Frequently Asked Questions
The Gardens, Budapest
Where is it?
The Gardens is located in District 13 on the north-eastern “Pest” side of Budapest, which straddles the Danube. A landlocked country in Central-Eastern Europe, Budapest is but 2 hours from Vienna, and is historically regarded as the gateway to central and southern Europe
What are the co-ordinates and the address?
The Gardens, Reitter Ferenc utca/Tahi utca, District 13, Budapest, Hungary.
Coordinates: Budapest" Latitude = 47°32'11.18"N - Longitude = 19° 5'17.21"E
What are the temperatures like?
Average temperatures typically range from lows of -7°C in the dry winter, to highs of 35°C in the summer
How many properties will there be at The Gardens?
The 1st phase Reitter building consists of 36 apartments, located across 5 floors; the Tahi 2nd phase, with another 37 apartments, will follow shortly after.
Will parking be provided on site?
Yes, there is ample secured parking and a secured storage area on the ground level. One parking space + one store is allocated to each apartment.
Is the property freehold or leasehold?
All properties are freehold.
What is the policy for the disabled at The Gardens? e.g. are doors wide enough for wheelchairs etc.
All facilities, including the lifts, will comply with the latest in disabled access/facility standards.
What facilities will there be at The Gardens?
There will be:-
- Exclusively designed 1,100 m2 of private landscaped gardens.
- The garden will contain a tranquil water feature, wooden benches in shaded areas, beautiful flowers and evergreen and deciduous trees.
- Easy access to parks, greenways, tree-lined avenues and transport links.
- Pre-installed air-conditioning.
- Refined modern rendered facade with contemporary steel detailing.
- Elegant powder-coated steel French balconies and terraces with all apartments.
- High-speed elevators to all floors, including parking and storage levels.
- Concrete frame construction with sound-insulating floor slabs and party walls for excellent sound and thermal insulation.
- Interior designed lobby area.
- 74% of apartments overlook the south facing gardens.
- A supermarket is located just 80 metres away.
Has the developer got the land title?
Yes, the developer has a full clean land title.
Has the developer obtained all permissions required to commence construction?
Yes. Outline and full detailed planning permission has already been granted.
Has a constructor been contracted to build The Gardens?
The Gardens’ developer is currently considering a number of high profile contractors. The Developers’ previous project was contracted to Strabag SE, who may well be used again for The Gardens construction. Strabag SE is one of Europe’s leading construction groups. With approximately 69,000 employees, Strabag expects to post revenue of around 13.3 billion Euros this financial year. From its core markets of Austria and Germany, Strabag, via its numerous subsidiaries, is present in all countries of Eastern and South-East Europe, in selected markets in Western Europe, on the Arabian Peninsula, as well as in Canada, Chile, China and India. Strabag generates more than 80 % of its construction output in markets in which it holds one of the top three positions. These include the Czech Republic, Hungary, Slovakia and Poland.
When will construction begin?
Construction is scheduled to begin in Q1 2010.
When will the Property be completed?
Q3/Q4 2011.
Is there any commercial property in the development?
No
What fittings/white goods are included with the apartment?
Luxurious Living Spaces
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Solid wood entrance doors with overhead accent lighting.
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Large, high-quality windows and sliding patio doors.
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Bespoke Italian ceramic tiled entrance.
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Solid parquet wood flooring throughout all apartments.
- Pre-installed high-speed wireless broadband Internet services
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Communal central satellite dish providing 100+ European channels.
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Wall-to-wall tiling in bathrooms and kitchens.
Kitchens
- Fully furnished and integrated kitchens
- Fully fitted with quality appliances, including:-
- Fridge/freezer
- Oven/hob/extractor fan
- Dishwasher
- Washing machine
- Spacious, open-plan kitchen designs
- Modern cabinets with stylish stainless steel hardware.
- Ceramic tile flooring.
- Attractive granite work surfaces and backsplash.
