Extra costs imposed on the participants of the market of newly built houses
The regulation of the National Settlement and Construction Requirements has been amended, which states how many parking spaces per apartment the investor is obligated to build in the case of a newly built residential park. On the developer side, an additional cost factor is the number of parking spaces; meanwhile, the news is not very good for the buyer either, as the more expensive construction is reflected in the real estate prices, regardless of whether someone buys a parking space or not.
According to the government decree: “For the proper use of each plot and building on the plot …. unless otherwise provided, the number of cars determined in accordance with Annex 4 shall be provided by placing four or more dwellings or holiday homes on a building site. 1.5 passenger cars per unit shall be provided.”
As the Hungarian news portal Portfolio reports, market participants have different interpretations and information regarding the issue, and it is not clear what rights, loopholes, or obligations the regulation may impose on local governments, or even on developments.
Read also: Here are the largest real estate developments in Budapest for 2021 – VIDEOS+PHOTOS
The previous regulation stated that a parking space for one car per apartment had to be built after every new apartment, which now has been amended to 1.5 parking spaces from the beginning of 2021.
One would think that at least there will be no shortage of parking spaces in the vicinity of a residential park, but the situation is not so simple. The design of a parking lot, broken down per cars, is such an expense to the developer that there would be no homeowner who would buy them at that price. The developer will thus have to sell the mandatory built-in parking lots at a price lower than the construction cost, but even so, many will give it up and prefer to look for a parking space on the street.
Besides developers, buyers will also be affected as house prices will probably follow the costs, so the price per square metre paid by buyers will be higher. Not just for those who buy one of the parking spaces of the apartment, but for everyone. From a consumer perspective, this is one of the biggest counter-arguments to the new regulation, which requires one and a half parking spaces, as it does not seem logical for someone to pay a higher price just because others are exercising their right to park.
Developers think that it is not realistic and makes construction projects very expensive.
According to Tibor Nagygyörgy, owner and CEO of Biggeorge Property, “The measure will have a significant negative impact on the production costs and thus on the pricing of flats from several sides as the development of car parks still means a loss of about EUR 9,800 per piece. The developers are expected to have an even larger loss of about EUR 11,200 – EUR 12,600 on the additional car parks, as there is no solvent demand from customers for more than 1 car park, except for the highest price category.”
“This means that for an average 50 square metre apartment, the extra half parking space costs about EUR 126 / m2 + VAT.”
Dr. Mihály Schrancz, Managing Director of Property Market , added that “the construction of the underground garage is not a profitable investment from the point of view of real estate development either; the full cost cannot be enforced (a parking space means a loss of HUF 3-3.5 million), therefore it increases the supply price of new flats and may have a negative effect on the project start-up.”
He also highlighted that in some areas, different regulations may be in force if a district has previously had a mandatory number of parking spaces in its own jurisdiction.
Featured image: www.budapart.hu
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In many cities in Europe new developments are required to scale back parking if they are near transport hubs so as to actively discourage car use. Hungary is behind the curve with this new regulation.