Can I Get Residency In Hungary If I Buy A House?

Should You Choose Residential Real Estate as a Guest Investor?

The Guest Investor Program allows foreigners to qualify for residency by investing in Hungary's real estate market. From 2025, buying a residential property worth at least €500,000 can make you eligible for this program. This option is more expensive than investing in a real estate fund, but could be more suitable for many residence permit holders.

Key Factors to Consider

• Price Trends: Hungarian property prices have been on a steady rise, with property values experiencing growth over recent years. This upward trend reflects strong market demand. However, potential investors should analyze the long-term sustainability of this growth and consider the possibility of market corrections.
• Demand and Supply Dynamics: The housing market has seen fluctuating numbers of issued building permits and constructed homes. For example, in Q2 2024, only 4,448 building permits were issued and 3,248 homes were constructed, which is significantly lower compared to 2020. This reduced supply could contribute to higher property prices and potentially fewer options on the market, making it crucial for investors to conduct thorough research and secure properties that align with their investment goals.
• Macroeconomic Considerations: Economic indicators like inflation, employment, and wage growth have direct impacts on the housing market. According to the Hungarian Central Bank's 2024 Housing Report, nominal wages have been rising significantly, while inflation has stabilized. This positive economic outlook could support continued demand for housing, but investors should remain vigilant about potential shifts in these indicators.

Purchase Price VS. Worth

When considering purchasing property in Hungary to obtain residency, one must be aware of the legal and financial requirements. The Hungarian government distinguishes between the purchase price and the actual worth of the property, particularly for foreign investors seeking residency.

During the immigration process the actual market value of the property will be scrutinized to ensure that there is no significant discrepancy between the purchase price and its market worth. The National Directorate-General for Aliens Policing will appoint a real estate appraiser to verify if the property's price corresponds to its true market value, safeguarding both the buyer and the Hungarian economy.

Purchasing a property below the required threshold, or a property whose value does not match the investment level, may disqualify your application for residency. Therefore, it is crucial to work with experienced real estate professionals and legal advisors to ensure that the property you are buying not only satisfies your needs but also meets the legal requirements for a residency permit.

Purchasing a Residential Property for Residency

Starting January 1, 2025, foreign investors can qualify for the Guest Investor Visa Program by purchasing a residential property in Hungary. Here are the main criteria:

Eligibility Requirements for Property

• Minimum Value: The property must be worth at least €500,000.
• Location: The property must be located within Hungary.
• Ownership for min. 5 years: The applicant must have sole ownership or co-ownership with eligible family members.
• Clear Title: The property must be free of any legal or financial claims.
• Usage: It must be registered as a residential home, not a holiday or industrial property.

Restrictions

• The property must remain under your ownership for at least five years.
• You cannot sell or transfer the property during this period.

Eligible and Ineligible Properties

Eligible Properties

• Fully Completed Residential Properties: These must have an independent land registry number.
• Unencumbered Properties: The property must be free from liens or encumbrances.

Ineligible Properties

• Under-construction Properties: These typically lack an independent land registry number.
• Holiday Homes & Industrial Properties: Only primary residential properties are eligible.
• Properties with Shared Ownership: Properties that do not have exclusive ownership rights for the investor are ineligible.

Can a Foreigner Own Property in Hungary?

Non-EU citizens, including those from countries like the UK post-Brexit, need to obtain a property acquisition permit before purchasing real estate in Hungary. This permit is issued by the local government office in the area where the property is located. The application process typically takes up to 45 days, and the fee is around HUF 50,000 per property. The permit process includes verifying identity, evaluating the impact on local and public interests, and ensuring compliance with local regulations.

Is There a Wealth or Property Tax in Hungary?

Hungary does not impose a wealth or property tax, as indicated by the absence of a net wealth tax in the tax structure. The country’s taxation system focuses on other forms of taxes, such as corporate income tax (CIT) at a rate of 9%, personal income tax (PIT) at a rate of 15%, and value-added tax (VAT) at a standard rate of 27%, which is one of the highest in the European Union.

For property-related matters, although there is no specific wealth tax, Hungary does apply inheritance and gift taxes. The general rate for these taxes is 18%, but there is a preferential rate of 9% for residential properties. However, children, siblings, and spouses are exempt from paying inheritance or gift taxes on property transfers.

Important Considerations Before Investing

Financial and Legal Considerations

• High Investment Threshold: The minimum investment for real estate is quite high (€500,000), making it an option only for wealthy individuals.
• Residency, Not Citizenship: The Golden Visa program grants residency, not immediate citizenship.
• Complexity of the Process: The application process can be complex and requires careful attention to legal and financial details. 
• Illiquidity: Your investment is locked for at least five years.
• Market Fluctuations: Real estate values may fluctuate.

Additional Costs and Challenges

• Property Management: If you don't reside in Hungary, managing the property might require professional assistance.

Conclusion

Investing in Hungarian residential real estate offers a unique pathway to obtaining residency through the Guest Investor Program. While it provides numerous benefits like long-term residency and a stable investment, it’s essential to carefully consider the financial commitment, legal requirements, and restrictions involved. 

Consulting with a real estate lawyer and a financial advisor is highly recommended to ensure a quick and easy process!