Frequently Asked Questions

Why invest in Budapest?

Why Hexacon Homes?
Hexacon Homes is an Irish-Hungarian development company run by three partners working together in Budapest since 1998. Between us we have over 40 years experience in the property business. We have first hand knowledge of investing in property in an unfamiliar country. We have tailored our developments and services to suit investors needs, from our "cradle to grave" purchasers service though to our professional partners, to the high quality and hard wearing finishes in our apartments, where we include as standard, items such as quality finished flooring throughout, fitted wardrobes and kitchen appliances.

Will I be able to rent the property?
Yes. Although the rental market is young and not as strong as most Western cities, there is a good demand for quality, well located apartments. Your letting agent will handle this on your behalf.

What rental yield can I expect?
Rent yields are 5% to 7% on average.

Will my property appreciate in value?
Property prices are low in comparison to most Western capital cities and high capital appreciation is expected. Below are current prices comparing similar properties and locations, which give an indication of where we see Budapest prices going.
On 1st May 2007, a one bedroom apartment in Budapest's 7th District, on Akacfa utca cost EUR 115,700 for 47m2(506 sq ft) equating to EUR 2,460 per m2 (EUR 228 per sq ft).
A one bedroom apartment on Rathmines Road Lower, Rathmines, Dublin 6 is EUR 370,000 for 45m2(484 sq ft) equating to over EUR 8,220 per m2 (EUR 764 per sq ft).
A one bedroom apartment on Friars Stile Road, Richmond, South London is £369,950(EUR 536,159) for 53m2(570 sq ft) equating to EUR 10,116 per m2 (EUR 940 per sq ft).
A one bedroom apartment in the 7th district of Paris, on Rue de Varenne is EUR 580,00 for 50m2(538 sq ft) equating to EUR 11,600 per m2 (EUR 1,078 per sq ft).

Who will be the buyers in 10 years time when I want to sell?
Besides the 100,000 student population who will be of buying age in 5-10 years time, the demand will be from young Hungarians who are leaning towards Western culture and modern apartment living. The culture of saving the full purchase price to buy an apartment is fading away and taking out mortgages will be normal for Hungarians soon. Hungarians will cease living with their parents after they are married, as has been the norm, increasing the demand for starter homes. Hungary will be using the Euro currency and interest rates should be considerably reduced, increasing affordability.

What are the legal requirements involved?
Hungary has an excellent legal system and the legal requirements for buyers are similar to most European countries. Your lawyer will deal with all legal aspects of buying on your behalf and will provide all documents in English for you.
For legal advice on purchasing property the following two legal companies are well
HGBV-Szabó Ügyvédi Iroda
Contact: Dr. Viktor Benedek
Address: H-1056 Budapest, Duna u. 1.
Telephone: + 36 1 411 23 35
Fax: + 36 1 411 23 31
E-Mail: benedekv@hgbv-szabo.hu
Holczer, Jákó and Boross Law Office
Contact: Dr. Brigitta Tremmel solicitor
Address: 1025 Budapest, Felhévízi u. 31.
Telephone: +36 1 336 2570, +36 20 958 2749
Fax: +36 1 336 2575
E-mail: btremmel@hjblaw.hu

How do I arrange finance?
Mortgages are relatively new in Hungary and most banks have special departments to deal with foreign buyers. You can deal with the banks directly yourself or deal with a broker who will act on your behalf. 

Are there direct flights to Budapest and how much do they cost?
There are direct flights from Dublin and Cork with Malev Hungarian Airlines and direct flights with Aer Lingus from Dublin. Flights start from about EUR 130 return including taxes for the cheapest flights. There are direct flights to Budapest from most major UK airports.

Do I need to speak the language?
No. A high number of Hungarians speak English and all the sales agents, lawyers, banks, letting and management agents we deal with have English speaking staff.

Do I need to travel to Budapest to buy a property?
Although it is preferable to travel to Budapest, all transactions can be done in Ireland through the Hungarian Embassy, if you wish. On-going property management can be carried out through your managing agent. 

Can I transfer rent or property sale proceeds back from Hungary easily?
There are no restrictions on transferring funds. You just instruct your bank or solicitor to transfer the funds back and it should take 3-5 working days.

How do I purchase a property?
Most properties in Hungary are advertised using prices per square metre, with parking and storage spaces priced separately. As a foreign national wishing to buy a property, you must either apply for permission from the district council or set up a Hungarian company (in which case no permission is required). The council will only give you permission to buy one property in your own name, to avoid foreigners buying up a number of properties.
If you wish to purchase a number of properties, you will need to set up a Hungarian company, which avoids the need to apply for permission.

