How foreigners can acquire real estate in Hungary?
Foreign clients often ask whether they are entitled to acquire a property in Hungary under the same conditions as Hungarian citizens, or whether there are any restrictions on their property acquisition, and if so, what are they?
First of all, it should be noted that the Hungarian legislation makes a distinction between cases of acquisition of property depending on the type of property that the foreign person wishes to acquire.
Article 10 of Act CXXII of 2013 on the Turnover of Agricultural and Forestry Land provides that the ownership of agricultural and forestry land may not be acquired by any person other than a national of a Member State of EU or a citizen of Hungary.
So, with very rare exceptions, legal persons and foreign natural persons who are not national of a Member State may not acquire agricultural or forestry land.
Thus, legal persons, whether registered in Hungary, in a Member State of EU or outside the European Union, are equally prohibited from acquiring agricultural or forestry land.
A national of a Member State is a citizen of a Member State of the European Union, a citizen of a State party to the Agreement on the European Economic Area and a citizen of a State treated as equivalent to beforementioned sates under an international treaty.
Acquisition of agricultural land by nationals of Member States is also a complex issue which will be dealt with in a separate post shortly.
For the moment, we will focus only and exclusively on the issue of the acquisition by foreigners of real estate other than agricultural or forestry land.
It is important to note here that it is common in Hungary – mostly in the case of holiday homes – that the property is not used for any agricultural activity or that such activity is minimal, but the property is still registered as agricultural land in the land register. This property, regardless of its actual condition, will be classified as agricultural and forestry land and will therefore be subject to the aforementioned restrictions on foreign ownership.
The rules for the acquisition of ownership of real estate not classified as agricultural or forestry land (arable land) by foreigners are set out in Act LXXV of 1993 on certain rules for the rental and disposal of apartments and premises (hereinafter: Housing Act) and the Government Decree 251/2014 (X. 2.) on its implementation.
The latter Regulation applies to all real estate that does not qualify as agricultural land (e.g. also holiday homes, industrial real estate, etc.), not only residential real estate. This decree sets out restrictive rules for the acquisition of these properties by foreigners.
The acquisition of ownership of such real estate requires a permit from the government office of the capital city or county where the real estate is located, unless the foreign person is an exempted person.
As an exception, the following persons may acquire land other than agricultural land without a permit:
– citizens of Member States of the European Union (Austria, Belgium, Bulgaria, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden), legal persons or bodies without legal personality,
– citizens, legal persons or entities without legal personality, of a State party to the Agreement on the European Economic Area (Norway, Liechtenstein, Iceland),
– citizens of Switzerland (under the Agreement on the free movement of persons promulgated by Act CXXV of 2006),
– dual citizens, if one of the citizenships of the person is Hungarian or a Member State,
– and Hungarian citizens living abroad,
– and, in the case of inheritance, anyone,
– and, persons with refugee or protected status.
All other natural persons, irrespective of their status in Hungary – whether settled or immigrant – need a permit from a government office to acquire property.
In practice, this means that in the case of foreigners who are subject to the authorisation procedure, even if a contract of sale is concluded between the parties, the registration of the buyer’s title will be refused by the competent land registration authority in the course of the land registration procedure, in the absence of a governmental permit.
The owner of the real estate in Hungary is the person who is registered as the owner in the Land Register.
Thus, in the above case, a seller in bad faith may even resell the property, and a foreign person who has not acquired the property in the absence of a government licence can only claim damages against the seller in a civil court action.
The authorisation procedure at the government office will start at the request of the buyer.
The requester must pay an administrative service fee for the procedure electronically, which is HUF 50,000 per property. However, if the foreign natural person has the right of free movement and residence or has settled status and has applied for Hungarian citizenship and has applied for a permit to acquire residential property, he/she must pay an administrative service fee of HUF 10,000 for the procedure.
In the procedure, the following annexes must always be attached:
- A preliminary or final contract for the acquisition of immovable property, or a declaration of intention to transfer ownership of the property, in a form notarised or countersigned by a lawyer.
- A copy of the applicant’s passport, driving licence or Hungarian identity card certified by a legal representative or notary.
- In the case of a branch or commercial representation under the Branch Establishment Act, a certified or notarised company certificate not more than 21 days old.
To speed up the procedure, it is also advisable to submit the applicant’s private moral certificate and an e-certificate of ownership of the property no more than 21 days old.
In some specific cases, additional annexes are required.
During the procedure, the government office will check whether the annexes to be attached to the application have been submitted and, if not, will ask the applicant to complete the missing documents.
If the applicant has not submitted them, the Government Office will itself obtain the applicant’s official certificate of moral character and the e-certificate of ownership of the property.
The Office will then contact the local government of the municipality where the property is located and ask for a statement as to whether the acquisition of the property is contrary to the interests of the municipality.
The Office then asks the National Immigration Directorate and the National Police Headquarters whether there are any circumstances (deportation, ban on entry and residence, arrest warrant) which could be detrimental to the public interest.
The time limit for the procedure is 45 days, which may be extended by the authority.
If the Government Office decides that the acquisition of real estate is contrary to the public interest or the interests of the municipality, and the Government Decree does not require that the acquisition of real estate be authorised, it must reject the application for authorisation of the acquisition of real estate.
There is no right of appeal against the decision to reject the application, but a judicial review of the decision may be initiated on the grounds of an infringement of the law.
