BREAKING NEWS! Another huge tax hike from the Orbán cabinet: this time it’s on short-term rentals in Budapest

The National Economy Ministry announced the launch of a public consultation on draft legislation on short-term rentals on Monday.

Draft legislation on short-term rentals

The draft legislation would raise the annual flat tax on short-term rentals in Budapest from HUF 38,400 (EUR 96) to HUF 150,000 (EUR 373,5) per room from 2025, while suspending the issue of new short-term rental licences in 2025 and 2026.

The new rules would only apply to short-term rentals in the capital.

Apartment rental situation in Budapest

The ministry noted that rents in Budapest, where 140,000 of the 800,000 households are tenants, could reach as high as 50-60pc of renters’ monthly income. At the same time, it added that the number of rooms at Airbnb-type accommodations has risen to 26,000, raising property prices and rents.

The ministry said that since the pandemic, rents and home prices in Budapest have climbed over 40pc, pricing some homebuyers out of the market. Additionally, it added that short-term rentals have restricted permanent residents’ right to an “undisturbed” home life.

The ministry said local governments’ lack of action in the matter had only made things worse, justifying the central government’s intervention.

Hungarian families own the majority of short-term rentals

However, the owners of short-term rentals are mostly Hungarian families who have invested their savings, so the Orbán cabinet is targeting families with this tightening and tax increase. Meanwhile, the government has done nothing to build social housing over the past 14 years, and municipalities have many empty flats because they have not been renovated.

In Budapest’s VI district, the ban on Airbnb has already been pushed through by a highly contested referendum, where although there may be a small drop in rents in the short term, the shock of fewer customers to cafes and restaurants will radically reduce. Related article – Airbnb effect: Budapest apartment prices start dropping after Airbnb ban

Hotel lobby against Airbnb

The country’s richest entrepreneurs, all of whom are close to the government, control almost the entire Hungarian hotel industry, and now they want to reduce competition in Budapest, the most visited tourist destination. Viktor Orbán is also personally involved, as his brother-in-law is one of the biggest hotel owners in Hungary.

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