Shortly after the landslide victory of the governing Fidesz party at Hungary’s parliamentary election, an advertisement, illustrated by photos of Budapest, appeared on one of the most popular Chinese social media apps. A new immigration program is launched in Hungary, says the ad posted by a company based in Hong Kong.
The new scheme called Home Purchase Immigration is advertised as the most cost-effective new type of immigration. It offers a Hungarian residence permit for applicants in exchange for investing at least HUF25 million (€78,000) in Hungarian real estate and paying €50,000 in fees. The company that advertises the new scheme is owned by Lian Wang, a Chinese businessman who also participated in Hungary’s highly controversial residency bond program, which was suspended last year amid allegations of corruption and security risks.
Although the Hungarian government has not announced the launch of any new immigration program, according to the Hong Kong company, the operability of the scheme is guaranteed based on negotiations with Hungary’s Immigration Office. The office, however, wrote to Direkt36 that it is not in contact with the company that advertises the program, did not make any deals or gave any guarantee.
For months, there have been rumors on the market about a new residency program, immigration lawyers told Direkt36. The new scheme is built on the same legal basis as the country’s previous immigration program, the residency bond scheme.
That program was initiated by Antal Rogán, a powerful politician of Fidesz and now the head of the cabinet of Prime Minister Viktor Orbán. While the government fiercely opposes taking in refugees and migrants, under the residency bond scheme, those who invested €250,000-300,000 in Hungarian state bonds – mostly through offshore companies with opaque ownership structure – were granted a Hungarian residency permit. Between 2013 and 2017, Hungary handed out nearly 20,000 permanent residence permits for residency bond investors and their family members, including people who could pose serious security risks for Hungary and the European Union.
In recent years, Hungarian press revealed that those businessmen who received a huge income through the program are connected to powerful political figures such as Rogán and the PM’s informal advisor, Árpád Habony.
Although the sale of the residency bonds was suspended, there has been speculation about the program’s potential relaunch after the 2018 parliamentary elections. „Can you promise that the sale of the residency bonds will not be re-started after the election?” Viktor Orbán was asked last June, but he did not give a clear answer to the question.
National interest yet again
The new immigration program is advertised by Hong Kong-based LSP International Limited through Chinese social media app WeChat, where currently three articles are available about the program. The article announcing the “official launch” of the program was published on 21 April, less than two weeks after Hungary’s parliamentary elections. It is advertised as a very favorable immigration program aimed at foreign investors, which is similar to the residency bond program.
Compared to a required investment of €250,000-300,000 in Hungarian state bonds under the residency bond program, under the new scheme applicants are required to invest HUF25 million (€78,000) in Hungarian real estate (the amount doubles if the investor’s spouse also wants to get Hungarian papers). The managing companies of the programs ask for high management fees: €40,000-60,000 in the case the residency bond program, and €50,000 in the real estate investment schemes.
According to the article, one of the advantages of the new scheme is that a residence permit can be obtained in 2-3 months. (An even quicker, a few-week-long process was promised in the case of the residency bond program.) Investors can receive a residence permit for a maximum of 5 years, and their children for 3 years. For this, there is no need for Hungarian language skills, participating in an interview or revealing the source of the investors’ funds. The Hungarian residence permit enables its holders to travel freely within other countries of the European Schengen-zone.
The Home Purchase Project has the same legal basis as the residency bond scheme. A law passed in 2007 stipulates that foreign investors can receive Hungarian residence permit in case their stay in the country, based on their investments, is of “national interest”. When the residency bond program was launched, a law modification added that the purchase of state bond is to be considered a national interest.
However, it is not regulated what type and amount of other investments can be considered a national interest, said three immigration lawyers who asked not to be named because of the political sensitivity of the issue. The Immigration Office decides individually about every applicant whether his investments make his stay in Hungary of national interest.
“The rules have always been vague; the conditions are not specific enough. The [Immigration] Office has a big room for maneuvering,” said a lawyer who has been helping foreigners to settle down in Hungary for over twenty years. Before the launch of the residency bond program, the lawyer had some clients that received residence permit based on their business activities. “With the bond program, these possibilities became narrower. Under the program, it was not really possible to apply for residence permit citing national interest in the normal way [without the purchase of residence bonds],” he said.
