HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
6.5 Rent Variation Generally, rent will remain the same throughout the term of the lease (unless so-called step rent is agreed). However, indexation is a common practice, allowing landlords to increase rent annually. The most commonly used indices are the Harmonised Indexes of Consumer Prices (HICP) published by Eurostat and the Monetary Union Index of Consumer Prices (MUICP). If rent is determined in HUF, the parties generally use the index published by the Central Statistics Office. A decrease in rent based on indexation is usually excluded. Landlords often give a three- to six-month rent discount, which in practice means that the ten - ant is only required to pay 50% (or a certain decreased percentage) of the monthly rent dur - ing the discount period. A tenant may no long - er be eligible for a rent discount if they are in breach of a material obligation under the lease (for example, if they are in arrears with payment). For retail, turnover rent is common besides or instead of a fixed rent, whereby an agreed base rent is usually topped up with an agreed percent - age of the tenant’s net turnover. 6.6 Determination of New Rent Except for indexation, rent can only be changed by the mutual amendment of the lease. 6.7 Payment of VAT As the main rule, rent for real estate is exempt from VAT, although lessors can opt to apply VAT taxation to the renting of real estate or non-res - idential real estate in general. The general VAT rate is 27%. VAT exemption cannot be applied to the renting of places for accommodation purposes or for parking purposes, among others.
6.8 Costs Payable by a Tenant at the Start of a Lease At the start of the lease, tenants are often obliged to provide security to secure performance of the lease, in the form of a cash deposit, bank guar - antee or corporate guarantee. If the costs of fit- out works are to be borne by the tenant (full or partially), the tenant must pay this amount to the landlord in advance, or cover the costs of the fit-out (refurbishment) directly. Tenants are usu - ally requested to take out and maintain through - out the term an all-risk property insurance and liability insurance. Tenants may be requested to provide the landlord with an eviction declaration to be incorporated into a notarial deed at the tenant’s cost. 6.9 Payment of Maintenance and Repair The costs of repair and maintenance of the build - ing, common areas and the leased premises are usually paid by the landlord, but are borne by tenants in the form of service charges. Leases usually include a non-exhaustive list of costs that are to be borne exclusively by the landlord Generally, tenants pay the costs of utilities of the leased premises, either directly to utility provid - ers (on the basis of separate utility agreements) or to the landlord who re-invoices such costs to the tenant. Telecommunication costs and the costs of cleaning the leased premises are borne directly by the tenant. 6.11 Insurance Issues Generally, tenants should take out all-risk prop - erty insurance, for the duration of the lease, against damages and loss in relation to items brought into the leased premises by the tenant, for an amount equivalent to the replacement val - or covered by the service charges. 6.10 Payment of Utilities and Telecommunications
329 CHAMBERS.COM
Powered by FlippingBook