On 16 October 2024, the Hungarian Government decided on a new economic policy action plan consisting of 21 measures, which also addresses the situation of short-term housing in the capital. The Government intends to tighten conditions for providing private accommodation services, i.e. Airbnb, to solve the worsening housing crisis in Budapest.
Short-term rentals (“Airbnb”) have become increasingly common in the Hungarian capital in recent years, creating a critical housing situation. This is alarming to the extent that, according to the Ministry of National Economy, given the current situation, the share of monthly incomes devoted to rent in Budapest can reach 50-60%. Nearly 18% of the 800,000 households living in the capital, i.e. 140,000 households, live in long-term rented accommodation, which is a high figure by international standards. By contrast, private accommodations host guests in nearly 26,000 rooms, which has also contributed to rising property prices in Budapest, pushing residents out of the rental and property markets in the inner districts. In addition, another prominent reason for tightening the conditions was that Airbnb's constant stream of guests also restricts the privacy rights of residents in condominiums. The groups most affected by the Airbnb housing crisis are in fact workers, students and young families who wish to move to the inner districts.
According to the proposed law, from 2025, the annual flat tax on Airbnbs in Budapest will increase fourfold, from HUF 38,400 to HUF 150,000. Furthermore, a two-year moratorium will be placed on Airbnb-type rentals, thus no new registrations will be allowed in 2025 or 2026. This latter decision aims to restrict the entry of new market players in the specified years. However, these restrictions only apply to accommodations in Budapest. Airbnbs outside the capital will not be affected, and the new regulation under development will not impact their activities in any way.
The need to regulate the housing crisis is underscored by the fact that house prices and rents in Budapest have risen by more than 40% since the Covid-19 pandemic. The Government expects the new economic policy action plan to deliver economic growth of between 3-6% by next year.
By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm
