Hungary’s reduced VAT rate on most new homes is set to expire at the end of 2026, potentially bringing the standard 27% rate back into play from January. In theory, the Hungary new home VAT 2027 change could add almost 21% to the gross price of an affected property if developers passed the entire tax increase on to buyers. The reality, however, may prove considerably more complicated as Hungary’s housing market is already losing momentum.

Under the current rules, the 5% VAT rate generally remains available until 31 December 2026 for qualifying newly built homes. Hungary’s National Tax and Customs Administration (NAV) confirms that the standard 27% rate will apply afterwards unless a development qualifies for transitional protection.

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The crucial date for developers is 31 December 2026.

Projects requiring a building permit can continue using the 5% rate for qualifying sales completed as late as 31 December 2030 if the permit becomes final by the end of 2026. Similar transitional provisions apply to projects using the simple notification system, although the precise deadline depends on which building legislation governs the notification.

“This deadline is particularly important for housing developers. With a permitting procedure starting now, a request for additional documentation or prolonged administration could put meeting the deadline at risk,” Péter Szegő, lead analyst at Duna House, said in a statement.

Developers already appear to be accelerating their pipeline. According to the Hungarian Central Statistical Office (KSH), permits and simple declarations covering 16,588 homes were issued in the first half of 2026, up 29% year on year.

This means Hungary could have a two-tier new-build market for years: protected projects still selling with 5% VAT alongside newer developments subject to 27%.

What would 27% VAT actually do to prices?

The theoretical effect is substantial.

Take a new flat currently priced at HUF 100 million (around EUR 275,000) including 5% VAT. Its pre-tax price is roughly HUF 95.2 million. Applying 27% VAT to the same net amount would produce a gross price of nearly HUF 121 million (EUR 333,000).

That is an increase of almost HUF 21 million (EUR 58,000) without any change in construction costs or the developer’s underlying price.

But this calculation assumes something that cannot be taken for granted: that buyers would accept the full increase.

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Duna House: slowing market could absorb part of the shock

Duna House argues that developers may have limited room to pass the entire tax burden on to customers because demand is already weakening.

The National Bank of Hungary (MNB) found that housing transactions fell by 18% year on year in the first quarter of 2026.

The slowdown remained visible during the summer. Duna House estimated just 8,077 residential transactions in August, 13.1% fewer than in July and the second-lowest monthly figure of 2026. The company’s August market estimate also put turnover 29% below the level recorded a year earlier.

“The 27% VAT rate would in itself represent a significant cost increase, but in a slowing market this cannot automatically be built into home prices,” Szegő said. “If demand does not accept the higher price, developers will have to absorb part of it.”

Could the VAT increase push up second-hand homes too?

There is nevertheless a less benign scenario.

If the price gap between VAT-protected developments and new projects subject to 27% becomes sufficiently large, higher new-build prices could also affect expectations in the second-hand market. Owners of existing homes may try to raise asking prices as newly built alternatives become more expensive.

That does not mean a market-wide 21% increase would automatically follow. Second-hand homes are not themselves subject to the new-build VAT change, and actual selling prices remain determined by affordability, credit conditions, location and demand.

The risk of a wider knock-on effect nevertheless exists, particularly in areas where buyers directly compare new and recently built properties.

Higher prices could collide with Home Start limits

Even a much smaller price increase could have consequences for buyers using Hungary’s subsidised Home Start (Otthon Start) mortgage programme.

The scheme offers loans of up to HUF 50 million (around EUR 138,000) at a fixed 3% interest rate. Eligible flats can cost no more than HUF 100 million (EUR 275,000), while houses are capped at HUF 150 million (EUR 413,000). The maximum permitted price is HUF 1.5 million per square metre (around EUR 4,130). The limits are detailed on the Hungarian government’s Home Start programme page.

A VAT-driven price rise could therefore push some newly built homes above the programme’s eligibility thresholds even if the increase falls far short of the theoretical 21%.

The end of 2026 is consequently becoming a decisive deadline for Hungary’s residential developers. The return of 27% VAT could place substantial upward pressure on new-build prices, but a weaker and increasingly price-sensitive housing market may prevent developers from simply transferring the entire bill to buyers. What emerges in 2027 is likely to depend as much on demand and financing conditions as on the tax rate itself.

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