purchased it?

• Access Hungary views your investment in Hungary as a mid to long-term commitment and therefore is committed to provide you with an after-sales service.
• We can help rent out your property and we deal with property management
• We provide furniture packages
• We can help you if you want to renovate a property by putting you in touch with local renovation companies.
• We will re-sell your property for you

Do I need to travel to Hungary if I want to buy?

• Not necessarily. Signing of contracts can be arranged from the UK by giving power of attorney to your Hungarian solicitor.
• However we do recommend a visit in the cases of buying an old property, as pictures sometimes do not reflect the true feel of the place.
• Also Budapest is ideal for a long weekend with all the exciting things to do and see.
• If you are taking out a Hungarian mortgage through a Hungarian lending bank you will have to open a bank account with the relevant bank and that can only be arranged by you travelling to Hungary.

What do I do if I would like to visit?

• If you would like to visit Hungary in order to view and buy properties, we recommend that you fit it in over two working days in order to be able to meet with your solicitor and bank.
• Access Hungary would be delighted to help you find suitable flights and accommodation.
• Once you have arrived we will accompany you to view properties and take you to visit your solicitor and bank.
• If you need tips on restaurants, sights and spas that you would like to visit Access Hungary will be happy to oblige ( contact us ).