Hungary government's plan to sell municipal flats draws fire

A block of new flats is built as the growing economy and low interest rates are fuelling a housing boom in Budapest
·2 min read

BUDAPEST (Reuters) - Hungary's ruling party has proposed legislation that would force municipalities to let tenants buy tens of thousands of municipally owned rented apartments at deeply discounted prices, a move that NGOs and mayors say could deepen a housing crisis.

The bill, submitted to parliament this week by Laszlo Borocz, an MP from the governing Fidesz party, proposes that flats owned by municipalities and the state be sold to tenants for 15%-30% of their market price.

The bill would not prohibit the immediate re-sale of the flats, many of which are located in Budapest's most expensive Castle district.

The text of the bill says the move would help families who cannot buy their own home due to a recent jump in property prices.

Since 2015, Hungary has experienced a steep rise in house prices, driven by generous subsidies for families to buy a new home and interest rate cuts fuelling demand by investors.

Critics, however, including some within Fidesz, say the legislation would deepen the housing crisis by dismantling the system of municipal social housing.

"Dismantling this safety net will take away the opportunity for decent housing from the most vulnerable," a statement by 25 NGOs including Amnesty International Hungary and Habitat for Humanity Hungary said on Friday.

There were 105,174 flats owned by municipalities in Hungary in 2019, or 2.6% of all flats in the country, according to the Central Statistical Office.

In a rare sign of opposition from within Fidesz, party member Peter Kovacs, the mayor of Budapest's 16th district, called the bill "nonsense" and "unfair". He said selling the flats meant his municipality would not be able to help people in need any more.

Selling the 200 units in his district would mean a loss of 3-8 billion forints ($10 million-$27 million) for the municipality, he wrote on his Facebook page.

The opposition mayor of Budapest's 13th district, a municipality that owns nearly 6,000 flats, also slammed the bill on Facebook. Jozsef Toth said the system of municipal rental flats was being sacrificed, with wealthier people set to benefit from the proposed move.

($1 = 293.4200 forints)

(Reporting by Anita Komuves; Editing by Hugh Lawson)