EU access is a hot product for non-EU people. The Portuguese program did extremely well while it had a real estate option, Greece is firing on all cylinders, and it appears that Hungary is about to launch a Golden Visa through real estate investment as well!
The rough outline: Either an investment of €250,000 into a local real estate fund, or €500,000 directly into real estate, would grant a residence permit which allows the investor and his family to travel freely across the Schengen Area.
If the €500,000 option turns out to be open to all real estate in Hungary, I will seriously regret having sold one of my apartments earlier this year.
I had a chat with Laszlo about what we know for now. He has been helping many people immigrate to Hungary for almost three decades.
I might start investing in Budapest again
I sold one of my Budapest apartments because the market was stagnating, I did not see any immediate catalysts, and had better opportunities elsewhere. There was nothing wrong with real estate in Budapest, it offered great value for money, but I didn’t see any short term catalysts for capital gains as per my guide on investing in the Budapest real estate market.
IF, I repeat IF, this Golden Visa is not restrictive in terms of what people can purchase, I will probably start investing there again.
Both Laszlo and Benedek will be helping people with the Hungarian Golden Visa. Feel free to get in touch with them, their contact details are in the description of the video.
I also invited Benedek, my real estate buyer’s agent in Budapest, to discuss the potential impact on the Budapest property market.
To a World of Opportunities,
The Wandering Investor.
Available services in Hungary:
- A Real Estate Lawyer in Budapest, Hungary
- My favourite buyer’s agent in Budapest, Hungary
- Residency-by-Investment in Hungary for non-EU people
Other articles on Hungary:
- How to maximize Airbnb yields when you invest in Budapest – up to 10% net yields
- A cheap Plan B in rural Hungary
- The full guide to investing in the Budapest real estate market
- Why did I sell my Budapest Apartment?
- Investing in the Stock Market in HUNGARY, good value or value trap?
If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.
If you want to discuss your internationalization and diversification plans, book a consulting session or send me an email.
Transcript of “BREAKING NEWS: Hungary Golden Visa – what we know so far”
LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. So today, I’m really excited to be discussing a topic that just popped out. Apparently, Hungary will be launching a golden visa that people will be able to obtain to have visa-free access to the European Union, to the Schengen zone more specifically, through the purchase of real estate. So I’ll be discussing with Laszlo, who has been in the immigration game for 30 years and who has helped dozens of people move to Hungary, as well as Benedek, who is my buyer’s agent in Budapest.
Outline of the new Hungary Golden Visa
So Laszlo, let’s start with you. Can you tell us about the general outline of what we’re hearing about this potential new golden visa?
LASZLO: Hello, everyone. I’m happy to join this conversation. Yes, it’s fairly new. I have to state several facts.
One is that the draft is in front of the parliament but it has not been voted on, meaning that we are talking about the current draft and not about anything which could change as the text of the law. And also you have to know that there would be additional regulation by a government decree which would define many technical details, what is permitted, what is not permitted, what is the best way, what would be approved, if approval is necessary. So there is, at this moment, there is a little bit of ambiguity of exactly the rules how they would be. The current draft of the law would become in force next September. So that is why that is also another question of when. I hear stories may be earlier, currently, the text which is in front of the parliament talks about 2024 September, meaning that there will be ample time to prepare. If it’s a nearer time period, then, obviously, then we have to speed up the procedure. Anyway, that I just wanted to add.
The whole concept of the new possibility, there would be a new immigration law, by the way, and it would be part of it, the old one would be abolished. So the old residency bond situation would be closed because that law will not exist anymore, this would overwrite it. Simply says that people who would like to get a long-term residency, which means that, initially, they get two years, but if they keep the investment, they would have a 10-year residency permit, which is renewable if they keep the permit for another 10 years and for another 10 years. There is no restriction on the timeline. That means that, yes, nearly, basically, if they keep the property, it will be a lifetime residency, which we could call, in economic sense, as permanent residency, but it’s a new law, it is using new expression, so then we translate the Hungarian into the foreign languages, then it would be quite near to permanent residency, but it is not explicitly called as a permanent residency. Is that clear?
Path to citizenship with the Hungary Golden Visa
LADISLAS MAURICE: Yes. Would there be any path to citizenship? Because I know, in Hungary, on paper, you need to live there for a few years, you apply for permanent residency, then you can get citizenship. But it’s actually hard. A lot of people get their permanent residency applications rejected, a lot of people get their citizenship applications rejected, you really need to integrate yourself into Hungarian society, which is not easy.
LASZLO: From what I read from the law and also the amendment to the citizenship law, it will be hard to convert it to citizenship. In fact, if you do not live here and you do not spend considerable time, then it is not Portugal, and authorities just simply do not want to use that system, but for five years, one week each year and you qualify for citizenship. That is not really a good deal for a government, I would say, but it’s another topic of what and how Portugal is doing thing. No wonder that they have a huge problem. They had a huge problem this year and last year with this. And also judges are refusing granting the citizenship. So anyway, only for people, but then again, we are talking about the primary legislation.
