Both the government and the Municipality of Budapest plan to restrict short-term house rentals in the capital, which could completely transform the downtown real estate market. The government would act primarily to help the hotel industry, while the capital would intervene to normalize apartment lease prices in Budapest. Although they have a common goal, they have not yet agreed on anything. However, it still seems inevitable that Airbnb sublets will soon be restricted.
Similarly to San Francisco, Paris, Amsterdam, London and other cities around the world, short-term housing rentals may soon be restricted here in Hungary as well. The government has entrusted the Hungarian Tourism Agency with developing a framework of restricted conditions – primarily in the interests of the hotel industry, which employs many people and which was severely affected by the coronavirus epidemic. Budapest municipal leadership also supports the idea, but for another reason: just like other big cities, they realized how Airbnb and companies with a similar profile are making long-term rentals less effective for owners, which leads to a rise in apartment and housing prices in the capital.
While guest traffic has peaked in recent years, the number of nights spent by foreign guests in accommodation fell by 98.7 per cent in April due to the coronavirus epidemic, while domestic guests nights fell by 95 per cent. In addition, while tourism is reviving in the countryside thanks to domestic travel, there are hardly any signs of this in Budapest. Thus, according to Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ), the capital should be treated separately, and several measures should be considered to help the Budapest hotel industry, including the stricter regulation of short-term housing rentals.
Tamás Flesch, president of the Hungarian Hotel Association, said that according to their information neither the government nor the MTÜ is planning a ban on short-term housing rentals. On the other hand, stricter regulations are needed, as hotels are at a disadvantage compared to short-term rentals.
He added that there are currently 20,000 hotel beds in Budapest, and there are about 10-12 thousand apartments for rent, so at the moment, private apartments can accommodate almost the same number of guests as hotels in the capital. Meanwhile, regulations concerning each of the two types of accommodations differ on many points, such as fire prevention, and health and safety regulations. In addition to this, hotels are also inspected much more frequently than AirBnBs.
Flesch considers it most likely that a time restriction will be introduced in the Hungarian capital, so the number of days guests can be accommodated in a private property for short-term housing will be limited. The president of the hotel association expects a decision on the matter within a few weeks.
However, this problem is not new, Airbnb offered 5,200 accommodations in Budapest in the autumn of 2015, this number has almost doubled in the last five years. According to a website monitoring the rental housing market, there are currently 9,725 Airbnb apartments for rent in the capital, and 300 apartments can be booked on the Vrbo platform, which operates on a similar principle. Most of these, nearly 3,000 available apartments, are located in the so-called party district (VII. district). Here, the number of properties offered to tourists has tripled in five years.
Last year, property site ingatlan.com examined how long-term apartment prices were affected by the rise in the number of short-term private accommodations. According to the data provided by Forbes, the monthly rent of a 50-square-meter apartment increased by an average of 13-27,000 forints (EUR 35-75) due to the proliferation of Airbnb in the inner districts. It has gotten to the point that renting an apartment in downtown Budapest is not cheaper than in Vienna.
Thus, the capital considers this to be unsustainable, therefore the Metropolitan Municipality also supports the restriction of short-term housing rentals. According to the city administration, the main problem is that the supply of long-term rental properties is shrinking, which is why rents are rising.
On the other hand, the downturn in tourism caused by the coronavirus pandemic is also having an impact on the real estate market. According to the analysis of ingatlan.com, at the end of June, the average rent of apartments in Budapest decreased by 10 percent compared to the pre-pandemic period, but there are places where the decrease even reached 20 percent.
Ádám Ribarics, head of Budapest Residence, a company that deals with the rental and operation of nearly two hundred Airbnb apartments in Budapest, talked to 24.hu about the plans to limit the operations of short-term renting. According to him, “the restrictions would not achieve the goal set by the hotel association and the government.” Ribarics said that the vast majority of their guests are young people, and many people choose these accommodations instead of a hotel specifically because of the “Airbnb-feeling.” According to him, these young people would not transition to staying in hotels if short-term housing were off the table.
According to Ribarics, the plans would ruin the Budapest Airbnb market, as the necessary profit could not be made in 120 days. In this way, everyone would rent out their apartments for medium and long term, which would cause a serious oversupply and would revitalize the grey economy. Ribarics also talked about the fact that on the last weekend of June, they were already operating at 62 percent occupancy, although the previously cheaper apartments (EUR 40-50) can now be rented for only EUR 25-30.
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