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Parl. Passes Controversial New Housing Law Allowing Council Apartments to Be Sold Underpriced

Hungary Today 2021.06.17.

Hungary’s parliament passed the government’s recent bill on housing into law, allowing for state-owned or council apartments to be purchased by tenants at a fraction of the market price.

The bill passed with 134 votes for and 25 against on Tuesday. The opposition MSZP, DK, LMP, Párbeszéd, and Momentum were absent from the vote.

The first version of the bill submitted by ruling Fidesz MP László Böröcz, would have enabled current tenants of any council properties in the country to buy them at a fraction of their real value, without needing approval from the municipalities.

Fidesz's New Bill on Sale of Council-Owned Properties Draws Criticism
Fidesz's New Bill on Sale of Council-Owned Properties Draws Criticism

The law would further deepen the housing crisis, and dissolve the local council's renting system, critics say.Continue reading

Tenants who have lived in the properties for only a year or two could have also taken the opportunity and – without any restrictions – they could have sold it the very next day of the acquisition even at a much higher market price.

The scope of the law would also have covered the high-value municipal apartments rented in Budapest’s Castle District and several historic houses.

Böröcz argued that legal changes are necessary to enable tens of thousands of Hungarian families and tenants to acquire a home.

Unsurprisingly, the proposal drew criticism both from professional organizations and municipal leaders who claimed that it would have further deepened the housing crisis and dissolved the local council’s rental system.

Many also suspect that the government was actually trying to benefit its own allies with the new legislation in Budapest’s Castle District, where earlier district leadership concluded highly discounted rental agreements with numerous figures tied to the government.

The bill was so controversial that it even garnered harsh criticism from several Fidesz mayors,  one of them simply labeling the proposal as “idiocy.”

Even Fidesz Mayors Criticize Bill on Sale of Council-Owned Flats
Even Fidesz Mayors Criticize Bill on Sale of Council-Owned Flats

In the case of "fixed-term rentals, the submitted draft in its current form is not acceptable," one of the Fidesz mayors said.Continue reading

In the face of the growing opposition, Fidesz eventually decided to take a step back and make some changes, restricting the mandatory sell-off only to Budapest’s world heritage sites, i.e. the most valuable flats.

Since then, however, the governing party has proposed new amendments, which significantly reverted the bill closer to the previously much-criticized version. Critics say the ruling party makes no attempt to hide the fact that they are trying to favor people close to their political circle. In the past years, and even more so as the center of politics, the Prime Minister’s Office, moved into the Castle, more and more people from Fidesz circles (Innovation Minister László Palkovics, Fidesz-founder and opinion leader publicist, Zsolt Bayer, etc.) acquired property here, usually by giving a privately-owned flat in a not so popular district for the rent of a Castle flat.

Under the version just adopted, only properties on World Heritage sites and their protection zones will be eligible for purchase.

It would only allow tenants who have had a rental contract since at least December 31, 2020, to purchase council housing if their tenancy also reaches the time period of five years. Otherwise, tenants only have to wait until the five years pass then submit the application within one year.

Tenants who have been renting for 5-15 years will have to pay 80 percent of the market value, those who have lived there for 15-25 years will pay 50 percent of the market value, while those who have lived there for more than 25 years will pay only 15 percent of the estimated market price.

For exchanged tenancies, the 50 percent purchase price is reduced to 35 percent. This means that, since the buyer also gets a 5 percent discount on a lump sum payment, the property can be sold for less than a third of the estimated market value to those who become tenants in exchange.

In the featured photo: Tárnok Street, Budapest’s Castle District. Photo by Csaba Jászai/MTVA