Costs of buying a real property

Costs of buying a real property are multidimensional. If you are primarily interested in the lawyer’s fee of buying a home, please click here to see the specific lawyer’s fees of our office for a real estate sales contract.

In this article, we briefly take into account the most important costs involved in buying a residential property. We have grouped the cost types according to

  • costs of buying an apartment
  • costs of buying a house
  • costs of buying a plot of land

Costs of buying an apartment

Lawyers’s fees

In view of the mandatory lawyer’s countersignature and the mandatory legal representation before the land registry, the cost of a lawyer’s fees is inevitably included in the cost of any property purchase, including the purchase of a home.

Percentage of the fee

There is a huge variation in the amount of legal fees for real estate contracts at national level. Anything in the range of 0.3% to 1.5% of the purchase price can occur. In extreme cases, you may even receive offers to draw up a contract outside this range.

Pricing in our office

For our part, we believe that the best solution is to set the lawyer’s fee for a real estate contract according to the complexity of the transaction, the amount of work involved and the value of the property as an adjustment factor. In this way, there is a minimum fee that will be charged in any contract, no matter how low the value of the property.

The lawyer’s fee, set at 0.5% of the market value, helps you to estimate the lawyer’s fees for a simple property sale contract of average value. If the value of the property is very high, the complexity of the work is the main factor determining the fee. Thus, expressed as a percentage of the purchase price, the fee can be significantly lower than 0.5% if the contract is a simple one, in addition to the high purchase price.

However, in the case of a specific property you have selected, you should contact our office directly. After a short assessment and free consultation, we will provide our clients with a precise quotation for the transaction, including all the costs involved.

Obtaining the abstract of title

An abstract of title of the real property is needed to prepare the contract. The abstract of title will be checked once again on the day of signing the contract to ensure that the legal status of the property has not changed. This makes a total of 2 abstract of title, at a cost of 3.000,-Ft each – from 1 January 2023. Individuals can request an abstract of title free of charge 2 times a year via the client portal. The client portal interface can be accessed by clicking here.

Land Registry procedure fee

In the land registry procedure, an administrative service fee is payable for the procedure to register ownership. This fee amounts to HUF 6.600,-.

Transfer tax

The buyer pays a property transfer tax on the market value of the property acquired. The property acquisition tax depends on many circumstances. If no discount is available, the buyer will have to pay a property transfer tax of 4% of the purchase price (market value). For a property worth HUF 30 million, this means a transfer tax of HUF 1,200,000.

Personal income tax

In addition to the many costs for the buyer, this item is on the seller’s side. Personal income tax is payable on the income generated by the sale of the property. In very simple terms, income is the difference between the purchase price of the property and the amount spent to acquire it. The personal income tax rate is 15% of the income. From the second year after the acquisition of the property, the personal income tax rate decreases in stages, while from the fifth year onwards the seller no longer has to pay personal income tax, regardless of the price for which he sold the property.

Cost of buying a house and buying a plot of land

The items listed as costs of buying a home are necessarily also included when buying a house or a plot of land. There are, however, other items which, because of their special nature, only arise when buying a house or land.

Obtain a copy of the map of the real property

When buying a house or a plot of land, a copy of the map showing the contours of the plot and the building on it to scale must be requested in addition to the abstract of title. The fee is HUF 2.250. The map is also available through the client portal. It can be paid by credit card.

Land parcel measurement

Geodetic measurement of the plot of land to ensure that the actual and legal boundaries of the plot are comparable. In the vast majority of cases, there is a discrepancy between the legal and the actual boundaries of the plot. The question is therefore not whether there is a difference between the two values, but the extent of the difference. Measurement of the plot may be important in order to prevent future disputes and may reveal that fences delimit a smaller plot than the seller advertises or the land register indicates. The cost of the measurement varies, but it can run into hundreds of thousands of forints.

Soil testing

The soil test and soil mechanics test serve to ensure that the buyer is aware of the soil conditions of the plot. This may be of particular relevance to the cost of laying the foundations for a future building project. The presence of possible contaminants and toxic substances in the soil can also be detected by a service provider with the appropriate infrastructure. The cost may take several thousands of forints, but if someone wants to build on the site later, it will be necessary to have it done anyway.

Indirect costs over and above the cost of buying an apartment

When buying a flat, land or a house, there may be additional costs that are not directly related to the sales contract of the property, but which are definitely worth mentioning in connection with the purchase of a property.

Costs related to a loan

If the buyer takes out a loan when buying a home, there are a number of costs, both large and small, that may arise in connection with the loan.

  • valuation fee
  • fee for notarisation of the loan agreement
  • disbursement fee

Fortunately, these items are often reimbursed or waived by the bank as part of various promotions.

Real estate agency fee

When a seller sells his/her home through a real estate agent, a real estate agent’s fee is charged when the sales contract is signed. This is usually around 3-5% of the purchase price. The real estate agent’s fee is charged to the seller, but in practice it is inevitably reflected in the purchase price. It is therefore not indifferent for the buyer whether he buys the property through an intermediary or directly from the owner. If the same property is advertised by both the seller and the owner, buying directly from the owner is likely to result in a better price for the buyer, up to the amount of the agency fee.

Home insurance

It is strongly recommended that you take out insurance on the purchased home when you sign the purchase contract, before taking possession and after the first instalment has been paid.  This is usually a few thousand forints a month or a few tens of thousands a year. Taking out home insurance early on will ensure that the transaction will not be frustrated by an insurance event occurring before the home is taken into possession, as the insurance will cover the cost of restoring the property.

Moving costs

If buying a house or apartment also means moving to a new property, then the costs of moving are inevitable. It may be possible to move a small household on your own, but if you convert your time into money, it is still the cheapest option to use a professional removal company. The cost of a removal can range from a few tens of thousands of forints to a few hundred thousand, depending on the size of the household to be moved.

Example calculation for the cost of buying a home

In the example below, we try to summarise the costs of buying a condominium in Budapest with an average value of HUF 40 million.

  • 200.000,-Ft lawyer’s fees
  • 6.600,-Ft Land registry procedure fee
  • 6.000,-Ft obtaining 2 copies of the abstract of title
  • 1.600.000,-Ft property transfer tax
  • 150.000,-Ft costs of taking out loan
  • 40.000,-Ft annual insurance fee
  • 100.000,-Ft removal costs

Total: HUF 2.103.600

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