How do I sell my home in Hungary?

  Market overview

With a strong economy and stable housing market above and beyond many of its European neighbours, Hungary is becoming the go-to country for plenty of foreign investors. Its privileged position right at the heart of Europe has opened Hungary up to incredible trade opportunities and the nation’s tourism trade is absolutely skyrocketing. As has been the case for years, Lake Balaton, Zala and the capital of Budapest are in the highest demand of all and offer consistently impressive rent yields and rock-solid property values. 

That being said, head away from Hungary’s hotspots and it’s difficult to ignore the housing market slump that bit hard a few years back – making the most of a property investment in Hungary all about location. 

The Selling Process

Find legal representation

You will need to secure the services of a Hungarian lawyer in order to deal with all aspects of the sale. To safeguard your interests, appoint an independent legal representative fluent in both Hungarian and English. He/she must ensure that yourchosen property has good title (many title registrations are out of date – a legacyof the communist era) and, particularly in the case of a new-build, has been constructedlegally.

Contract

Once all the necessary legal checks have been completed to the satisfaction of the buyer, you will be ready to sign a private sales contract. Before this stage you should have had the contract translated into English and ideally have English-speaking assistance on hand during the signing. The contract is prepared by the selling broker and signed at the office of the broker.

The private contract details the finer points of exactly what you are selling, andincludes all the fundamental information about the sale such as the purchaseprice (including how and when it should be paid), the list of fixtures and fittingsincluded in the sale, and the completion date when the deeds will be signed.

Legal requirements

The seller has to comply with the legally stipulated notification requirementstoward those having rights of pre-emption (i.e. first refusal to buy the property ifit comes up for sale). Vendors must ensure they possess relevant property ownershipdocuments and make sure they have paid any outstanding tax or utility billson their property.The seller is obliged to sell the property free from defects. The seller is liable fordefects which reduce the value of the property or prevent the use of the propertyfor a particular purpose. If the property lacks a particular characteristic which thevendor claimed it possessed, he is liable.

Preliminary agreement

Both parties now sign a preliminary contract (compromesso), although this isn’t obligatory. The compromesso is a legally binding contract which commits both parties to the transfer of ownership on the terms and conditions set out.  It can include as much information as the parties wish to include and, if necessary, special terms can be inserted to deal with specific issues raised by the searches. 

The compromesso must be in writing, although it does not need to be notarised. You should have the compromesso translated to make sure you understand it. It can be signed in person or signed in the buyer’s resident country then posted or faxed to you (although it’s not binding until received in Italy).

Deposit

This agreement commits both buyer and vendor to complete the transaction andat this point the buyer must pay a deposit of 10% of the purchase price which willbe forfeited if the buyer walks away from the deal subsequently. However, if thevendor reneges on the deal at a later date, they are liable to repay the buyer twicethe value of the deposit in compensation.

Completion

After the technical handover of your property the final payment is due by thebuyer. At this stage your solicitor will take care of repaying any outstanding mortgageamount. The buyer is obligated to notify the seller immediately after receivingpurchase permission from the Administration Office. Following notification,the buyer must also transfer the balance of the purchase price.

Closing usually takes place within a week from receipt of the purchase permit.During the process, the seller and the buyer will sign the closing statement, whichis a declaration that the purchase price is paid in full and possession is transferred.

Land registry

The buyer obtains full title when the property is entered onto the land register.You should be aware that the registration procedure can take anywhere fromone to six months from the time of filing the necessary documents at the LandRegistry office.

Average selling prices

1 Bed Apartments

£56,910

2 Bed Apartments

£106,705

3 Bed Apartments

£218,817

2 Bed Homes

£54,262

3 Bed Homes

£118,583

4 Bed Homes

£171,751

 

Selling costs checklist

Legal fees - 1% of the property price plus 20% local VAT(this might include the cost of applying forthe permit at the land authority). CGT - all income gained from the sale of an assetare treated as ordinary business income andare taxed at a 10% - 19% rate. Estate agent's fees - usually paid by the buyer. Most sellers are reluctant to pay high broker fees. Transfer duties - also paid by the buyer. If you are sellingshares in a company, there is no liabilityfor stamp duty. VAT - If you sell your home or flat in the sameyear that you purchased it, you are liablefor the full 25% VAT.

 

Photos: Shawn Harquaail, Images_of_Money, AJC1, Diana Parkhouse