Many British are looking into buying property in Hungary

For UK-based investors thinking about “escape” or “fallback” options, several factors are motivating:

• Political and social uncertainty: Some British citizens feel that issues such as large scale immigration, social tension, cost-of-living pressures, rising taxation or uncertainty in public services make diversification prudent.

• Asset protection and diversification: Holding property abroad can help hedge risks linked to Britain (currency, tax changes, property market stagnation) and gives a tangible alternative location.

• Lifestyle and mobility: Having a second home abroad offers flexibility, whether for holiday use, eventual relocation, or as an option for children or extended family.

• Investment value: Beyond “escape”, the prospect of buying property in a market with growth potential, rental returns or under-pricing relative to western Europe remains appealing.

British investor in Hungary could acquire a property that functions both as an investment and as a “safe-place” fallback option

Why Hungary is a compelling option

Here’s a breakdown of the benefits that make the country worth considering.

1. Relatively affordable entry compared to Western Europe

• The average price of real estate in Hungary is around HUF 970,000 / m² (≈ €2,400/m²) according to one source — lower than many Western European countries.

• For many British buyers used to UK property prices, this offers relatively lower entry costs.

2. Growing market and decent rental yields

• According to one guide, the average gross rental yield in Hungary was about 5.09% in 2023, and increased to 5.75% in Q1 2024.

• Other data show yields in Budapest around 5.39% and some regional cities 5.0%+ in early 2025.

• Price growth has been substantial: for example, one estimate suggests a 100 m² apartment five years ago for ~€111,000 can now sell for ~€206,000 in some areas.

• The combination of capital appreciation + rental income makes it a real investment proposition (not just a “fallback”).

3. Favourable tax & cost environment

• Property transfer tax: for purchases under approximately €2.6 m, stamp duty is 4% of price, and for amounts above that 2% on the excess.

• Reduced VAT: for new residential properties (under certain thresholds), VAT can be as low as 5% until end of 2026.

• Property tax: after thresholds, some very low rates apply (one source gives 0.25% as a very low tax rate compared with Greece/UK) for certain residential investment cases.

• Double tax treaties: Hungary has treaties with many countries, which can help reduce tax burdens for foreign investors.

• In short: the cost of ownership and taxes are relatively friendly.

4. Legal clarity and foreign-owner access

• Foreigners (including non-EU citizens) can purchase property in Hungary (with certain restrictions) excluding large agricultural land, heritage assets etc.

• The “property purchase licence” process is clearly set out for non-EU/EEA citizens.

• Many guides emphasise that the Hungarian market is relatively accessible and stable: “real estate in Hungary is a liquid asset” in one estimate.

5. Strategic location & European access

• Being in the EU (Schengen area) gives additional mobility options for an investor from the UK.

  
  

• Hungary offers the possibility of a residence permit via investment (for non EU-citizens) under certain terms—meaning the property may serve not just as investment, but also as a “door” to residing somewhere more stable or alternative.

How this works as a “safe-haven / escape” option for Brits

For British people who are minded by “what if the UK becomes less safe/less desirable”, here are some ways owning property in Hungary could serve that purpose:

• Option to relocate: If circumstances in the UK worsen (economic, social, regulatory, security or personal), owning a fully paid property abroad gives you an immediate base or fallback home.

• Diversification of risk: Having tangible assets abroad means you’re not fully dependent on the UK property market, sterling, local tax/regulation.

• Potential residence route: Although the UK is no longer in the EU, a Hungarian property (especially if one meets the investment-residence route) may allow long stays, travel in Schengen states, or relocation of parts of family.

• Family legacy: The property can become part of a family plan—holiday home now, fallback home later.

• Psychological security: The notion of “I have somewhere to go” often comforts investors in uncertain times.

Of course, this “escape strategy” approach should be handled as part of broader planning – owning property abroad is not itself a guarantee of future protection, but it adds flexibility.

How it works as a pure investment

If you’re more traditionally minded (not only thinking about “escape”), the property in Hungary can offer:

• Capital growth potential: Given the lower base, if Hungary continues to develop, the percentage gains may exceed those available in many mature western markets.

• Rental income: Especially in cities like Budapest or in tourist/holiday-areas, strong rental demand can generate decent yields.

• Relatively low holding costs: With tax advantages and manageable ownership costs, the “drag” on investment can be modest.

• Resale liquidity: Although any property market has cycles, foreign interest (e.g., other investors) is present which improves liquidity.

• Diversification within real estate: Rather than only UK property, you now have exposure to a central European real estate market.

Combined, these mean that even without the “escape” motive, a well-chosen Hungarian property could be a sound investment.

Key considerations & caveats (especially for British investors)

Any investment/travel/relocation asset has risks and things to check. Here are the major ones specifically for Hungary:

• Legal/permitting complexity: Non-EU citizens must obtain a purchase licence; local law and legal representation are mandatory.

• Hidden costs: There may be additional fees (legal, notary, translation), renovation/maintenance costs, unpaid utilities on the property, etc.

• Location matters: As with any property market, capital growth & rental yield vary by city/region. The best returns tend to be in Budapest or strong regional centres; peripheral locations may be slower.

• Regulation changes: For example, the investment-residence programme in Hungary has seen recent changes; minimum thresholds may shift.

• Exit strategy/liquidity: Even if the market is growing, you should have an exit plan or understand local demand for resale.

• Currency/geo risk: While Hungary is in the EU, fluctuations in HUF (Hungarian Forint) vs EUR or GBP might affect returns or costs for a UK investor.

• Tax implications in UK: Owning property abroad can trigger UK tax obligations (capital gains tax, overseas income tax) depending on your situation.