- Stylish light switches and sockets.
Bathrooms
- Modern taps, porcelain sinks and polished chrome fittings.
- Deep bath with polished tile surround.
- Generously sized walk-in tiled shower.
- Designer ceramic tile flooring.
- Tailor made mirrors.
Do I have to pay community charges (Ground Rent)?
No. Community charges are paid by the tenant, NOT the landlord and will be approximately €70-€80 a month.
Buying a property
How can I purchase a property in Budapest?
1. For an EU Citizen, buying a property in Budapest is very straight forward.
As of the 1st May 2009, EU citizens do not require a permit to purchase real estate in Hungary any more. Nor is there any restriction on the number of properties a private individual can buy.
2. For a non-EU investor who wants to purchase real estate in Budapest, the easiest way to progress is to establish a local Hungarian company, usually a limited liability company. This is certainly preferable if the purchaser wishes to acquire multiple properties. Our Developer has already established a process to help you through the local Visa and Company purchase proceedures
How can I purchase at The Gardens?
First you complete a reservation form and send it, along with a signed and certified copy of your passport, plus a utility bill (less than 3 months old) and the reservation fee of €3,000 (either directly, or through your agent). At that point, we will take your chosen property off the market and issue your preliminary purchase contract.
What are the Advantages and Disadvantages of buying as a private individual vs. as a company?
Private Person: The application for a permit can be denied, although this is unlikely as EU integration is rapidly finalising; it will take approximately 2 -3 months. If a permit is denied, it is still possible to establish a Hungarian limited liability company to acquire the property. If a private individual purchases a property and retains the property for 5 years, they are subject to ZERO % Capital Gains Tax.
Company: The advantage of buying property through a company is that it saves time. In addition to this, all expenses relating to the apartment can be written off (e.g.) travel, accommodation, legal & agency fees, purchase (stamp) duty, renovation costs, furniture, utilities, and all associated services, including the interest on the purchaser’s loan. Under this approach, the company can be sold along with the property, which makes it attractive for future buyers, as no purchase duty needs to be paid. Note that the company will need an accountant to submit annual tax reports; most speak excellent English.
What are the legal expenses of establishing and running a company?
The initial fee is HUF 250 000 or approx. €1000 plus 25% VAT. There is an annual fee of about HUF 10,000 or approx. €40 plus 25% VAT, for accounting and tax purposes, if the company is not actively trading.
Do I have to register for Hungarian social security if I am the Managing Director of a Hungarian company?
No, it is not necessary. Many investors ask this question, because of the high social security tax (44% of the salary). A company does not need to have employees; it can operate through subcontractors, who invoice the company for their services.
What are the additional expenses when buying an apartment at The Gardens?
All in, these expenses are between 8.5% - 10% of the sales price. This includes:
1. 6% purchase duty (stamp duty) - this is paid 6 months after closing. Note: there is no stamp duty on newly built apartments below HUF 30m (approx. EURO 100 000)
2. Between 0.75% and 1.5% solicitor's fee(s) is charged on the purchase price
These are in addition to the costs associated with establishing a company, plus renovating and furnishing an apartment.
What are the payment terms on the property?
Within 28 days of reserving your property, clients must return the signed contracts, along with the 15% deposit (less the reservation payment), with the final balance being due at completion.
Will I be offered a mortgage on my property at the Gardens?
The developer has arranged a number of unique financing packages, offering a mortgage or leasing package of up to 85% of the completion value (LTV) of the property.
What rate will the mortgage rate be?
The mortgage will be based on a rate of between 6% - 8%. This will be confirmed prior to completion.
How do I know I will qualify for a mortgage or lease?
An approval in principle will be provided by Cretum Ltd, our local finance advisors, within 3 working days of receipt of your full application.
Can I sell my contract before completion?
Yes.
Will someone be able to sell my property for me before completion?
Yes.
