Government: Planned building societies to promote new construction

Budapest, March 17 (MTI) – A bill on national building societies, now before parliament, was designed with the aim to boost new home construction, Antal Rogán, the prime minister’s cabinet chief, said on Thursday.

Speaking in the national assembly, Rogán said that passage of the motion into law would contribute to increasing construction, a priority for the national economy. He added that in terms of new housing, Hungary was behind other countries in central Europe.

Fidesz group leader Lajos Kosa told a press conference that the new societies would be “the third pillar” in the government’s home building programme, to complement reduced VAT on home construction and the home purchase subsidy for families.

The bill, submitted on Wednesday, would match 30 percent of society members’ contributions up to 25,000 forints a month. However, the savings could only be used for the purchase of new homes.

Rogán announced plans to establish such societies in January. He said the institution would be based on the model of building societies in the UK, adding that it would give home savings banks some competition.

Hungarians who put money into home savings banks also get a 30 percent state subsidy, but the support is limited to 72,000 forints a year.

The bill would require members to commit to a contribution size and schedule as well as set an upper limit on the price of the property they wish to purchase. No interest would be paid on the contributions.

The price of new homes purchased by members may be between 10 million forints and 40 million forints, though members may make up the difference for more expensive homes in a lump sum upon purchase.

Members who stick to their contribution schedule may be selected to take out an interest-free mortgage loan over the amount of their savings in the society for the purchase of a home. Alternatively, members who have already saved 20 percent of the home purchase price may bid to get the interest-free credit.

Communities under the bill must have at least 120 members, and they may remain established for no less than ten years but no more than 15.

According to the opposition Socialist Party, the proposal was not aimed to help families but one particular businessman, who had earlier organised consumer societies and sold over 1,000 homes.

The leftist Democratic Coalition (DK) said that the planned building societies would be a “subsidised pyramid game” ensuring no protection to “unsuspecting members”. DK’s Lajos Oláh told a press conference that in the new mechanism a “Fidesz-associated company would set up a building society, receive a tremendous amount of public funds” and then the houses would be bought from “oligarchs” associated with the ruling party. “That is how public funds would be turned into private assets,” Oláh insisted.

The Együtt (Together) party said that the new system was reminiscent that of the bankrupt Quaestor brokerage company.

Együtt deputy leader Levente Papa insisted that under the new law the ruling parties would help “cronies” to a market segment and profits in the billion forint range. He suggested that only a “very few” companies could meet the “reliable organiser” criteria, and those businesses could control “nearly the whole of the market”.

Source: http://mtva.hu/hu/hungary-matters