New law will make properties more expensive and difficult to buy for foreigners in Hungary
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A new bill has been submitted to the Hungarian Parliament empowering local governments to introduce restrictions concerning building, selling and buying new properties. Since the bill comes from PM Orbán’s Fidesz, it is obvious that the government supermajority will pass it. As a result, it will be more difficult for a foreigner to buy property in Hungary. In some cases, it may become almost impossible to buy a house or an apartment in some Hungarian settlements.
Overcrowded settlements
According to the Hungarian government, multiple Hungarian settlements are no longer capable of welcoming more inhabitants because of the lack of infrastructure and free spaces in local kindergartens, schools, or shopping facilities. For example, in Érd, a settlement 21 kilometres from Budapest, which is the biggest town in Pest County, having more than 71 thousand inhabitants, the local council banned building new apartment blocks and twin houses because the traffic infrastructure, public utilities, and local educational institutions cannot sustain any more people. As a result, due to the lack of free spaces in kindergartens and schools, some local families have to take their kids to Budapest every day.
New law will make it more expensive and difficult for foreigners to buy property
Thus, the Hungarian government decided to help such communities to “protect themselves”. Tibor Navracsics, the Minister for Regional Development, has proposed that municipalities be granted five legal tools to limit population growth and reduce tensions between locals and newcomers.
- restricting property purchase;
- expanding pre-emption rights;
- setting up conditions for property purchase;
- introducing an obligation to pay extra taxes;
- making address registration subject to permission.
According to Blikk, the new draft law would empower local governments to choose one or more of the above-mentioned legal tools to rewrite local regulations and adapt them to the present challenges from 1 July.
According to László Balogh, an expert of ingatlan.com, a Hungarian real estate sales website, most municipal governments would probably introduce restrictions concerning property purchase or address registration. He added that the settlements where the locals’ dissatisfaction caused by the influx of masses reaches a critical level would be the ones to act first. He believes that municipal councils will probably ask newcomers to pay a contribution to the settlement’s development. This can be a few percent of the purchase price of the property.
In Budapest, a significant rate of property purchases is done by foreign buyers. Local governments may impose extra taxes on foreign buyers to syphon extra money into their budget and limit property price rise.
