How To Finance My Property Purchase?
If you are not a cash buyer it is advisable to seek a secured loan in the UK before viewing property in Budapest. However if you work and pay tax in Hungary some of the banks may be able to help you, it is worth contacting them to see what they are able to do for you.
There will be no capital gains tax due on any profit you make after the first 5 years of purchasing your property. The first of these years is classed as a whole or part of the calendar year when your purchase was completed.
The rate for the first 5 years is as follows:
1st Year 16% x 100% = 16% (or part of the year)
2nd Year 16% x 100% = 16%
3rd Year 16% x 90% = 14.4%
4th Year 16% x 60% = 9.6%
5th Year 16% x 30% = 4.8%
6th Year 0% x 0% = 0%
How Easy Is It To Rent Out A Property In Hungary?
If your property is well kept and has a good central location in the capital city you shouldn’t have an issue finding a tenant. Currently the demand for rentals is very high in Budapest primarily for the following reasons; there’s a large amount of ex-pats who now work in Budapest for multinationals and as they are unsure of how long they will be working there they choose not to buy, there’s also a huge amount of foreign students who choose to attain their degrees in Hungary renting property and the third reason is that buying a property in the city can seem expensive to Hungarians as income tends to be low so renting is the only way they can live somewhere that is both convenient and affordable.
Please take a look at our pdf that shows in depth figures displaying current trends in the property market of Budapest in more detail.
Do I Need A Hungarian Bank Account?
The good news is no, you don’t need a hungarian bank account to buy property in Budapest. If you wish to open one for the payment of your bills, just take your passport along with you when opening the account to a local branch in the city and you shouldn’t encounter any issues whatsoever.
How Easy Is It To Buy A Property In Hungary?
There is no restriction for an European passport holder to buy property in Budapest. For non-European passport holders you will be required to apply for a permit to buy. This is just a formality and nothing to worry about. I have never heard of anyone having an issue attaining this.
An individual is allowed to purchase a property in Hungary without setting up a company.
You can set up a company to purchase property in Hungary, this can be a Hungarian company or a foreign one, however this is not necessary.
When purchasing your property you will need to factor in your legal fees around 1% of the purchase price and there is a 4% stamp duty which is payable directly to the government after your purchase.
How Much Rental Income Can I Expect?
Of course this varies from property to property. Realistically, investors can expect a 6-8% rental yield.
As a rule of thumb, properties which cost £100,000 can be expected to bring in £500-£700 a month.
Which District Is Right For Me?
This really depends on your personal cirumstances. If you are looking for a vibrant lifestyle frequenting the "cool" side of the city then the obvious place to go is towards downtown Pest, specifically districts 5,6 and 7 or over the bridge in Buda in district 1. Here you will find a plethora of bars and restaurants. This is the most appealing area to the millions of tourists who visit Budapest. These districts boast a huge number of extremely well positioned and modern apartments.
If you have a family or are looking for a more balanced lifestyle then districts 2, 3 and 12 are ideal where there are a great number of apartments and houses all built to the highest specification for the discerning buyer. If you are on a budget then we would recommend districts 11 and 13 where a short tram or underground ride will get you into the heart of the city.