However, if the use of the property becomes disputed between co-owners – for example due to co-ownership arising from inheritance or prior to a sale – it is advisable to seek a legal solution for regulating its division of use.

Note: This is not limited to residential houses; it may arise in the case of any jointly owned property.

What qualifies as a single property?

If only one title deed (land registry sheet) and one cadastral number are associated with the property, it is legally considered a single property.

This is the case even if physically it appears to be multiple separate units – for example, if two houses stand on one plot, or in the case of a semi-detached house with separately fenced gardens and entrances. In such cases, a use-sharing agreement is required.

f the co-owners are able to reach an agreement, they may regulate the use of the property by contract. This agreement records between the co-owners:

• which parts of the property are used exclusively by whom – for example, who uses the ground-floor unit, a specific part of the garden, or the garage

• which parts are used jointly – for example, a driveway or corridor

• how costs are to be shared – for example, separate utility meters or agreed cost-sharing arrangements

I always attach a layout plan to use agreements to illustrate the division. The plan does not require official approval from the land registry, but it is advisable to have it prepared and measured by a licensed surveyor.

If the intention is to sell a physically separated unit within the property, a lawyer countersigned use-sharing agreementis indispensable for bank financing and strongly recommended in any event to prevent future disputes.

What is the problem if there is no use-sharing agreement?

• Legal uncertainty: Without a use-sharing agreement, each co-owner may use the entire property. The law limits this by stating that no co-owner may exercise this right to the detriment of the others’ rights or essential interests. However, what qualifies as such detriment depends on circumstances and interpretation, making it uncertain.

• Difficulties regarding rights and obligations: Without division of use, the collection of benefits, bearing of costs, risk allocation, and preservation of condition apply proportionally to ownership shares. Decisions require majority voting, and in certain cases unanimity. This is often difficult to coordinate. A contract can clarify that each owner collects the benefits and bears the costs of the part allocated to them.

• Conflicts arising from joint use: “This is my part,” “Don’t park there,” “I want a cheaper fence,” etc. Without written regulation, such disputes are difficult to resolve.

• Difficulties in sale: Without regulated division of use, selling an ownership share is almost impossible due to the issues above. In the case of bank financing, proper legal regulation of use is a requirement.

What happens if the owners change?

There is no need to conclude a new agreement, as the previously concluded contract also binds future owners. I draft agreements with effect extending to all current and future owners of the property.

Modification or termination is only possible by unanimous agreement of all co-owners currently registered in the land registry, in the same formal manner as the original agreement.

Should I be concerned if my co-owner takes out a mortgage or incurs debt?

A co-owner may encumber only their own ownership share and is liable only to that extent. If they take out a mortgage loan, it is registered against their ownership share. In enforcement proceedings, only their share may be affected.

A use-sharing agreement concluded before enforcement proceedings will also affect the terms of a judicial sale. Any purchaser at auction will likewise be bound by the existing use agreement.

hat is required for a property to be divisible in terms of use?

Both nothing and quite a lot.

If co-owners merely wish to regulate use among themselves, the agreement can be flexible.

However, if the goal is that a separated unit be independently marketable – for example with bank financing – the following should be considered:

• Optimal: separate main entrances for each unit
Possible: one common entrance leading to a shared area (e.g. corridor) with separate entrances from there

• Optimal: separate utility meters
Possible: agreement on cost-sharing arrangements

• Optimal: yard divided with exclusive use and fencing
Possible: shared yard or shared driveway

• Optimal: lawyer countersigned use-sharing agreement with layout plan
Possible: agreement without countersignature if no bank financing is involved

If there is a use-sharing agreement, may I freely sell my ownership share and the associated exclusive use part?

Co-owners have a right of first refusal against third parties.

This means the ownership share may be sold, but the seller must notify the co-owner entitled to pre-emption and offer the property under the same conditions as agreed with the external buyer (price, payment terms, possession date, etc.).

If the pre-emption right is exercised, the contract is concluded with that co-owner. If not, the sale may proceed with the third-party buyer.

Clearly defined use rules ensure lawful use and prevent disputes between co-owners in the long term – thereby protecting peace of mind and the value of the property.

The next part of this series will discuss what can be done if no agreement exists but a formal division of use is specifically desired.

A Property in Co-Ownership bejegyzés először Dr. Czotter Regina-én jelent meg.

