Should You Choose Residential Real Estate as Guest Investor?

Purchase a Residential Real Estate

Starting January 1, 2025, you can qualify for the Guest Investor Visa Program by purchasing residential property worth at least €500,000. This property must meet specific criteria:

• Location: The property must be located within Hungary.
• Clear Title: It must be free of any liens or encumbrances.
• Residential Use: The property must be intended for residential purposes.
• Restriction: You cannot sell or transfer the property for five years. This restriction is registered in the land registry.

Eligible Properties and Key Considerations

Let's explore the real estate opportunities that qualify for the Golden Visa!

Eligible Properties:

• Completed Residential Properties: The property must be fully constructed and have an independent land registry number, signifying its legal recognition as a separate entity.
• Free of Encumbrances: The property must be free of any legal or financial claims, ensuring the investor has full ownership rights.
• Residential Real Estate: The property must be classified as residential according to its title deed, excluding holiday homes, weekend houses, and industrial properties.
• Sole Ownership: The property must be owned exclusively by the applicant (or the applicant and their eligible family members) for five years, excluding properties with shared ownership structures.

Ineligible Properties:

• Under-construction properties: These properties typically lack an independent land registry number and may have encumbrances.
• Holiday homes and weekend houses: These properties are not considered primary residences.
• Industrial properties: These properties are not classified as residential.
• Semi-detached houses: These often have shared ownership structures, making them ineligible.
• Properties with shared ownership: Any property where the applicant does not have exclusive ownership rights is not eligible.

Keep In Mind

• Property Value: The property must have a market value of at least 500,000 euros.
• Appraiser's Opinion: In addition to the title deed, the property appraiser's opinion will also be considered in determining whether a property qualifies as residential.
• Legal Clarity: While the law allows for "partial ownership," the requirement for exclusive ownership for five years may create challenges for properties with shared ownership structures. It is advisable to seek legal counsel to ensure that any potential investment meets all the requirements of the program.

Benefits of Choosing Residential Real Estate

The residential real estate option offers a tangible asset, potential for appreciation, and lifestyle benefits, making it a compelling choice for Guest Investors seeking a foothold in Hungary.

• Growth-Oriented Investment: Real estate represents a tangible asset with the potential for appreciation, particularly in a dynamic market like Hungary.
• Rental Income Potential: Your Hungarian property can generate rental income when you're not residing there.
• Stability and Security: Compared to other investment options, real estate offers a sense of stability and security.
• Enhanced Lifestyle: Hungary boasts a high quality of life, rich culture, captivating history, and vibrant cities. Owning property here allows you to fully experience all that this beautiful country has to offer.

Important Considerations

• Capital Outlay: Requires a substantial initial investment.
• Illiquidity: Your investment is tied up for at least five years due to the restriction.
• Market Dynamics: Real estate values can fluctuate.
• Due Diligence: Thorough research and legal advice are crucial before investing.
• Property Management: If you don't reside in Hungary, you might need property management services.

How to Purchase a Property and Obtain the Guest Investor Residency Permit

Navigating the process of purchasing a property and obtaining residency can seem difficult. Here's a simplified breakdown:

• Finding the Right Property: Start by researching the Hungarian real estate market, identifying properties aligning with the program's criteria and your budget, desired location, and lifestyle.
• Due Diligence: Once you've found a potential property, conduct thorough due diligence. This includes verifying ownership, checking for encumbrances, and reviewing all relevant documents.
• Negotiations and Contract: Negotiate the purchase price and terms of the sale with the seller and real estate agent. Once you've reached an agreement, a legally sound purchase contract will be drafted outlining all the details of the transaction.
• Visa and Residence Permit Processing: You'll need to apply for the necessary visas and permits to legally reside in Hungary.
• Coordination with a Forensic Real Estate Expert: A forensic real estate expert will provide mandatory services during the appraisal process, ensuring that the property's value is accurately assessed.
• Management of the Land Registry Process: This involves registering the property in your name at the Hungarian Land Registry.
• Property Acquisition Permit: In some cases, you may need to obtain a permit from the Hungarian authorities to acquire the property as a foreign national.

Conclusions

Hungary's Guest Investor Program grants residency to non-EU citizens who make a significant contribution to the country's economy. This program is particularly attractive because it provides a pathway to permanent residency and eventually citizenship. While investing in residential real estate offers a tangible asset and a potential pathway to residency, it's essential to weigh the financial commitment, market dynamics, and restrictions involved.

Want to consult with an immigration expert to make an informed decision? Contact us!