3 ways to obtain the Hungary Golden Visa
Investors would have three options to invest, if I can describe that, which currently is the situation. Either invest into real estate investment fund, REIT. It’s not a trust but a fund, but anyway. Properly licensed by the Central Bank of Hungary, which is the financial supervisory body in Hungary. So they supervise all the banks, they supervise the insurance companies, they supervise the investment funds, they supervise the brokerage firms, and that is why the National Bank has to license these kind of investment funds. €250,000 investment, which is required, it’s always a minimum, but probably then if you want to use this option, then you do not want to pay €300,000 just for the sake of getting the residency. There is also another option, which is not an investment fund, not a joint investment, not a mutual fund. It is that individual properties would be purchased, possibility is there, and the minimum is €500,000.
And there is an interesting solution, which probably will not be as competitive, which is to donate €1 million to– And I know. Anyway, that’s in the law. That’s currently where we stand, €1 million to donate to a foundation which is supervising and managing either a high school, or a college, or university. Quite a lot of the universities are operating as private foundations in Hungary. And therefore, that is one way of how to donate that. Yes, again, yeah, €250,000 seems a little bit better than €1 million donation. And for this, you get an investment here depending on how the investments are doing. Those are the three options currently on the table in the draft law.
LADISLAS MAURICE: So, why is the Hungarian government doing this?
Why is the Hungarian government doing this?
LASZLO: The property market is not moving now. In fact, it is just stagnating. And then there are quite big property investments which are coming into line, and then, I guess, that this will be one way how to soak up the usual additional supply, by this way to stir up, not for individual user is much harder, they need a permission to buy. If they are outside of European Union citizens, they need the permission to buy a property. This property investment fund is a very, very easy solution. You just transfer the money to the investment, you sign the subscription agreement, and you get the investment confirmation. And this is it.
And then, yes, big property projects specializing in real estate, not in commercial real estate but private properties then, yes, I think this is what they are targeting.
Potential of Hungary Golden Visa on Budapest property market
LADISLAS MAURICE: So thank you, Laszlo. So Benedek, what do you think would be the impact of this on the property market? Because we’ve seen the highly successful Portuguese Golden Visa, it helped property prices in Portugal, to say the least, in core areas. Same thing in Greece now. So what do you think the impact would be in Hungary?
BENEDEK: Hello, everybody. I’m also glad to be part of this conversation. And like Laszlo mentioned, the property market in Budapest right now is, well, it’s a nice way to put it, it’s not stagnating itself, it has been in decline for more than a year, so prices have been steadily declining. And there is very little movement. And like Laszlo mentioned as well, this is probably a way to enhance the situation. So I would expect that this would mean an influx of demand for the higher end properties, which would mean that the inner parts of Budapest would receive a big influx of capital.
So this could mean that luxury real estate would be in high demand, which makes a good opportunity for investors who are ready to invest now, because prices are down now. So it’s possible to buy in to the property market for least amount of money. And then you can hold onto the property and, in the worst case scenario, you would have an appreciating assets over time. And the best case scenario, you can resell the property for the golden visa applicants.
LADISLAS MAURICE: Yeah, we’ll see how the mechanics work exactly. So there are essentially two scenarios, either a single property must be bought to qualify for the €500,000. So here, there’s definitely an opportunity to buy now and front-run the demand in the future, or it’s multiple properties. If multiple properties qualify, then, I have to say, I really regret selling my real estate in Budapest a few months ago, [laughs] because then it means that, generally speaking, like you say, core property in Budapest will be doing well as long as this golden visa is active and as long as the mechanism is relatively easy.
The reason I sold my real estate in Budapest a few months ago, well, some of my real estate, not all of my real estate, was that it was stagnating, I didn’t see any catalysts for things to become better. If I had known that a golden visa would be launched, I would absolutely not have sold my core Budapest real estate apartment in the 6th District. That is for sure. So I think that this, suddenly, puts Budapest back on the map. It’s not only great value in terms of real estate overall compared to other European capital cities, but now there’s a big, big catalyst around the corner, again, if this golden visa gets properly implemented and is not too restrictive. So it’s a bit early to say. I wouldn’t jump in right now until the mechanisms are clear.
Any thoughts, gentlemen?
LASZLO: Just want to give an idea. I think like 8 or 10 years ago, St. Kitts increased the necessary property investment threshold from €250,000 to €400,000, and all the properties previously available for €300,000, €280,000, and so on and so on, they just simply disappeared. All of them became €400,000 properties.
LADISLAS MAURICE: Yeah.
LASZLO: This is [inaudible 10:39].
LADISLAS MAURICE: Yeah. So if anyone wants to speculate, get in touch with Benedek, he can find you properties around €300,000, €350,000 in the 5th District. If things work out, great, you’re probably going to be able to sell it for €500,000 to some Qatari within 18 months. If it doesn’t work out, guess what, you have an amazing property in Budapest at some reasonable price. [laughs]
Cool. All right, fantastic. So this was just a short update because a lot of people have had questions on this. I know both of you will be active with the Hungarian golden visa once it launches. In which capacity, I’m not too sure exactly. I know, Laszlo, you’ll be offering the full package. Benedek, you’ll be helping people find individual properties, you were discussing potentially a fund, we don’t know. But there is the contact information of both Laszlo and Benedek in the description below if you want to get in touch with them.
Gentlemen, thank you very much.
LASZLO: Thank you for the chance. Take care.
BENEDEK: Thank you.