Rental Information
What is the anticipated rental income I can expect to receive?
6% NET guaranteed for the first 2 years, which may be renewed thereafter.
What is the tax on rent?
If the apartment is privately owned (not by a company), then it is 25% of the rental income when renting a residential property to an individual or a business. Foreign nationals must apply for a tax ID and issue an invoice to the tenant. As a company there is only an 18% corporate tax on any rental profits.
What's the accepted management fee for a rented apartment in Hungary?
10% + VAT of the monthly rent.
What is the accepted commission when renting an apartment through an agency?
One month's rent plus VAT paid upon signing the contract,if the apartment is rented for a year.
When is the high season?
Budapest is a year-round destination, receiving 30 million tourists annually. The Gardens's apartments are likely to be rented by locals, professionals and students as well, as the demand for this standard of accommodation is also all year round.
Is there a guaranteed rental return?
Yes. A guaranteed rental return of 6% NET for 2 years is applicable to this purchase and will be paid from a secure escrow account in arrears, directly into your bank account every 3 months.
Can I have personal use of the property?
Yes.
What costs must be deducted from the guaranteed rental return?
None.
When will the rental guarantee begin?
At completion.
Are the properties sold fully furnished?
No. Furniture packs can be purchase upon completion:
Full Furniture Package Prices:
Studio € 5,000 - € 6,000
1 Bed € 6000 - € 8,000
2 Bed € 8000 - € 10,000
Are there any maintenance or service fees?
No.
Do I need to pay property insurance?
This is included in the financial package
Who will perform the snagging assessment and evaluation?
Snagging can be arranged through a 3rd party. We can advise on this.
Is my deposit put into ESCROW?
Yes. The developer will not receive any client funds until after your occupancy permit is received.
Do I need to go to Hungary?
Yes. You will need to visit once in the next 2 ½ years to open a bank account.
Finance and legal
What currency is the property transaction carried out in?
All transactions are in Euros.
Why Euros?
The developer wants to insulate clients from exchange rate movement and as the developer is in Budapest (which is expected to adopt the Euro in 2012/2013), it is more sensible to use the source currency than to exchange it first into Pounds Sterling (for example) before exchanging it into HUF (the local currency).
What are the tax incentives for purchasing property in The Gardens?
Interest payments are tax-free and new Hungarian tax legislation effective 1st Jan 2008 allows any private individual to own up to 3 properties and then re-sell them on, TAX FREE, after 5 years.
This all sounds very complicated – is it?
No, not at all. You simply complete a reservation form and whichever method you decide to use for purchase, we can help you every step of the way. We have specific notes and guidance on each subject if you require further information in the meantime.
Are there any annual property and land taxes have to be paid?
There is no land tax to be paid. However, July, 2010 will see a new annual property tax introduced. This will be 0.25% of the value of homes worth 2-10 million HUF (7,300€*-36,500€*), rising to 0.35% on those valued at 10-30 million HUF (36,500€*-109,000€*), and up to a maximum of just 0.5% for properties worth over 30 million HUF (109,000€*).
Pensioners would be exempt, but the accumulated tax will be payable by their heirs. State institutions and churches would also be exempt, as would farmland.
The property tax would be levied by local authorities, and would be payable in two installments. Those disagreeing with the value of their property could obtain another appraisal at their own expense from assessors registered by the state.
* Calculated at a rate of 275 HUF/€1
Do I have to pay income tax when selling property?
If an individual person is selling before 5 years: In this scenario, the tax incurred is only 20%. However, it is more difficult to account for expenses, as there is no annual amortization on the property. It may be possible to deduct the costs of travel and service fees that are associated with the property as part of your global income; but we would suggest that you consult a tax advisor in the country where you pay taxes. Hungary has long standing double taxation treaties with most countries, making this process fairly straightforward.
