The Hungarian parliament is reviewing a draft law that would introduce a “golden visa” program, granting long‑term, visa‑free access to the Schengen Area in exchange for qualifying investments in Hungary. If the legislation is approved, it is slated to take effect in September 2024, but the final rules will depend on a subsequent government decree.
Residency framework
- Initial permit: two‑year residence permit granted upon completion of the investment.
- Renewal: the permit can be extended to a ten‑year residence permit as long as the investment is maintained.
- Long‑term outlook: a further ten‑year renewal is possible, effectively providing a lifetime residency that is comparable to permanent residence, although the law does not label it as such.
- Citizenship: the draft does not create a direct route to Hungarian citizenship. Applicants would still need to meet the standard integration requirements, and recent practice shows a high rejection rate for both permanent‑residency and citizenship applications.
Investment pathways
The draft outlines three qualifying options:
| Option | Minimum amount | Structure | Notes |
|---|---|---|---|
| Real‑estate investment fund | €250,000 | Fund licensed by the Central Bank of Hungary (the country’s financial supervisory authority) | Investors receive a fund share and any returns generated by the fund’s assets. |
| Direct property purchase | €500,000 | Individual residential property | Must be a single property (or possibly multiple properties that together meet the threshold, pending final regulations). |
| Foundation donation | €1,000,000 | Donation to a foundation that runs a high school, college or university | No financial return; intended to support education institutions that operate as private foundations. |
The fund route is the lowest‑cost entry point, while the donation route is the most expensive and offers no investment yield.
Rationale behind the program
Hungary’s housing market has been largely stagnant, with prices in Budapest declining for more than a year and transaction volume low. The government aims to:
- Attract foreign capital to revive demand for high‑end residential properties.
- Provide a streamlined alternative to the existing “residency bond” scheme, which will be abolished once the new law is enacted.
- Encourage investment in sectors such as education through the donation option.
Expected impact on the property market
- Demand surge: The program is likely to generate new demand for luxury apartments, especially in central Budapest districts.
- Price dynamics: Investors who enter the market now could benefit from lower prices, with the potential for appreciation as demand rises.
- Supply considerations: If the single‑property threshold remains €500,000, investors may target properties in the €300,000–€350,000 range, anticipating resale values near €500,000 within 12–18 months.
- Historical precedent: A previous increase in the required investment amount (from €250,000 to €400,000) led to a rapid price jump in the affected segment, suggesting a similar effect could occur if the golden‑visa thresholds are enforced.
Key considerations and risks
- Legislative uncertainty: The draft has not been voted on; technical details will be defined by a later government decree. Implementation timelines could shift.
- Citizenship limitations: Even with long‑term residency, obtaining Hungarian citizenship remains difficult and requires genuine integration.
- Regulatory approval: Non‑EU investors must obtain permission to purchase property; the fund option may bypass some of these hurdles.
- Market volatility: While the program aims to stimulate the market, price appreciation is not guaranteed and depends on the final design of the scheme and broader economic conditions.
Prospective investors should monitor the parliamentary vote and subsequent regulatory announcements before committing capital, and assess whether the residency benefits align with their long‑term personal or business objectives.