How do I apply for a permit?
This is a straightforward procedure, which is dealt with by your Hungarian lawyer on your behalf. The procedure takes 2-3 months and will cost EUR 250 to EUR 350 approximately.

How do I set up a Hungarian company?
The concept of an off-the-shelf Hungarian company does not exist. Setting up a company is a routine procedure although with considerable paperwork. All paperwork can be completed within a few days through your Hungarian lawyer while in Hungary or can be handled without travelling to Hungary but will take a little longer. The cost to set up a Hungarian limited company is EUR 1200 to EUR 1400 approximately.
Most lawyers and accountants advise foreign nationals to set up a Hungarian company. The apartment(s) would be bought by the Hungarian company, which is wholly owned by the foreign national.

What are the advantages to setting up a Hungarian company?
There are many advantages to buying property through a Hungarian company such as;

What will my legal fees cost?
Legal fees for property purchases are usually 1% - 1.5% plus Vat @ 20 %. The legal system in Hungary is highly regulated and secure. Deposits are usually between 10% to 30% of the purchase price, paid on signing the initial contract. Solicitors are registered in the Municipality Bar and National Bar Association.

How do I secure property ownership?
There are no title deeds in Hungary. Ownership title is registered with the Hungarian Land Registry, which is operated by The Hungarian Government. This is a simple and safe system, giving you clean title with no possibility of title deeds being lost.

What will an accountant cost?
Bookkeeping and accounting costs for a company vary depending on the level of service required. Basic book keeping starts at about EUR 50 per month.

How much is the stamp duty?
Residential Property; 2% on first 4 million Forints (approx.EUR 16,000). 6% on the balance. New Residential property over 30 million Forints (approx.EUR 120,000), stamp duty payable as above. New Residential property up to 15 million Forints (approx.EUR 60,000) is exempt from stamp duty. New Residential property between 15-30 million Forints (approx.EUR 60,000 - EUR 120,000); 6% stamp duty on the value within the thresholds. e.g. on a 20 million purchase, there is 300,000 Forints stamp duty payable, i.e. 6% stamp duty on 5 million. 10% stamp duty on car park spaces.

Can I expect a good return on investment?
The residential rental market is maturing with a good demand for new western style apartments in Budapest, giving returns of 5-7% approx.

What will the letting and management services cost?
Letting fees are usually 1 month's rent and management fees are 6%-12% of the monthly rent. Fees are subject to Vat.

What are the service charges?
Apartment services charges are levied at a price per square metre per month. The average price per m2 is 130 Forints (approx. EUR 0.52 per month).

How can I furnish the apartment?
Complete furniture packages and fit out services are available. At present these packages start at EUR 6,000 for 1-bed apartments, EUR 7,000 for 2 bed apartments & EUR 8,000 for a 3 bed. A detailed list of each is available on request.

How can I arrange mortgages?
Mortgages are now available for foreign investors from various Hungarian banks, each with difference lending terms ranging from 50% to 70% loan to value, 7 to 20 year terms and mortgages in either Hungarian Forints, Swiss Francs or the Euro.

What is the Vat rate?
Vat is generally 20%.

What are the tax rates in Hungary?
We have outlined below some basic Hungarian tax rates. However, due to the complex nature of Taxation in Hungary, as in all countries, we advise you to seek professional advice regarding tax matters.

Property Tax
Property tax, where levied, is low and varies from district to district. For example, the 9th district council do not charge a property tax on apartments. The 7th district charge 900 forints (approx. EUR 3.60) per square metre per annum if the property is on a main road and 750 forints (approx. EUR 3.00) per square metre per annum on minor roads. This equates to 33,750 forints (approx. EUR 135.00) per annum for a 45-m2 apartment (485 Sq foot) on a minor road.

Property held in a Hungarian Company
Corporation tax is 16% and there is an annual local business tax levied by the district council of 2% of gross turnover of the company excluding Vat. When a company sells a property, it pays corporation tax at 16% at the end of the tax year, as there is no Capital gains tax. When calculating the profit of the company you can deduct from the profits, the annual amortization of the apartment (2%-5% per year), as well as all the other related expenses as mentioned above.

Property in an Individual Name
Where an apartment is owned privately (not by a company), the tax on rent is 25% of the gross rental income. However, there are no deductions whatsoever for any expenses or annual amortisation/depreciation. Foreign nationals must apply for a tax ID and issue a rent invoice to the tenant. Your agent can handle this. Capital Gains Tax (CGT) is paid at 25%. If a property is owned for 6 years, CGT can be reduced by 10 % for the 6th year and each subsequent year it further reduces by 10 %. The final result is that after 15 years there is no CGT.