Slovak Real Estate Market
Slovakia has 359 properties for every 1000 inhabitants and only 317 housing units for 1000 inhabitants (after exclusion of cottages, vacation houses – properties not suitable for year round residency and uninhabitable properties). Slovakia’s long-term plan is to achieve the European average, which is 400 housing units for 1000 inhabitants.
However, with current new housing development of 12-13,000 new properties a year, it will take more than 20 years to achieve this goal. At present there is a shortage of over 220,000 housing units and also number of existing properties (from the communist days) will become uninhabitable in the medium to long term.
|Year||New Constructions, Reconstructions and Modernizations||Repairs and Maintenance||Whole Domestic Construction Production|
|2005||3108 mil. EUR||756 mil. EUR||3886 mil. EUR|
|2006||3850 mil. EUR||813 mil. EUR||4689 mil. EUR|
|2007||4320 mil. EUR||798 mil. EUR||5136 mil. EUR|
|2008||4945 mil. EUR||1074 mil. EUR||6040 mil. EUR|
Note: The amounts of trade before 2009 were converted to Euro with the official exchange rate: 30.129 SKK = 1 EUR
In Slovakia, the real estate agents market is growing fast, but people are used to selling and buying their property by themselves, which makes the prices even lower. Finding an English-speaking agent can be a bit of a challenge, especially in areas that are not too touristy yet.
Most houses in Slovakia are in good shape and the cost of renovation is very reasonable. The average labour cost is still low compared to other EU-countries. Bureaucracy is not that “heavy” as in other EU countries.
Buying Property by a Foreigner
Since joining the European Union, virtually anyone can buy property in Slovakia. The real estate market is open and does not discriminate neither citizenship, nor place of residence. Also, it does not matter whether the potential buyer wants an apartment in the city, house in the countryside or cottage in the mountain area.
The only exception is agricultural and forest land. According to the Law on protection and use of mineral wealth (Mining Act or so-called Water Act 184/2002 Coll), foreigners can not buy or receive such property as a gift. However, from the 1st of May 2007 foreigners can buy (or get as a present) agricultural and forest land, provided that the potential buyer conducted business on the land for a minimum of three years and has temporary residence in Slovakia.
Also, according to the legislation, legal persons (companies) having registered seat in Slovakia, are also considered as Slovak residents and as such, can purchase agricultural or forest land without any restrictions. So, for foreigners there is another option of establishing a company in Slovakia (which is very easy) just for the special purpose of buying such a property. Either way, if a foreigner wants, he/she can buy (directly or indirectly) any property in Slovakia.
The property market was fully liberalized in May 2011, when the transition period negotiated with EU ends. But even nowadays, it offers some of Europe’s best opportunities with low prices and solid growth (for the right type of property in the right area). And, of one thing foreign investors can be sure – as virtually all property sales are sold to locals, and 95% are owner occupiers in their family apartment or house, so investors will always be able to sell their property on to a Slovak buyer, ensuring a safe exit.
Property Buying Process
Buying property in Slovakia is not very different of buying property in any of the EU countries. It is actually quite simple. Here is a step-by-step guide:
- The process of searching for property is successfully completed, the buyer made an offer and the offer was accepted by the recent owner. Buyer and seller agreed to all terms of trade.
- The buyer then lodges the whole price (or an agreed deposit) to a notarial custody or to a bank account where funds are kept till the property right is transferred to the buyer. At this time, there is an official pre-contract agreement signed by both parties. This sets out the terms of the deal, as well as locking both the buyer and seller into the deal. (If anyone changes his/her mind after this, he/she will have to pay any agent’s costs to the other party.)
- Buyer should make sure to have a survey carried out through an independent surveyor. The surveyor’s report is then arranged and sent to the solicitor so that the sales contract can be compiled. All of the documentation should be translated into the buyer’s language.
- Both sign the sales contract. The seller’s signature must be verified by a notary or the registry.
- The purchase price is released to the seller after the buyer gets an extract from the cadaster (Slovak national information system) denominated in the name of new owner or the purchase contract was confirmed by the cadaster with an indication of ownership permit. This process usually takes about 4 weeks.
For legal certainty, buyer should never pay cash before the transfer of property ownership is finished.
If someone sells or buys property through real estate agency, the agency will ensure a comprehensive legal service and prepare all the documents necessary to transfer ownership of the property. Another possibility is to contact a lawyer for preparing the contract, but lawyers will not monitor the sale itself.
Fees and other Costs
The costs of buying a Slovak property other than the property price itself are relatively low:
- Expenditures on sales contract may vary according to which lawyer/realtor you hire, generally around 500-600 EUR.
- Administrative fees for cadastral office (application for entry into the cadastre, extract from the property ownership document) – 300 EUR
- Registration with tax authorities + local taxes – 100 EUR per year
- Property tax and other small taxes – 30 EUR per year
- Property sold within five years after construction is subject to 19% VAT.
If buyer plans to let the property, it is also needed to count with costs of managing agent. Buy-to-let management can cost about 200 EUR per year plus 19% tax on rental profits. At resorts, the property management prices vary a lot.
Since 2005, there is no real estate transfer tax in Slovakia. Therefore the purchase of the property is not financially burdened, but there is the income tax of 19%. The tax liability is calculated as the difference between the acquisition property price and the selling price. The Income Tax Act, however, allows many options where the seller is not required to pay tax or the tax base can be reduced (for example, permanent residence in the property for more than 2 years).
Mortgages in Slovakia
Mortgages for foreigners are available in Slovakia. Terms and conditions are pretty much the same as European standard and Slovak banks have no problem with lending money to foreign investors. The application requires documentation such as your passport, proof of address, six months of bank statements and a proof of income and employment.
Usually, the bank lends maximum 70 percent of the property’s market price and the interest rates are around 5-7%. Some buyers use to purchase real estate mortgage financing and as security for loan they use the property itself.
Most Popular Investment & Leisure Properties with Prices
Generally, there are two main options when buying property in Slovakia. First is buying an investment property in a city with the intent of renting it out to foreign workers or for short-term renting to tourists. The other option is to buy a leisure property and use it as a holiday destination. Leisure properties are also available for renting out, but the primary intent is usually to have a nice weekend break destination.
When speaking about buying an investment property in a city, the most wanted is, of course, Bratislava. There are new properties built on the outskirts of Bratislava and renovations are taking place in the existing districts of the city. The apartment investments were particularly popular, but the oversupply has hit the prices. One room apartment in the Old Town is about 120,000 EUR, 4-room renovated luxury flat costs about 400,000 EUR.
Other interesting areas include Poprad (with its ski properties) and Košice, cities with international airports. Easy access to the resorts brings tourists and property owners alike and largely supports the development. The property prices in these areas are still lower than in comparable destinations.
Investors may also be interested in cities like Nitra, the site of lowland vineyards, forests and thermal springs, Banská Bystrica, town in the middle of Slovakia with mountains and ski centres just around the corner or Trnava, one of the economic centres in the west of Slovakia.
For leisure investments, the national parks of the High and Low Tatra Mountains are very famous, because they are visited not only by Slovaks, but by Polish, Russians and other tourists. Tatra Mountains are a UNESCO world heritage site with established resorts for summer and winter activities. Outstanding natural beauty which has a wealth of attractions to offer tourists including skiing, hiking, spa centres/wellness and golf courses. Typical resort in High Tatras comprises apartments and villas priced from 80,000 EUR for a studio flat to 400,000 EUR for a four-room villa.
Property for Sale in Slovakia – Classifieds
If you are interested in buying or selling a property in Slovakia, leave a comment on this page with all the details as location, price, etc.