History of law in Hungary

Under the communist regime, the issue of property acquisition in Hungary by foreign nationals and legal entities was a marginal area in the field of Hungarian law. The change in the political system in 1989, as well as the ambition of Hungary towards European integration necessitated a detailed regulation of this area of law.
The first legal regulation on property acquisition by foreigners was a government decision made in 1991, in which the approval for property acquisition by foreign nationals had to be obtained from the Ministry of Finances. The regulation did not allow foreigners to purchase agricultural property or nature conservation areas. The implementation of the regulation was rather cumbersome. The Ministry often denied permission to purchase property. During that time, in order to bypass this longwinded procedure of uncertain outcome, foreigners often formed a Hungarian company, mostly a Kft (private limited company).
The Hungarian government became aware of this gap in legislation and prepared a new Act. In 1994, first the new Agricultural Act was introduced and thereafter, in 1996, a new government decision on property acquisition by foreigners was published. To date, these regulations form the legal framework for property acquisition by foreign national and legal entities.

On 01.05.2009, a change in these regulations became effective and will be explained further below.
The legal regulations stipulates as a basic rule that foreign nationals are not allowed to purchase property that falls within the scope of the Agricultural Act, as well as property situated in nature conservation areas. The new regulation has expanded the ban on purchasing to include Hungarian legal entities. This has effectively ended the possibility of foreigners buying agricultural land via company registered in Hungary. The government decision further regulates the acquisition procedures of property other than agricultural land. By virtue thereof, any acquisition requires the approval of the local authorities.

The accession of Hungary to the European Union did not bring any relevant changes in this area of law, bar two points. The first change has made it possible for foreign private individuals – with a view to the accession – to purchase agricultural land under the same conditions as their Hungarian counterparts. The second change made following the accession of Hungary to the European Union has enabled EU nationals to obtain the property rights for property within nature conservation areas, but which are not classed as agricultural land.

With effect from 01.05.2009, the obligatory approval for the acquisition of property by foreigners has been lifted. Consequently, EU nationals as well as legal entities registered in these countries can purchase property (with the exception of agricultural land!) under the same conditions as Hungarian nationals.