The most important thing is to have a clear understanding before paying the deposit. You should be fully aware of:

• what a deposit is and what legal consequences it has,
• how to document its payment securely,
• when it is forfeited and when it must be returned.

Deposit — briefly

The deposit serves to confirm the intention to conclude the contract. It is usually 10% of the purchase price, but the parties are free to agree on the amount, and this should be carefully considered.

Its legal consequences:

• If the sale is completed → the deposit is credited toward the purchase price

• If the transaction fails due to the buyer → the buyer forfeits the deposit

• If it fails due to the seller → the seller must return the deposit in double (i.e. return the received deposit and pay the same amount again as compensation)

• If neither party is responsible → the deposit must be returned

Deposit in practice

Even if we are aware of the above legal consequences, in practice it is often difficult to determine which situation applies — especially if the buyer fails to perform because the bank rejects the loan application.

As a general rule, the buyer risks losing the deposit if the contract merely states that the purchase will be financed by a loan, but does not specifically regulate what happens in case of loan rejection. This is why it is important to incorporate clear rules into the contract in advance.

In every case, I draw the parties’ attention to this and we agree on a regulation acceptable to everyone. We may differentiate based on the reason for the loan failure (e.g. if the property is unsuitable for financing versus the buyer being non-creditworthy), or we may stipulate that in case of failure the buyer is not liable for the full deposit, but for an amount accepted by the seller, since the seller’s waiting time should not remain uncompensated either.

There are many possible solutions — the key is thorough discussion and proper written documentation.

Practical tips — what to do before paying a deposit

• Request pre-qualification or preliminary credit assessment from the bank before paying the deposit, so you know the expected equity requirement and conditions

• Ideally, pay the deposit simultaneously with signing a preliminary agreement or final sale contract, or at least under a detailed written agreement regulating all conditions

• Consult a lawyer before paying the deposit and request assistance in preparing the documentation of transfer

• Pay attention to unauthorized extensions or constructions without permits: these may lead to loan rejection by the bank, and it is advisable to stipulate that in such cases the deposit must be returned

• Carefully review the title deed, cadastral map extract, the legal status of the property, its suitability for residential use and the existence of utilities

Note:If the exact terms of the sale are not properly recorded at the time of paying the deposit (e.g. payment schedule of the purchase price, cash or bank transfer payment, date of handover of possession, consequences of loan rejection, etc.), and during the preparation of the final contract there is disagreement between the parties on any point, a legal dispute may arise regarding who is responsible for the failure of the contract and what happens to the deposit.

A well-drafted contract, prior credit assessment and professional legal assistance significantly reduce the risk of losing the deposit.

A Why You Should Not Pay a Deposit Too Hastily bejegyzés először Dr. Czotter Regina-én jelent meg.

The government decree on Otthon Start indeed mentions 10%, but it states that the loan may be granted with at least 10% own contribution. It also specifies the following exceptions:

• inclusion of additional collateral
• compliance with the debt-to-income ratio (JTM)
• compliance with the MNB regulation on loan-to-value ratios

Inclusion of Additional Collateral

In such cases, the applicant does not only offer the purchased property as security, but may also involve another property as collateral. Depending on the value of the properties, this may result in a lower required down payment — in some cases even no own contribution at all.

Debt-to-Income Ratio (JTM)

The borrower’s monthly income capacity must be examined.

Generally:

• Below HUF 600,000 net monthly income, up to 50% of income may be used for loan repayments
• From HUF 600,000 net monthly income, up to 60% may be used

All existing monthly repayments must be added together. For example, if someone already has a baby-expecting loan (Babaváró) and wishes to take out an Otthon Start loan, the combined monthly instalments may not exceed the above limits.

The JTM indicator can be improved by involving a co-debtor, such as a spouse or parent.

Change effective from 1 January 2026: The threshold will increase from HUF 600,000 to HUF 800,000 regarding the 50%/60% income burden limit.

Loan-to-Value Ratio (LTV)

An MNB regulation determines to what extent a property’s value may be financed by a loan.

The general rule is that the loan amount may not exceed 80% of the value of the property. This means that, as a starting point, the required down payment is typically 20%, not 10%.

So how can the 10% mentioned in the Otthon Start decree apply?

The MNB regulation also provides preferential cases. A property may be financed with 10% down payment if:

• the borrower (and co-debtor, if any) qualifies as a first-time home buyer (previously defined as under 41 years of age and not having owned 50% or more in a residential property, or having only owned property encumbered by statutory usufruct), or

• the purchase concerns an energy-efficient home (total energy performance not exceeding 68 kWh/m²/year and at least “A+” energy rating).

