The Hungarian Guide - Investing and retiring in Hungary

  • A stunning capital with unique setting A stunning capital with unique setting
  • walking and birdwatching paradise walking and birdwatching paradise
  • undisturbed nature rich in rare species undisturbed nature rich in rare species
  • enjoy the 144 mile lakeside cycle track enjoy the 144 mile lakeside cycle track
  • Teeming with History Teeming with History
  • over 300 Thermal Health Spas and warm lakes over 300 Thermal Health Spas and warm lakes
  • picturesque lakes with Carp weighing over 100 lb picturesque lakes with Carp weighing over 100 lb
  • Feast on delicious sunripened local fruit Feast on delicious sunripened local fruit
  • Lake Balaton gets as warm as the Caribbean in the summer Lake Balaton gets as warm as the Caribbean in the summer
  • Tranquil Lake Balaton Tranquil Lake Balaton
  • Lush rolling hills of western Hungary Lush rolling hills of western Hungary
  • buy a thatched cottage for under £30 000.. buy a thatched cottage for under £30 000..
  • horsemen and nature lovers paradise horsemen and nature lovers paradise
  • Europe's second largest freshwater lake Europe's second largest freshwater lake
  • A paradise for watersport enthusiasts A paradise for watersport enthusiasts
  • Tihany peninsula- a pearl of history and nature Tihany peninsula- a pearl of history and nature

What does Brexit mean for Hungarian property owners?

What does this mean for those already owning a property or for those people considering buying a property in Hungary ?

In the short term there will be no changes at all.

The UK government must trigger Article 50 of the Lisbon Treaty – the legal process for quitting the EU. This starts the clock on a 2 year period during which time negotiations take place to agree new rules affecting trade, justice and reciprocal arrangements

Current situation :

In order to put things in perspective let’s consider the facts

The UK joined the EU in 1973, Hungary in 2004. Both countries still have their own currencies and are not in the Euro. Hungary along with 25 other European countries are part of Schengen – open borders. The UK is not a member of Schengen.

There are 2.2 million ex pats owning properties in other EU countries with 1.2 million of these living there permanently

In contrast there are over 3 million EU nationals living permanently in Britain. Currently there are approx 5000 expats with holiday homes in Hungary.

Each EU country will already have their own rules in place for both EU and non EU citizens buying property and living in their country.

The Hungarian government welcomes overseas property buyers irrespective of their nationality, grateful for the injection of money raised from taxes ( Stamp duty and VAT ) and boosting local businesses through the spending on goods and services. The property buying process is well defined and involves a Hungarian lawyer completing the necessary forms on your behalf and registering the Freehold title with the Hungarian Land Registry. For EU citizens the process is very simple. For non EU owners the solicitor must complete an extra form on your behalf. When the UK eventually exits the EU it is highly likely this extra form would need to be completed. There is no extra requirement on yourself as a buyer

Already there are several thousand Hungarian property owners from outside the EU most notably Switzerland. There are several owners that I am personally aware of from China and countries from the Middle East.

Future situation :

I have undertaken quite a lot of research based on available facts to help reassure people as overall I believe the impact of Brexit will be minimal. Let’s look at the main subjects in turn :-

Healthcare:

Could expats really be barred from EU healthcare and benefits ?

Very unlikely for several reasons.

For one it would open the door to retaliatory measures from the UK. In 2014-15 the British government paid out £674 million to other EU countries for expats requiring treatment across the EU. In contrast the UK government only received £49 million from other EU nations to treat their nationals residing in the UK. So the UK certainly pays its way !

At the moment the EHIC healthcard system is in operation across Europe whereby emergency healthcare is provided should healthcare be required whilst visiting another European country. This system works well and includes several non EU members such as Norway, Iceland and Switzerland. There should be no reason why this should change as the card is not an EU initiative

For those expats living permanently in Hungary they are encouraged to contribute to the state health system ( TAJ ) which entitles them to free health care and subsidised medicines and drugs ( a typical prescription drug costs approx £2.50 in Hungary ).The same health cost contribution also applies to Hungarian nationals. The costs are the same for both Hungarians and foreigners at 7,500 Hungarian Forints per month = approx £19

This is a small cost to pay for shorter waiting lists and excellent treatment – Hungary has twice as many doctors per person and twice as many hospital beds per capita than the UK

As there is no difference in fees for Hungarian nationals and foreigners – irrespective of EU membership or not, this is likely to continue

 

Volatility to Currency Markets and increase in costs

In the short term it is inevitable that currency markets will be more volatile than normal. The Pound has dropped against the Euro but less so against the Hungarian Forint.

Prior to Brexit the Pound bought approx 400 Forints. In October 16 the rate was 340 Forint. To put things in perspective when I purchased my property in 2007 the exchange rate was approx 290 Huf to £1

So relatively speaking the cost of living and the cost of Hungarian properties today are still very inexpensive and even allowing for inflation, due to a strengthening Pound over the intervening years, it is as cheap to live in Hungary today as it was 9 years ago.

To counter any erosion in purchasing power it is quite reassuring to know that property prices in Hungary continue to grow at 14% per annum – the fastest growth across the EU http://dailynewshungary.com/hungarian-property-prices-continue-surge/

 

Human Rights and Deportation

Could expats be deported by other EU members ?

Almost certainly not. First, there are numerous political reasons for EU states not to do such a thing, including the treatment of their own nationals living in the UK.

Mass expulsions of citizens from another developed economy would startle foreign investors and potentially cause economic turmoil in the expelling country.

