A fresh draft bill by ruling Fidesz would enable current tenants of council properties to buy them at a fraction of their real value, without needing approval from the municipalities. The law has drawn criticism both from professional organizations and municipal leaders who say that it would further deepen the housing crisis, and dissolve the local council’s renting system. Even a Fidesz mayor stepped forward to harshly criticize the plan.
According to the proposed bill from Fidesz MP László Böröcz without any consultation with the local governments or social organizations, tenants could buy these properties for not more than 30% of the market price. Each and every year spent in an apartment would mean a further 1% reduction (until 15% maximum) for the tenant. In addition, those who can pay it in one sum would get a further 30% reduction, which in many cases would push the final purchase price down to around 10%.
In addition, the legislation doesn’t contain any major restrictions for the buyers; they would even be permitted to sell their property rights after purchase. Also, contrary to earlier reasons and arguments of the government pointing to the unsettled affairs after the regime change, the law would open up the opportunity for anyone who rents such a flat since December 31, 2020.
Böröcz reasons that modifications to the amendment are aimed to enable tens of thousands of Hungarian families and tenants acquire a home. “Most Hungarians only feel completely safe if they can live in a home they own,” he argued.
In Hungary, there are some 100-120,000 such local council, or state-owned rental apartments, which is a moderate (and ever decreasing) number. In comparison, Vienna (roughly the size of Budapest both in terms of residents and area) has around 220,000.
Castle district apartments
One important side-story of the legislation is the case of the apartments in the Buda Castle district. Here, due to all the buildings being historical monuments and some other rulings, tenants couldn’t buy their apartments after the regime change (as elsewhere in the country), so these flats went under the local council’s ownership. In exchange, the tenant’s rights of (most of) these apartments in the Castle are inherited, with very favorable renting fees, amounting to only a fraction of the market price. However, many of the tenants are wealthy people.
As the center of the government, the office of Prime Minister Viktor Orbán was moved to the Buda Castle, and over the past years, a growing number of Fidesz- and government politicians or their followers- obtained Castle district renting rights, such as IT Minister László Palkovics, businessman Tibor Kuna, and pro-government media strongman Philip Rákay.
This is also the case with Fidesz founder and controversial publicist Zsolt Bayer, who got access to two of the Buda Castle flats in the same way: first he exchanged a house of his family’s for the renting rights of a Castle district flat, than he bought back that house. In this way, he eventually bypassed the Housing Act, according to which the right to rent these municipal flats can only be exchanged for the lease or ownership of another flat, but it cannot be bought for actual money.
The Castle district’s (1st district of the capital) mayor Márta V. Naszályi (elected in 2019, after a long Fidesz-majority in the district) would have implemented higher renting fees after pointing out that the scheme generated losses for the local council, while those residing in the Castle district are generally not those most in need. Many suppose this current move is not independent from those unsettled relations in the Castle, that besides its amazing location, bears some special symbolism too.
Last year, 1,645 'real estate related enforcement actions' had taken place in 4.5 months.Continue reading
Professional organizations: the bill would deepen the housing crisis
After many of them having released their condemning statements one by one, 25 of the professional, social, and housing-focused civil organizations teamed up to issue a joint statement warning the government that the plan would tear apart the social safety net, cause irreversible damage, and deepen the housing crisis.
They point out that the municipal rental housing provides housing possibilities for people who don’t have the opportunity to solve their housing needs at market price: families fleeing homelessness, low-income pensioners, or young people with families. They also fear that the bill would allow (currently municipality-owned) residential buildings to fall into the hands of real estate developers in the future, in which case the public sector and locals will lose influence over urban development.
Instead of reducing them, more of such local council-owned rental housing possibilities would be needed, they insist urging lawmakers not to vote in the law that “allows the privatization of public property [and] expose the poorest families.”
Opposition municipal leaders: it’s for the cronies
Opposition municipal leaders criticized the bill, fearing the same and additionally suggesting that the government would help their loyal followers to get their hands on these properties.
The 13th district’s (with some 5,000 of such properties, the most in the country) Socialist mayor, József Tóth, (in office since 1994) fears that those living in such properties who are struggling with daily subsistence problems would be exposed to the housing mafia this way, pointing out that the possibility of buying a cheap apartment favors the wealthy, while it can push those neediest into debt. In addition, it is also unfair for those who have not been able to acquire rented housing in recent decades. The government is sacrificing the entire municipal rental housing sector in order for their cronies to get housing, Tóth concludes.
“A new, criminal form of privatization is underway, which will eventually result in an army of cronies close to [Orbán’s system of national cooperation] NER gaining access to downtown and other valuable homes at reduced prices,” the 8th district’s independent (but opposition-backed mayor) says. András Pikó believes the decision will “lead to a housing disaster,” arguing that instead of aiming for a tighter social safety net, it would rather tear the rest of the net apart, just from political motivation.
Budapest Mayor to prevent sell-off
Meanwhile, the Budapest mayor promised to prevent the execution of the legislation in case it gets voted in. Gergely Karácsony said the advantage that the amendment would give to a few thousand tenants was acceptable, but “the real winners would be tricksters, Fidesz cronies, and the flat mafia.”
“At the same time, the entire country would lose out; people who were not lucky enough to get council-owned property and who had to use half of their life’s income to be able to buy a proper home,” Karácsony said. He also warned of investors buying council-owned flats via deals with old-age pensioners occupying them. “And, in the end, the council won’t be able to help because there won’t be any council-owned flats left,” he added.
“Together with opposition mayors we will take all legally available measures to prevent this,” Karácsony said. “If need be, we’ll even go the Constitutional Court.”
The bill’s presenter, László Böröcz, on the other hand, denied claims that this would put an end to council-managed properties. Out of hundreds of thousands of council-owned flats, around 20,000 are empty and additional properties can also be acquired by the councils to manage, he added, arguing that the proposal laid bare the false accusations that the government was trying to bleed local councils dry as the councils would now generate significant income by selling the properties.
If Budapest's residents don't want an investment, then it will not move forward, Budapest Mayor Karácsony said.Continue reading
He also said the proposal aimed to resolve an unfair situation: tenants in listed Buda Castle council properties were not given the chance to buy the homes they occupied in 1994-1995 when the majority of councils’ properties throughout the country were offered to tenants. If the proposal is approved, every tenant will be given an opportunity to buy the home they rent from the council, and low-income tenants will be given a chance to pay over 25 years in interest-free installments, he added.
Fidesz mayor to MP Böröcz: “Your proposal is idiocy”
The brand new proposal, however, apparently divided the ruling forces as well. The 16th district’s Fidesz mayor was pretty straightforward in making his views public.
“In my opinion, your proposal is idiocy,” Péter Kovács wrote, also listing similar, opposing arguments (about the housing mafia, suspicious dealings, social reasons, local councils’ loss of assets, injustice with those left without such possibility, etc). Kovács, therefore, wants Böröcz to revoke this “immeasurably unjust” bill.
Featured photo: the Úri Street in the Castle; image by Csaba Jászai/MTVA