The controversial new “Local Identity Act” introduced by the Hungarian government has sparked widespread concern, with many fearing that municipal involvement in property sales could drive down real estate values—even in the country’s most desirable housing markets, such as Budapest’s suburban belt and the Lake Balaton region. However, several mayors have indicated they are reluctant to exercise these new powers due to public backlash.

The major concern among Hungarians: will their property lose value?

No mayor in Hungary wants to jeopardise their chances of re-election in 2029—and they certainly do not want to drag their team down with them. That is why they are hesitant to support measures that could alienate voters. In Hungary, where middle-class families typically do not own substantial assets such as businesses or stocks, home ownership often represents their most significant financial investment. Any attempt to interfere with its value is likely to provoke public outrage.

Mayors in towns such as Érd, Balatonalmádi, and Gödöllő have publicly stated they do not intend to use the new powers. Others, like the mayor of Salföld near Lake Balaton, told Blikk that they would consider enacting a municipal right of first refusal. The new law, which came into effect today, grants local governments even broader authority—but so far, it appears that only the smallest municipalities may take advantage of it, avoiding major interference with property values.

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New tools for local governments to manage mass influx

One of the law’s key provisions allows municipalities to impose conditions for establishing permanent residence. According to  ingatlan.com, local authorities can now require proof of actual residence and ensure that incoming residents are compatible with the town’s infrastructure capacity. This is particularly critical for communities around Budapest, where utilities are already strained by the expansion of new housing developments.

In the Buda Hills, for example, water shortages persist due to a combination of drought, overpopulation, and underfunded infrastructure projects—issues that become particularly apparent during peak demand periods.

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Local governments can also grant locals a right of first refusal or impose conditions on property purchases by non-local buyers. (A proposed outright ban on non-local buyers was ultimately removed from the final version of the legislation.)

Hungarian municipalities—especially smaller ones lacking industrial revenue—have long relied on government redistribution for funding. That could now change: towns that adopt these new legal tools may impose local taxes on newcomers to subsidise infrastructure improvements.

Check local rules before attempting to buy property in Hungary

Starting today, municipalities may pass local ordinances exercising these new powers. However, such regulations must be fair, transparent, and non-discriminatory.

For current residents, the new law does not require any additional steps. But anyone planning to move to a new town should review local rules to determine whether special documentation or declarations are required when purchasing property or registering a new address.

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