After the sale of residency bonds was suspended, the possibility to apply for residence permit citing national interest remained in the law – this is the legal basis on which LSP International build its program. The company emphasizes that the new scheme is not a state program, but their advertisement suggests that the Immigration Office knows about the program: “Based on the negotiations between immigration lawyer and the Immigration Office about the specific application, the actual operability of the scheme is guaranteed,” the company claims. Immigration lawyers told Direkt36 that it is unusual that a private company guarantees the outcome of future decisions of the Immigration Office. “One has to have very good information in order to know and guarantee the future legal practice of the Office,” said one of the lawyers.
The Immigration Office told Direkt36 that it did not make any deals with LSP International, neither with any other companies: “[the office] did not and will not give any guarantee. It does not have any legal basis to do that.”After the publication of our article, theImmigration Office also wrote it has not been involved in any negotiations about the new scheme.
Also after the publication of our article, the Government Information Centre said in a statement that the “program is simply a lie, the Foreign Ministry will take the necessary steps against the company in question. Those who apply [for Hungarian papers] based on their real estate investments will not automatically receive a residence permit.”
Two immigration lawyers told Direkt36 said that they had heard rumors about the possible launch of a new immigration. “This is already treated on the market as an individual program. For about half a year, there have been rumors that a €80,000-€100,000 real estate investment is needed, and that the management companies will receive quite elevated fees, tens of thousands of euros,” one of the lawyers said.
Another company, Budapest-based Helpers Hungary Kft. – which previously offered services in connection with the residency bond program – now also advertises a Real Estate Residence Program. Applicants are required to invest around €200,000 in two apartments, and to pay a fee to Helpers Hungary that equals 10% of the price of the purchased properties. In return, Helpers Hungary helps the applicant to create a real estate management company, whose main business activity will be to lease the two freshly purchased properties. Helpers Hungary will request a residence permit for the investor, based on this business activity of the real estate management company. We asked the company whether it had previously negotiated with the Immigration Office about the program and if the company can guarantee that the applicant will receive Hungarian papers based on the investment. The company declined to comment on these details.
From government bonds to the real estate market
The residency bond program had already been very popular among Chinese investors: under the 4-year-long program, over 15,000 Chinese applied for Hungarian residence permit. The company that was authorized to sell bonds on the Chinese market received an income of at least €244 million.
The same Chinese business group is behind the Home Purchase Immigration. LSP International, the company advertising the new scheme, is owned and co-directed by Lian Wang. The Chinese businessman had also been named as one of the shareholders of Hungary State Special Debt Management Fund (HSSDF), which was authorized to sell Hungarian residency bonds in China. Under the residency bond program, LSP International had offered different services for Chinese investors moving to Hungary.
Through his Hong Kong-based company, Lian Wang is also the owner and one of the directors of Budapest-based Landing Service Provider Kft, which also deals with real estates. The law firm of Kristóf Kosik, who had previously worked for Rogán and Habony and participated in the residency bond program, has been the legal representative of the Hungarian company. In another company, Kosik currently acts as a representative of Lian Wang.
The 270-square-meter office of Landing Service Provider is located in central Budapest. When visiting the office, two employees told Direkt36 that they had not heard about the new immigration program advertised by their parent company, but even if they did, they would not be allowed to comment on it.
Cheap luxury in Budapest
Although the investor can choose freely the real estate he wants to purchase, LSP International offers some help: through WeChat, the company advertises over 30 apartments located in Budapest. The exact address of the flats and thus the identity of their current owners are unknown.
It has been revealed, however, the Lian Wang and other shareholders of HSSDF have three Hong Kong-based companies that are connected to the real estate market in Budapest. Through these companies, they bought luxurious apartments in downtown Budapest, and offered premium real estates in other parts of the city. Two out of three real estate companies are registered at the same address as Habony’s company. Habony’s lawyer claimed that there is no connection among the companies.
Chinese investors had already been active on Hungary’s real estate market before the launch of the new immigration project. According to market reports, in 2017, 40 percent more Chinese were interested to buy Hungarian real estate than a year before.
LSP International tries to attract investors by emphasizing Hungary’s relatively cheap prices: “In Budapest, real estate prices are still half as much as in other European capitals (…) Compared to the luxury market of other countries, at almost the same price a castle can be bought in Hungary.”
According to LSP International, their first advertisement attracted a great attention. The company highlights that the Immigration Office has its own objectives, and it is not certain how long the new immigration program will last. The advertisement warns that „this means that while you wait and see, you may miss this opportunity like you had missed the residency bond program.”
András Pethő contributed to this article.
For the Hungarian company data, we used the services of Opten.