Change effective from 1 September 2025:As indicated above, first-time home buyer status will no longer be subject to an age limit.

Summary: Despite the widely mentioned 10%, in most cases 20% down payment is required. However, 10% may be sufficient in the case of first-time home buyers, energy-efficient property purchases, or with the inclusion of additional collateral.

It is advisable to consult a loan specialist regarding the exact possibilities. However, given the currently evolving regulatory environment, some uncertainty remains even among professionals. Certain aspects of the Otthon Start decree are still not entirely clear, and further amendments are expected according to recent reports.

The next part of this article series will focus specifically on the mistakes to avoid — and how to avoid them.

A Is 10% Down Payment Too Much, Just Enough, or Not Enough? bejegyzés először Dr. Czotter Regina-én jelent meg.

The loan may be used for the purchase of a property or, in the case of construction, to cover the remaining costs. In this post, I focus on the conditions to consider when purchasing a property.

Important:

• • The applicant must acquire 100% ownership (1/1 share) of the property. The loan cannot be used to purchase only a fractional ownership share (spouses may jointly acquire full ownership of one property).

• The acquired property may not be encumbered by usufruct rights.

• The seller may not be a close relative or partner of the applicant.

• If the seller is a business entity, the applicant may not be a member or shareholder of that entity, and the owner of the selling company may not be a close relative or partner of the applicant.

Who qualifies as a close relative?

• spouse
• direct-line relative (parent, grandparent, child, etc.)
• adopted, step- or foster child
• adoptive, step- or foster parent
• sibling

The selected property may qualify if it is:

• an inner-area apartment, residential house, farmstead (tanya) or agricultural residential centre (birtokközpont)

• suitable for satisfying residential needs

• maximum value:

• HUF 100 million for an apartment
• HUF 150 million for a residential house, farmstead or agricultural residential centre

• price per square metre not exceeding HUF 1,500,000

• purchase price deviating by no more than 20% from the value determined by the lending institution

What counts toward the floor area?

The regulation would be clearer if it referred to a legally defined floor area concept. However, it introduces a new approach.

Construction law defines “gross floor area,” “net floor area,” and “usable floor area,” but does not define floor area simply as “area” without qualification.

According to the Government’s explanation, the legislator’s intention in using the term “floor area” was to allow, in case of interpretative uncertainty, the application of whichever legally defined concept is most favourable to the applicant.

It is somewhat interesting that a new, potentially uncertain term is justified as a means of avoiding interpretative difficulties. In any case, this is good news for applicants, as it allows interpretation in their favour (or according to the financing bank’s requirements). For lawyers, however, it presents a challenge when determining the basis for specifying floor area in the sale contract. This will need to be examined case by case.

Update:: According to information provided by the Ministry for National Economy, based on a position agreed with the Hungarian Banking Association, where the Otthon Start decree refers to “floor area,” lending institutions will uniformly consider the net floor area of the apartment or residential building.

Suitability for Residential Use

This condition is assessed by the lending institution through an on-site inspection. Basic requirements include, for example, the availability of utilities, safety standards, and at least one habitable room.

If the lending institution determines that the property is not suitable for residential use, the applicant may still support compliance by submitting an expert opinion prepared by a certified construction technical expert.

In the next part of this article series, I will discuss the requirements concerning own contribution (down payment).
Is 10% really enough?

A Property Requirements under the Otthon Start Housing Loan bejegyzés először Dr. Czotter Regina-én jelent meg.

𝐓𝐢𝐩#𝟏 It is advisable to begin the process with a preliminary credit assessment. This allows the applicant to determine whether they qualify and for what amount before undertaking any contractual obligations in connection with the purchase.

Note: Credit assessment may vary significantly between banks. One bank may reject the application or approve a much lower amount, while another may grant approval under the same circumstances.

A Common Misconception: When Otthon Start is mentioned, many assume they are not eligible because of their age, believing the programme is only for young people. In reality, there is no upper age limit — only a minimum age of 18 years.

Basic Eligibility Requirements:

• The applicant must be at least 18 years old

• Must reside in Hungary and lawfully remain in the country (Hungarian citizen, EU citizen, third-country national with permanent residence permit, or officially recognised stateless person)

• Must have a clean criminal record

• Must not have public debt exceeding HUF 5,000, or must settle it within 14 days

• Must have at least 2 years of continuous social security relationship, including at least the last 180 days in Hungary in gainful employment (interruption of up to 30 days — or up to 6 months following termination of student status — permitted)

• Must meet bank creditworthiness requirements

• Must qualify as a first-time home buyer

Who qualifies as a first-time home buyer?