Private Person selling after 5 years: 0% Capital Gains Tax
Company: If a company sells its property, 18% of any profit (after expenses incurred relating to the property) must be paid as tax, plus 20% of what's left if money is withdrawn as income (dividend). After the 18% corporate tax is paid, you will be left with 82% of the profit in the company. 20% of 82%, (16.4%) must be paid as dividend tax. Please note that the purchase price shall be further reduced with the annual amortization (2% or 5% per year), as well as other expenses, fees relating to the property.
Socio-Economic and Political
Is the Hungarian political system stable?
The Hungarian political system is democratic and stable. Executive power, government functions and the highest-level control of public administration is exercised by the government, in which the Prime Minister plays a dominant role. The National Assembly elects the Prime Minister on the basis of the principle of parliamentary majority, concurrently approving the government programme.
Is the Hungarian economy growing?
After a string of boom years throughout the early '80s, the Hungarian economy slowed down in 2007. With the world recession in 2008, Hungary was then badly affected by the rapid decline in Russia's economy, as Russia was historically a key major export market. However, having accessed an IMF loan at the end of 2008, the economy is now benefiting from a number of fiscal improvements, and is expected to move back into growth by the end of 2010. The standard of education here is very high, and Hungary is increasingly involved with Western Europe and the USA, driven by a shift from the lower-value textile and food industries into investment in luxury vehicle production (amongst others, the Audi TT is made here), renewable energy systems, high-end tourism, and information technology.
Isn’t tourism only a minor part of the Hungarian economy?
Over 30 million tourists from all over the World visit Hungary each year – which is 3 times more tourists than there are citizens!! More than 8% of the working population work in the tourism industry and they bring in, directly and indirectly, over 13% of the GDP of the Country. Source: HCSO.
Is Hungary investor friendly?
As a part of the EU, Hungary is a straight forward place to do business. The Parliamentary system and the Legal system are both based on British practice, so investor safety is also good.
There are no restrictions on EU citizens wanting to invest in Hungary and most of the professionals required to assist in transactions are multi-lingual.
Travel & Transportation
How far is The Gardens from the Airport?
Budapest Ferihegy Aiport is located approximately 20km (a 25min drive) from District XIII. The area is easily reached by car (M3 Motorway) and public transport.
How easy is it to get flights into Budapest?
Very!
Can I visit The Gardens now?
Yes - Inspection trips are available for all clients. Complimentary accommodation will be provided by the developer, just off the famous Váci utca shopping street and the covered Grand Market Hall. All that the client will need to pay for is their flight! Clients will also receive a guided tour of Budapest, and The Gardens.
What about the roads and public transport?
The area is easily reached by car down the M3 motorway and public transport. Many bus lines (no's.4,20,30 and 120) all run through the area; tram lines (no's.1,3 and 14) are also within walking distance. The closest Metro lineis the M3 blue line, with stations at both Arpad Hid and Forgach utca.
General
What are the entry requirements?
You will need a valid passport. EU nationals do not need to obtain an entry Visa.
Other nationalities may require an entry visa, and these are usually issued by immigration officers when entering the country; but please check first with your own Consular office for the exact requirements.
How do I get a residency?
Any foreigner who stays in Hungary for more than 30 days, and does not lodge in a public lodging facility such as a hotel, is required to provide notification of their place of residence to the local government office or the regional alien policing authority. Those with residence permits are required to notify the authorities of their place of residence within three days of moving in, and to keep them informed of any subsequent change in residence. If you have been resident for five years (or three if you are married) then you can file for a permanent residency permit.
What about electricity?
In Budapest voltage is 220 volts/50Hz and plugs are of the two-pin European type (so-called europlugs).
Can I use credit cards?
Yes, all major credit cards are accepted in most stores, restaurants, bars and clubs. Traveller’s cheques are also widely accepted.
Important Notice – Although every care has been taken to ensure the accuracy of all the information given, the contents do not form part of any contract, and as such should be treated as a guide only. Information is considered accurate at the time of going to print.
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