• Purpose clarity: If the property is intended for “escape”, then practical relocation planning matters (visa/residence status, cost of living in Hungary, quality of services, language, schools etc.)

• Maintenance & management: If renting the property, you’ll need to organise local management, deal with vacancies, tenant issues, possibly short-term rental rules (which may change).

• Political/economic risk: While Hungary is relatively stable, any country has potential risk of policy changes, property market cycles or external shocks.

Suggested action plan for a British buyer

Here’s a rough step-by-step for a UK investor considering this route:

1. Clarify your objective

   • Are you buying primarily for fallback (“escape”) purposes, or primarily for investment (or both)?

   • How much budget do you have? What kind of property (apartment in city, house in countryside, rental vs holiday use vs own use)?

   • What timeline do you have (immediate relocation, 5-10 years, indefinite)?

2. Research locations

   • Cities such as Budapest are more expensive but offer liquidity and yield.

   • Regional centres (Debrecen, Pécs, etc) may offer lower cost entry but perhaps slower growth.

   • Consider holiday areas (e.g., Lake Balaton region) if you intend dual use (holiday + rental + fallback).

   • Visit in person, evaluate neighbourhoods, local infrastructure, transport, services – especially if relocation is part of the plan.

3. Engage local specialists

   • Retain an independent Hungarian real-estate lawyer (mandatory for foreigners in most cases).

   • Use a reputable local real-estate agent, translator if necessary, check ownership/title, check that all prior taxes/utility bills are settled.

   • Consider property management if you’ll rent it out and you are living abroad.

4. Analyse total cost and returns

   • Price of purchase + purchase tax/fees (transfer tax ~4% under threshold).

   • Holding costs: property tax, maintenance, insurance, local management, vacancy risk.

   • Rental yield: estimate realistic gross/net yields in chosen area.

   • Capital growth assumption: use local historical data but exercise caution (past growth doesn’t guarantee future).

   • Currency risk: if income or costs are in HUF or EUR, and your base currency is GBP, factor in exchange rate risk.

5. Plan for fallback use

   • If part of the motivation is relocation, then consider: visa/residence status, healthcare, schooling (if relevant), language barriers, costs of living.

   • If you anticipate needing to live there for significant time, pick a property and area that satisfies lifestyle & comfort, not just investment metrics.

   • Consider how you’ll maintain the property and access it if you’re based in the UK — travel costs, management etc.

6. Exit plan / risk mitigation

   • Ensure you understand the resale market for your chosen property type/area.

   • Have contingency plans: if rental income drops, if the property needs major repairs, if local regulation changes (e.g., short-term rental restrictions).

   • Keep funds/liquid reserves available for unforeseen costs (renovation, currency swings, legal issues).

7. Tax planning

   • Consult both UK tax advisor and Hungarian tax advisor to understand implications (income tax on rentals, capital gains tax on sale, inheritance/gift tax, domicile/residence rules).

   • Understand double tax treaty implications.

🇬🇧 UK vs 🇭🇺 Hungary Property Investment Comparison (for British Buyers)

Category	UK Property Market	Hungarian Property Market	Why It Matters for British Investors
Average Price per m² (City Centre)	£7,000–£15,000 (London), £3,000–£7,000 (regional cities)	€2,500–€4,500 (Budapest), €1,000–€2,500 (regional cities)	Hungary offers far lower entry costs — allows owning full property for the price of a UK deposit.
Rental Yield (Gross)	2–4% typical (lower in London, higher in northern cities)	5–6% average (up to 7% in tourist or student areas)	Better income return potential in Hungary.
Capital Growth (Past 5 Years)	~20–25% (UK average; stagnating recently)	~80–100% in Budapest; ~50%+ in regions	Hungary’s developing market shows stronger capital appreciation trend.
Purchase Taxes & Fees	Stamp duty: 0–12% depending on value; legal fees 1–2%	Transfer tax 4% (2% above €2.6 m); legal fees ~1%	Hungary has simpler and slightly cheaper purchase costs.
Annual Property Tax	Council tax (can be £1,500–£3,500/year)	Often 0–0.25% of value or fixed small municipal fee	Significantly lower annual holding costs in Hungary.
Mortgage Availability	Widely available for residents; stricter for foreigners	Possible for foreigners, but with higher deposit (30–40%)	UK buyers often purchase Hungarian properties outright due to affordability.
Market Liquidity	High, but expensive entry barriers	High, Especially with the growing foreign buyers interest	Hungary is improving in liquidity, especially in Budapest and resort areas.
Currency Risk	GBP-based	HUF or EUR (depending on region/bank)	Currency fluctuations can impact GBP-based investors, but diversification can hedge UK inflation risk.
Legal Process	Familiar and highly regulated	Requires foreign buyer licence (simple process), lawyer mandatory	Straightforward once legal representation is arranged.
Tax Environment	Tightening (higher CGT, inheritance tax, landlord regulation)	Low property tax, 5% VAT only on new build flats, double tax treaties	Hungary’s environment currently more favourable for investors.
Lifestyle & Safety Perception	High cost of living, social tension in some areas	Lower cost, quieter environment, EU Schengen access	Attractive as a peaceful “backup” or holiday base.
Residency Options via Property	No special residence benefits	Residence permit possible with certain investment levels	Hungary offers a potential “Plan B” residence option.
Language & Integration	Native for British	Hungarian language barrier (English common in cities)	Manageable with local support, especially in Budapest.
Property Management Options	Mature market	Expanding market, especially for expats	Reliable services available in Budapest and tourist areas.
Overall Investment Attractiveness	Stable but mature and highly taxed	Emerging, high-yield, affordable, EU-based	Hungary offers both diversification and “safe-haven” potential.

Source: Various sources , Empire Real Estate Kft.