There are so many new property kids on the former Eastern bloc, the wise investor should open a nursery. The latest El Dorado, with goulash in the prospector's pan, is Hungary.
Investments, why Hungary? click here..
Hungary had an economic wobble a couple of years ago, but is now growing on the back of EU membership, significant foreign investment and a proactive government keen to pull clear of neighbours, such as Slovakia, in the race to be the next big thing.
The market continues to rise at a rate of about 15 per cent a year. With the local population getting wealthier courtesy of business expansion and tourism.
"A lot of existing property in Budapest, thrown up in the Communist era, is in very poor condition and so there remains a strong market for top-quality apartments, especially when you can get them in the heart of the city for £50,000,"
6 to 9 per cent rental returns are achievable, provided you furnish an apartment properly and buy in the right district. Most British buyers are investors with no intention of living in Budapest. Mr Padfield and his Hungarian wife have bought a one-bedroom apartment, with a view of the Danube, for £59,000, which rents for £575 a month.
Hungary has a strong culture card to play, with the elegant city of Buda on the west bank and the earthier commercial centre of Pest to the east, divided by the magnificent Danube. There is beauty through the ages in some of the buildings, as well as concert halls and thermal baths to enrich and revive the visitor. The Hungarian capital is also developing film studios.
Foreign buyers have to apply for a permit, which can take three months, but is invariably a formality and soon EU citizens might not require one.
The process is far quicker if you set up a Hungarian company - a procedure a competent lawyer can do for about £500 - and while buying as an individual currently restricts you to one property in any district, you can, as a company, put together a portfolio. The corporate route offers tax savings, too.
Tax as an individual is 20 per cent, but corporation tax 16 per cent, with the government looking to reduce this to 12 per cent by 2006, by which time the Hungarian florint should have been replaced by the euro. Stamp duty ranges from zero to 6 per cent and agency commission is about 2 per cent, as is transfer tax.
There is a solid, reliable feel to the Hungary market. Rather like their goulash.
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