Property Rental

Rental market

It is estimated that 8% of accommodation in Hungary is rented, compared to the EU average of 35%. The rental market in central Budapest, therefore, is driven largely by demand from foreigners. Budapest's expat population is currently 7%.

 

The rental market in the city is divided into 3 distinct groups:

• Students
• Local Hungarians
• Expat/corporate lettings

Each category having their own demands with regard to quality, location and price, you need to know what can be rented out in Budapest, and what will sit vacant unless you drop the price well below what you had in mind when you bought the flat.

 

Car parking, as in any major capital city is vital and well-positioned secure underground car spaces already rent for between EUR 80-150/month. A lack of car parking in the city has a major impact on the value of these apartments.

Leasing contracts

Apartment leases can last for up to 3 years but the standard is 1 year. Rents are payable in HUF, EUR, USD or GBP. Leases are similar to UK leases with the main difference being that tenants also pay the building service charges (known in Hungary as common charges) separately to their rent.

 

Usual payment terms:

 

• 2 months deposit needs to be paid upon signing the rental agreement
• The monthly rent shall be paid to the owner's representative by the 5th day of the relevant month.
• Besides the rental fee the Lessee shall pay- utility charges (common costs, heat, electricity, telephone, cable TV, internet, hot-and cold water).- defects in the apartment caused by the Lessee.

Rental income

Renovated, fully furnished apartments in central areas - Districts V, VI VII and XIII in Pest and Districts I and II in Buda are very easy to rent. In the case of resale apartments the higher the standard of renovation, the more it appeals to the high quality, long term, western tenants. Ideally these tenants are business people, diplomats, or foreign students.

 

The anticipated rental income is EUR 400-500 for a small 40-60 sqm flat, Euro 800 and up for a larger two-bedroom apartments; this excludes utilities that will be paid by the tenant.

 

Investors can expect a 5% - 7% yearly rental yield on properties in Budapest.

 

Property management services

Managing a property in a foreign country can be a difficult task taking into consideration the distance and language difficulties. Therefore you will need a property management company that can deal with all the operational responsibilities.

 

Service charges:

Typically a one time fee equalling 150 EUR+VAT plus management fee of 10% +VAT / upon each gross collection going forward.