HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
a residential portfolio). Housing property prices have been increasing intensely but the buying power of locals has not kept pace, so a wider spread of renting is expected, thereby raising the opportunity for investors to invest in larger residential projects. The increase in interest rates made bank financ - ing expensive, but banks have not stopped financing (although they are more cautious) and still face the risk of the devaluation of their financed real estate portfolios. To mitigate risks, banks are turning towards alternative projects, such as mixed-use developments (office, retail, hotel, residential within the same building com - plex) and renewable energy projects (primarily solar parks). 1.3 Proposals for Reform The most significant reform for real estate is the ongoing renewal of the land registry system. The framework of legislation has been published, and the preparation of the supporting proce - dural rules and IT background is at an advanced stage. The new land registry system and pro - cedure is expected to be launched in October 2024. The introduction of the new “E-Land Reg - istry System” is expected to create a safer, more transparent and faster system, which will allow automatic decision-making processes in certain cases. A new Construction Act will become effective in October 2024. There is a housing development programme in place to promote the renewal of neglected urban rust areas by encouraging development in these areas. Rust projects are classed as “pri - ority investments in the public interest”, which speeds up and simplifies the process of obtain - ing the necessary permits. The Hungarian gov -
ernment continuously determines rust areas, which are mostly (but not exclusively) located in Budapest. In February 2024, a new change of control rule was introduced. Accordingly, if there is a change in the direct or indirect major - ity ownership of a real property qualifying as a rust area after it was designated as such, then the property in question shall lose its rust area status, which may result in severe fines for the owners. The Hungarian act regulating ESG requirements came into force on 1 January 2024, setting out ESG reporting obligations for so-called “public interest entities” and certain large companies registered in Hungary; fines for non-compliance with such obligations shall only be due as of 2026. The “Golden Visa” will be introduced on 1 July 2024, meaning that non-EU and non-EC citizens and their family members may acquire a “guest investor visa” in Hungary for ten years by invest - ing (among others) in bonds issued by certain real estate funds in the amount of EUR250,000 or purchase residential real property in the amount of at least EUR500,000. Property rights range from full ownership to con - tractual usage rights. Most property rights can be registered in the land registry. Some rights, such as ownership, are established by regis - tration, whereas others – such as pre-emption rights or options – are valid irrespective thereof. 2.2 Laws Applicable to Transfer of Title The rules for the transfer of title are contained in the Hungarian Civil Code, the Act on Real Estate 2. Sale and Purchase 2.1 Categories of Property Rights
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