1. Costs of Real Estate Transactions in Hungary B. Berdár Gy. Fenyő B. Márkus J. Nyiri B. Berdár Gy. Fenyő B. Márkus J. Nyiri

2. Contents The costs of transactions from a private person’s point of view; The real property transactions from the real estate developer’s point of view; The price of flats in Hungary; The price of agricultural land in Hungary.

3. Transaction costs Private person’s point of view cost of the contract cost of the real estate valuation cost of the registration wage of the notary taxation and duties

4. Transaction costs Private person’s point of view cost of the contract When the contract is made by the lawyer, the cost depends on the purchase price. It is 0,5-1,5 % of the price.

5. Transaction costs Private person’s point of view cost of the contract cost of the real estate valuation The wage of the valuation is 30 000 – 50 000 HUF.

6. Transaction costs Private person’s point of view cost of the contract cost of the real estate valuation cost of the registration Within 30 days after the date of the contract the case have to have to send to the District Land Office a request to register the right of the ownership. The registration cost is 2000 HUF.

7. Transaction costs Private person’s point of view cost of the contract cost of the real estate valuation cost of the registration wage of the notary 500 000 – 5 000 000 HUF = 11 700 HUF + 1%; 5 000 000 – 10 000 000 HUF = 56 700 HUF + 0,5 %; over 10 000 000 HUF = 81 700 HUF + 0.25 %.

8. Transaction costs Private person’s point of view cost of the contract cost of the real estate valuation cost of the registration wage of the notary taxation and duties The general rate is 10 % + VAT. For a housing property it is 2 % until 4 million HUF and 6 % above. Company trading of real estates it is 2 %, and the real estate should be sold within two years

9. Real estate developer’s point of view The development procedure buy a land (or land + construction) develop the property (added value – construction work) let the property to tenants sell the real property (with tenants) to an investor At the beginning of the procedure the developer is purchaser (buyer), in the second step is an owner, in the third phase is a landlord, and in the last stage is a seller or vendor.

10. Asset deal VAT Commercial building 25%. Residential building only the first sale is subject to VAT. From January 2004 VAT is charged on the sale of land as well. Transfer tax The standard rate is 10%. This tax is payable by the company (person) buying the real property, the base of the tax is the transaction price (VAT included). A reduced rate of 2% applies if the company acquiring the property is deemed to the real estate trading company. At the residential property the rate is 2% of the purchase price up to HUF 4 million and 6% the amount thereof. Corporate tax of 16 % after the difference of the book value and the selling price.

11. The price of a house Szentendre – parcel 263 sqm, house 70 sqm 157000 HUF/sqm Gárdony – parcel 646 sqm, house 76 sqm 138000 HUF/sqm Source: Gy Fenyő, March 2005

12. The price of flats in towns Source: Central Statistical Office *** The price is thousand HUF/square meter

13. The price of flats Budapest – downtown Buda – 450000 HUF/sqm Pest – 330000 HUF/sqm Salgótarján Centre – 140000 HUF/sqm Outskirts – 80000 outskirts Source: Gy Fenyő, March 2005

14. The price of flats (1997) Source: Central Statistical Office

15. The price changing of flats - 1997-2002 Source Difference from the average Difference from the average

16. The price changing of flats (1997-2002) Source: Central Statistical Office

17. The price changing of flats (2002) Source: Central Statistical Office

18. The price changing of flats - Budapest Red line is price of the flats on the open market. Blue line is the value of the Duty Office. Source: Tilk László Géza, www.ingatlan-online.com/www.ingatlan-online.com/

19. The prices adjust to the demand

20. The price of agricultural land

21. North – Borsod32000 HUF/ha East – Békés45000 South – Baranya73000 West – Vas62000 Average69747 Max200000 Min 32000 Source: TALC, March 2005

22. The price of agricultural land The market prices are in average 5-10 times higher in the EU than in Hungary. According to our conservative estimate, prices will go up at least 2-3 times in the next 2-3 years in Hungary. That means 30-40% per annum, the compounded interest taken into account. This income is remarkable comparing to the 10-20% income of alternative investments.

23. The price of agricultural land In the valuation the following conditions should be taken also into consideration: in which part of the country the land is situated, distance from cities, main roads, accessibility, system of irrigation, weather and surface conditions, slope category, slope aspect, buildings and infrastructure.

24. GISS 2005