Nowadays as a result of globalization people are no longer just migrating to larger cities, but often moving to another country or continent to start a new life. An essential condition for it is creating the right home, which requires renting or buying real estate as a first step. In this article we would like to inform you about the second one, we aim to delineate how a foreign citizen can acquire real estate in Hungary.
First of all, it is important to know that according to the current Hungarian legislation – with the exception of legal or natural person of certain countries – foreign legal entities or foreign natural people can only purchase real estate for themselves with official approval.
Our article describes the way a foreign natural person can require a permission for buying a real estate in Hungary.
The legal background is provided by the following acts and decrees:
- Act LXXVIII of 1993 on the lease and alienation of apartments and premises (“Housing Act“);
- the implementing decree of the Housing Act;
- Government Decree no. 251/2014 (X. 2.) on the acquisition of foreign nationals of real estate other than land used for agricultural or foresty purposes (“Decree”).
For definitions, the provisions of Act CXXII of 2013 on agricultural and forestry land trade (“Land Act”) must be considered also.
Based on the Housing Act. the authorization is mandatory to all real estate which does not qualify as agricultural and forestry land according to the Land Act.
As we mentioned before, legal entities and natural people from certain countries do not need permission to buy real estate in Hungary. First, let’s see which countries are these.
Foreign natural people
According to the Housing Act. foreign natural people are those who are not nationals of a Member State of the European Union or a State party to the Agreement on the European Economic Area or a State under consideration with them under an international treaty.
Foreign legal entities
In addition, foreign legal entities or business entities without legal personality are those which registered office is not in a Member State of the European Union, or in a State party to the Agreement on the European Economic Area or in a State under consideration with them under an international agreement.
Permission not required
In view of the above, authorization is not required for citizens, legal entities, and business entities without legal personality
- of the European Union. (But as we know the United Kingdom has left the European Union, so its citizens, legal entities, and business entities without legal personality will need an authorization from 1 January 2021)
- of the State party to the Agreement on the European Economic Area (Iceland, Liechtenstein and Norway) in accordance with the provisions of it.
- of Switzerland, based on the Act CXXV of 2006. on joining the Agreement with the Swiss Confederation: free movement of persons
No authorization is required if the real property is acquired by inheritance, if the purchaser is a dual citizenship and one of the nationalities is Hungarian or is a nationality of a EU Member State.
Based on the above, it can be seen, that citizens, legal entities, and business entities without legal personality of most European countries an authorization procedure is not needed for sales contracts in connection with real property-purchasing. In these cases, it is sufficient to refer to the provisions mentioned above in the contract and to attach documentary evidence (e.g. passport, residence permit)
Permission is required
However, the acquisition of real estate by citizens, legal entities, and business entities without legal personality of countries other than the above are subject to a permit. For example, a permission is required if citizens of Russia, China, Israel and Arab countries would like to purchase real estate in Hungary.
The procedure must be initiated at the competent government offices, at Budapest at the Government Office of the Capital City Budapest in the countryside at the government offices of each county according to the location of the property on the standardized form.
The language of the proceeding is Hungarian, therefore if the applicant does not know Hungarian, she/he can request that the administrative authority consider her/his application in her/his own language. However the costs of it must be borne by the applicant, unless the applicant’s mother tongue is a language that belongs to a recognized Hungarian minority group.
In order to speed up the procedure, it is worth entrusting the preparation of the sales contract to a law firm that also undertakes to carry out the authorization procedure for the foreign purchaser.
The following documents are needed to be attached to the application:
- in the case of a foreign natural person, a certified copy of the applicant’s valid travel document or other identity card certified by a notary public or a consular officer;
- in the case of a foreign legal entity, a certified or notarized extract of the certificate of incorporation of the branch office or commercial agency not older than 21 days, as well as a copy of a notarised signature or a specimen signature countersigned by an attorney at law of the registered representative with signature right;
- a preliminary contract or a contract for the acquisition of the real estate, on the basis of which the intention to the transfer of the ownership of the real estate can be established, in this case a letter of intent to sell and buy the real estate is sufficient;
- a statement of consent to the public interest investigation, which is attached as Appendix 3 to the downloadable application,
- Certificate of good conduct;
- if acting through a proxy, a letter of authorization or a power of attorney.
The deadline for administration is 45 days.
The amount of the administrative service fee to be paid for the application is HUF 50,000 per property.
A foreign natural person who has the right of free movement and residence or has established legal status and has initiated the acquisition of Hungarian citizenship is obliged to pay an administrative service fee of HUF 10,000 upon the acquisition of his or her home ownership.
Our Law Firm undertakes to draft real estate sales contracts in a foreign language, primarily in English, but also if needed with the involvement of a translation agency in any other language. If it is needed than Our Firm also undertake the representation during the authorization procedure.