New law will make properties more expensive and difficult to buy for foreigners in Hungary
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.
Differing opinions
György Gémesi, the neutral mayor of Gödöllő and the head of the Hungarian Association of Local Governments, said the draft law is “too strong”, it would be enough to give back the building authority powers for the settlements. However, since Gémesi expressed his opposition towards the Orbán cabinet multiple times, his proposals will probably not be accepted.
László Csőzik, the mayor of Érd, said locals are outraged by the draft law because they are afraid that the Hungarian government would like to restrict their right to dispose of their own real estate. Property is the most valuable or only asset for most Hungarians. Csőzik said he would support parts of the draft law that would empower local governments to introduce extra taxes for newcomers.
Other mayors said they would thoroughly study the new legislation, but would not apply every element of it.
Bill on local identity protection may not include property purchase restrictions, Navracsics says
A plan to hand local authorities the right to restrict property purchases contained in the bill on local identity protection “may even be removed” from the final draft, Tibor Navracsics, the public administration and regional development minister, told a conference on housing on Tuesday, citing the outcome of a social consultation on the bill.
He noted that the bill contains planned provisions aiming to ensure that emigration and population growth do not threaten the structure, community or infrastructure of small settlements, adding that it appeared there was resistance to one of the five measures, namely curbs on real estate acquisition.
Navracsics said that at the same time arguments that this measure would harm property prices in the settlements were questionable, arguing that high property prices in any case “shut down the settlement” by handing it over to rich and older people, making it harder for young people to thrive and help the local economy.
Property prices in Hungary, he noted, have grown by 230 percent since 2010, on a par with Estonia and the highest rate of increase in the European Union.
Read also:
- Property tax for foreign buyers could be imposed in Hungary – read more HERE
- Hungary introduces ban on energy drink sales, adopts drug abuse ban – details in THIS article
Featured image: depositphotos.com