Expats would also enjoy significant legal protection – “acquired rights” under international law based on the Vienna Convention of 1969, which says that the termination of a treaty “ does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination”

So expats who have already exercised their right to live in EU states can expect to keep that right after Brexit.

After Britain has formally left the EU the ex pats ability to live and work in EU nations will depend on new agreements the UK government negotiated with these nations

Hungary has a very liberal policy when it comes to foreigners owning property in Hungary. At this point in time many properties are owned by non EU nationals in particular Swiss families many of whom live permanently in Hungary. There is nothing to suspect British families will be precluded from owning a property and living permanently in Hungary. Overseas owners and visitors bring valuable income to Hungary

It is very unlikely Hungary or any other EU country would introduce Visas for British visitors – the tourist business is far too important to introduce unnecessary barriers in place. The Brits are known as enthusiastic travellers with 58% of all Brits travelling abroad each year. In any case Brits are considered low risk from a security point of view and having a British passport allows easy passage throughout the world.

Residency and ability to work

Currently it is a very simple process to apply for Hungarian residency if you are from another EU member state. ( I have available a single page document giving owners a step by step guide – this can be made available as necessary )

For non EU nationals the process is well defined and involves a few more forms to be completed. The authorities need satisfying are the reasons for residency and the ability of the applicant to be able to sustain themselves without having to rely on the state. Please check out this link

https://www.angloinfo.com/budapest/how-to/page/budapest-moving-residency-residency-non-eu

Regarding UK nationals wanting to work in Hungary. Most expats looking to buy a holiday home in Hungary have little or no desire to work in Hungary so the discussions likely to take place over the 2 year period exit period will be of little consequence. It has to be said there will be far more Hungarians seeking work in the UK where wages are higher than there are Brits wanting to work in Hungary with wages around £125 / wk)

Trade

It should be noted the UK buys more from the EU than the EU countries buy from the UK so it could be argued the UK is in a stronger position to negotiate future trade deals.

The situation regarding Hungary is different – The UK ranks as the 7th largest investor to Hungary with exports worth £16 billion per annum – 8.2% of total Hungarian imports. In contrast the UK imports just £2.8 billion of goods from Hungary. Hungary relies heavily on UK technology something it would be keen to protect going forward.

Pensions

At present, anyone who retires within the EU, has their state pension increased every year under the “triple-lock” system. This means that pensions rise by the higher of wage or price inflation, subject to a minimum of 2.5 % – The UK government would have to negotiate individual reciprocal agreements with EU countries if annual state pension increases for expats were to continue.

Expats who still have a residence in the UK will be unaffected as their state pension will be paid in the UK. Similarly private pension payments will be unaffected if a recipient lives in a EU country or not

Taxes

Double tax treaties that Britain has agreed with EU countries ( including Hungary )will remain unaffected. This is because the agreements to ensure people aren’t taxed twice on the same money are made individually with each country.

Hungary is unlike some other EU countries like France who have tougher tax laws for non EU citizens. Capital Gains Tax in France is a punitive 49%. In Hungary the rules are the same irrespective of nationality and much lower. There is no Capital Gains Tax to pay on any profit generated from a property sale providing the property is held for longer than 5 years.

 

Mortgages

British borrowers may find it more difficult to obtain a Hungarian mortgage in the future. As property prices in Hungary are the 5th lowest in Europe most property buyers use existing savings to buy their holiday home so it is likely to have little or no impact

 

Mobile phone costs

Mobile phone roaming charges have been reduced over the last few years and any premiums are set to disappear altogether in 2017. The UK benefits from being part of the Zone 1 area with charges capped at 4p / min for calls and 2p for text messages with data at 4p / Mb.

So would Brexit mean phone costs increase ?

Very unlikely as other non EU members form part of the Zone 1 area eg Iceland and Norway

Feel Good Factor

My summary of the situation is as follows :-

It could be argued the recent Brexit vote disappointed 48% of the UK voting population disillusioned they will be no longer part of the EU in future. Worried they will no longer be able to enjoy Europe

Similarly many of the 52% who voted to exit are disappointed with their deteriorating life in the UK – immigration out of control, too much pressure on the NHS, traffic congestion, abuse of the system and generally feeling hard done to by politicians. Many voted as a protest against “a not fit for purpose” EU organisation and being governed by unelected politicians from overseas – in particular Merkel, Hollande, Tusk and Juncker who along with other EU heads of state have failed to deal with the Greek crises and bundled the Syrian refugee problem

So it could be argued there are many millions of British people, both for and against EU membership who are currently feeling unhappy with their lives in the UK. One thing is certain things will be slow to change – if at all and I do fear many of the voters especially those who voted to leave the EU expecting a miracle cure will end up feeling bitterly disappointed once more.

There is no point complaining and making yourself unhappy – the vast majority of Politicians the world over are only interested in themselves – Fact !!! – there is only person who can change their quality of life and that is yourself. Relying on a politician to do this for you is foolhardy. You have to be the catalyst !

Whatever you voted for in the recent Brexit referendum and irrespective of your political views one thing is for certain the quality of life in Hungary far surpasses that which is on offer in the UK. – why not come and see for yourself and make a decision which will ensure your life is enhanced ?

 

For further reading please check out the following article from the Place in the Sun magazine :-

https://www.aplaceinthesun.com/articles/2016/09/

regards
Steve

Disclaimer
This information is provided as a general guide and is based upon information researched at the time of compilation and may be subject to change at any time with little or no notice. I will not be liable for any inaccuracies in this information