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Buy to Let in Hungary

by admin
May 8, 2013

Buying to let is a popular trend in Hungary among Hungarian expatriates as well as international investors. Between 7% and 10% can be had as a yield on investment depending on the property’s location, et cetera. Knowing where to buy and what people are looking for is very important.

The city of Budapest and the resort towns are both great areas to buy and let. Although you can also buy and let in rural towns and villages; the rents will be cheaper and the demand is also lower. For buying and letting, here are some important facts for Buda:

  • Districts 2 and 12 have bigger apartments. These areas are favorites among Hungarian expatriates not only because of the spacious dwellings but also because these areas are clean and have a lot of greenery.
  • Districts 1 and 11 have smaller apartments. These districts are located near the Danube and range in price from EUR1 900 (USD$2 889) for 75 m2 to EUR2 500 (USD$3 275) for 2 500 m2.
  • Monthly rents range in price from EUR10 (USD$13) per m2 to EUR12 (USD$16) per m2.
  • Monthly rents cost EUR800 (USD$1 045) for 75 m2, EUR1 400 (USD$1 829) for 120 m2, and EUR2 400 (USD$3 136) for 200 m2.
  • Yield on gross rental income is between 6% to about 7.5%. Apartments with 120 m2 have the highest percentage yield.
  • Net rental income is taxed at 16%.
  • Net capital gains are taxed at 16%.
  • Annual property taxes are about 3%.

Here is some information regarding buying and letting in Pest:

  • Young professionals have a preference for Districts 5 and 6. These districts are the hub of the financial and corporate offices.
  • Monthly rents range in price from EUR12 (USD$16) per m2 to EUR14 (USD$18) per m2.
  • Monthly rents cost EUR1 000 (USD$1 307) for 75 m2, EUR1 400 (USD$2 483) for 120 m2, and EUR2 500 (USD$3 267) for 200 m2.
  • Yield on gross rental income is between 7% and over 8%. Apartments with 120 m2 have the highest percentage yield.
  • Net rental income is taxed at 16%.
  • Net capital gains are taxed at 16%.
  • Annual property taxes are about 3%.

Hungary’s rental market is unregulated. State and municipal properties are the only ones with regulations. This makes letting very favorable for landlords. Also, all rental terms are negotiable.

Unless you are purchasing properties through a Hungarian Limited Company; an individual can only purchase one property. It is always a good idea to consult with a lawyer who has no financial or other interests in the property whatsoever when performing any real estate transactions in Hungary. In doing so, you will help to safeguard yourself from issues like out-of-date title registrations as well as illegally constructed buildings.

Other tax information:

  • 14% health tax is levied on rental incomes in excess of EUR3 369 (USD$4 402).
  • Property taxes vary by municipality and may or may not be levied.

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  • Why Buy Property in Hungary?

    Hungary is one of Europe’s most beautiful countries. It is located in Central European with Budapest as its capital and largest city. In terms of international tourism, Hungary holds the number thirty (30) position for the most popular tourist destination in the world. This is an impressive recognition for a country with an area of only 35 919 square mile (93 030 km2).

    Hungary has ten (10) national parks and about one hundred eighty (180) nature preserves and protection areas. From the lush prairies of the Great Hungarian Plain to the gentle hills of the Pannonian Basin; Hungary’s landscape is full of charm and unique character.

    Real Estate in Hungary is a thriving industry offering properties of all categories. Without a doubt, the Hungarian property market is robust. International investors are seizing the opportunity to own a little piece of one of Central Europe’s most favored and charming nation.

    There are many reasons Hungary has become a prime real estate destination for luxury living. Many of these reasons are attributed to its natural environs that makes Hungarian Property Investment a very appealing deal for investors seeking profitable locations in central Europe.