Fortunately, this does not only include those who have never owned any property.

Only inner-area residential properties must be considered. Furthermore, ownership of up to 50% share in one residential property does not exclude eligibility. Also, if the applicant owns a property encumbered by usufruct and the usufruct holder resides in it, this is not a disqualifying factor.

In detail:

A first-time home buyer is someone who, at the time of application and within the previous 10 years, has not owned an inner-area residential property.

Exceptions apply if the previously owned or currently owned property:

• had an ownership share value not exceeding HUF 15 million

• was subject to demolition ordered or authorised by the building authority

• was encumbered by usufruct and occupied by the usufruct holder

• was owned only up to 50%, and the applicant has ownership in only one inner-area residential property

Preferential Rules for Spouses:

In the case of spouses, it is sufficient if only one spouse qualifies as a first-time home buyer and meets the 2-year social security requirement.

This is significant for creditworthiness assessment, as both spouses’ income may be taken into account. Other conditions (clean criminal record, no public debt, etc.) apply to both spouses.

Preferential Rules for Parent–Child Applications

Here arises the interpretative difficulty mentioned earlier.

It is clear that if a parent joins the loan application due to creditworthiness considerations, it is sufficient if only the child (aged 18 or above) qualifies as a first-time home buyer and meets the 2-year social security requirement.

The parent may join as co-debtor, allowing their income to be considered for credit assessment. Other general conditions apply to the parent, but they do not need to qualify as a first-time home buyer nor meet the 2-year social security requirement.

The interpretative question was whether the reverse could apply — meaning if only the parent qualifies as first-time home buyer and meets the social security requirement, and the child joins as co-debtor.

My interpretation was that only the first scenario would be accepted.

Update:
The decree has since been amended, confirming this interpretation. The child must qualify as a first-time home buyer. The parent may join only as co-debtor and may not acquire ownership in the property purchased under this arrangement. The reverse structure is not permitted; a child may not join a first-time home buyer parent as co-debtor under these preferential rules.

In the next part of this article series, I will discuss the conditions applicable to the purchased property.

A Who Can Apply for the Otthon Start Loan? bejegyzés először Dr. Czotter Regina-én jelent meg.

The essence of the subsidy is that the annual interest rate payable by the borrower may not exceed 3% on the loan amount. The State pays the remaining interest exceeding this rate directly to the lending institution in the form of an interest subsidy.

It is extremely important that the 3% interest rate is fixed for the entire loan term, meaning the same monthly instalment is payable until the end of the repayment period. This is what truly makes the scheme attractive.

The interest rate of the Otthon Start loan is significantly lower than market-based housing loans. Currently, the average interest rate of housing loans fixed for at least 10 years is around 7.10%. A fixed rate maintained for a full 25-year term is even higher. It is therefore no surprise that there is considerable interest in this new subsidised housing loan. It offers a stable and predictable solution, with a monthly instalment comparable to what many people currently pay in rent.

In the case of the maximum loan amount and the longest term — that is, HUF 50 million over 25 years — the expected monthly instalment is approximately HUF 237,000.

A similarly fixed 3% interest rate is available under the CSOK Plus subsidised loan scheme. However, unlike CSOK Plus, the Otthon Start programme does not require marriage or childbearing, and the purchased property may also be rented out.

Key Information in 10 Points:

• Available for persons qualifying as first-time home buyers, for the purchase or construction of a residential property
• Maximum loan amount: HUF 50 million
• Maximum loan term: 25 years
• Fixed 3% interest rate for the entire term
• Minimum 10% own contribution (down payment)
• The price per square metre may not exceed gross HUF 1.5 million
• Maximum property value: HUF 100 million (apartment), HUF 150 million (single-family house)
• The property may not be encumbered by co-ownership shares or usufruct rights
• The seller may not be a close relative or partner
• The loan may be combined with CSOK Plus, public service housing support, or other loans

In the next part of this article series, I will explain who is eligible to apply for the Otthon Start interest-subsidised housing loan.

A Highly Anticipated Fixed 3% State-Subsidised Housing Loan Available from 1 September 2025 bejegyzés először Dr. Czotter Regina-én jelent meg.