What to do if a foreign buyer is interested in buying a Real property that is for sale? Is it burdensome to enter into such Sale & Purchase agreement with him? Are there any other restrictions or additional procedures that may cause time or other administrative difficulties for foreigners buying property?
In part 10 of our real estate article series, we will look at the possibilities for foreigners to acquire real estate in Hungary.
Which foreigners can acquire Real Estate in Hungary?
Both natural persons (such as foreign citizens) and legal persons (such as companies established abroad) or unincorporated organisations can buy property in Hungary if they meet the legal requirements of Hungarian law. A further condition is that there must be no public interest risk – i.e. the foreign person must not have a criminal record or be subject to a restriction of activities measure, so obtaining an official certificate of good repute is essential. It should already be noted that foreign persons who are resident or established in, for example, EU Member States or EEA countries are treated differently for licensing purposes (they are not even considered foreigners in legal terms).
What type of Real property can be bought?
Only real estate that is not classified as agricultural or forestry land (thus excluding e.g. the acquisition of vines, ploughs, orchards, forests, pastures, etc.) can be acquired by foreigners – thus excluding all real estate that is subject to Act CXXII of 2013 on the Turnover of Agricultural and Forestry Land. Conversely, foreigners can thus mostly buy property that is included in the domestic property register (e.g. flats, houses, garages, business premises, etc.).
Do you need any permission?
In principle, according to the applicable legislation, yes. If a foreign person (please check below) wishes to purchase real estate in Hungary, a permit must be obtained from the competent government office of the capital city or county where the real estate is located, but foreign persons may be exempted from obtaining a permit if they meet certain conditions.
In which cases is no authorisation required?
We have indicated above that some foreign persons can acquire real estate in Hungary without a permit.
A permit from the government office is not required in the following cases:
- a) a national or resident of a European Union (EU) member state (e.g. Germany, Spain) (note: the UK’s withdrawal from the EU means that UK persons are no longer exempt from the requirement to obtain a permit!)
- b) a national or resident in a European Economic Area (EEA) Agreement country (Iceland, Norway, Lichtenstein)
- c) a national or resident in Switzerland
- d) Dual citizens (if one of the citizens is a Hungarian citizen or a citizen of an EU member state or a Hungarian citizen living abroad)
- e) In case of inheritance of real estate
- f) In the case of acquisition of real estate by refugees and protected persons
In such cases, it is a simple matter to conclude a contract of sale with the foreign buyer, since from a legal point of view, the foreign buyer is considered to be the same person as the domestic acquirer (not a foreign person).
What is the authorisation procedure? What must be enclosed?
The application for authorisation must be submitted to the competent government office where the real estate is located by post or electronically using the e-service, using the form provided by the government office.
In general, it must be accompanied by:
- a) a (pre)contract of Sale & Purchase for the acquisition of the property (1 original copy)
- b) personal documents (passport) or foreign company certificate
- c) an e-certified title deed of the property, not older than 21 days (in the absence of which, the government office will request it)
- d) if the foreign applicant is not acting in person, a power of attorney covering procedural representation (this can be included in the contract of sale and does not necessarily have to be drawn up in a separate document)
(e) official certificate of good character to prove a clean criminal record (to be obtained by the government office upon special request at the time of authorisation)
In exceptional cases, other documents must also be attached, e.g. if the contract of Sale & Purchase was signed by the parties’ proxies instead of the parties, in which case the relevant power of attorney must be attached.
It is important to note that the contract for the acquisition of the real estate must comply with the requirements of the domestic legislation, so the use of a lawyer is not indispensable. For an overview of the content of the contract of sale, we recommend Part 7 of our article series.
Is the authorisation procedure free of charge?
Unfortunately not. You have to pay an administrative service fee for the authorisation procedure. This is normally HUF 50.000,- per Real Property. The fee can only be paid by bank transfer (e.g. no stamp duty).
How is the authorisation procedure carried out? What should we expect?
The Government Office will examine the application within 45 days and will contact other authorities (e.g. the municipality where the property is located or the ORFK) to grant the licence. It will then decide whether to reject or accept the application.
Should I do it myself or should I involve a professional in the process?
In our experience, the permit procedure is an additional burden for applicants (especially if they do not understand or speak Hungarian), so it is advisable to seek the help of a professional from the outset to facilitate this extra administration and procedure. In addition to drafting the purchase contract – even bilingually (English-Hungarian, German-Hungarian, Spanish-Hungarian) – our law firm also provides legal assistance in the licensing procedure and communication between the parties in the case of foreign citizens and legal entities acquiring real estate in Hungary.
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If you are about to buy a property, please contact our office and get in touch with us. We can assist you in the complete management of your real estate purchase and sale transaction (from making the purchase offer, through the preparation and submission of the contract, to the registration of the title in the land registry), whether it is a sale or purchase by an individual or a company.
Authors:
dr. Farkas Szabolcs László
dr. Bajcsay Gergely
Please note that the general information provided in this article is for informational purposes only and does not constitute legal advice. We do not assume any liability for any misinterpretation of the above information or for any changes in the law that may have occurred in the meantime. If you have a specific question or legal problem, we are able to provide individual advice after consultation with our office and after a full investigation of the case.
