From Weekend House to Valuable Property: Changes in the Rules on Garden Plots in Hungary

By Katona & Partners Law Firm

In summer 2024, the Hungarian legislature amended the Land Registry Act, introducing significant relief for owners of so-called garden plots (formerly zártkerti ingatlanok). While these plots have long been a peculiarity of the Hungarian real estate market, their legal status has often posed challenges for both owners and potential buyers. The new rules, effective from July, promise to make ownership and sale more straightforward – though much will depend on the approach of local municipalities.

What exactly is a garden plot, and why has it been problematic?

Historically, garden plots developed around residential areas as orchards, vineyards, or garden land, sometimes with small houses or weekend cottages built on them. In practice, many of these properties are used as summer holiday homes or even as permanent residences in suburban areas.

The problem lies in their legal classification. Despite being used for residential purposes, these parcels are typically recorded as agricultural land in the land registry. Buildings constructed on them are often entered as “farm buildings” rather than residential houses.

This mismatch between actual use and legal status has serious consequences:

Mortgages and housing subsidies cannot be obtained for a “farm building,” even if the property is structurally equivalent to a family home.
Construction possibilities are restricted, as zoning rules for agricultural land usually allow only low building density.
Owners are subject to additional obligations, such as weed control or agricultural use requirements.
Most importantly, the sale of such plots has been governed by the Act on the Transfer of Agricultural and Forestry Land, which requires publication of the sale and grants broad pre-emption rights to local farmers. This process is slow, burdensome, and generally results in lower market value.

As a result, garden plots have long occupied a marginal position in the property market, often undervalued compared to similar houses in residential zones.

What has changed in July 2024?

The amendment to the Land Registry Act introduces a new option:

If a local municipality adopts a specific decree, landowners may request that their garden plot be reclassified as “land withdrawn from cultivation” (művelés alól kivett terület).

This reclassification allows the land registry to officially recognise that the plot is not used for agricultural purposes. For the first time, the legal status can be brought into line with actual use.

Notably, the new rules also allow the reclassification to apply not only to an entire parcel but also to a defined part of it.

Why is this important?

The amendment brings several practical advantages:

Simplified sales: Once reclassified, the plot no longer qualifies as agricultural land, meaning sales are no longer subject to the strict provisions of the Land Transfer Act. This eliminates the requirement to publish sale notices and the pre-emption rights of local farmers.
No land protection levy: The reclassification does not count as “other use” of agricultural land, so owners are not required to pay a land protection levy – a cost that previously could reach several hundred thousand or even millions of forints.
Better financing options: Properties may be more easily recognised as residential in practice, opening access to mortgages or subsidies.
Higher market value: With simplified transactions and clarified status, garden plot properties may finally achieve prices closer to comparable residential properties.

A framework with local discretion

It is important to underline that the July amendment sets out only the framework. A government decree will define further details, and ultimately local municipalities will decide whether to permit reclassification in their area. Owners will therefore need to closely monitor municipal decrees to see if their plot qualifies.

Outlook for owners

For owners of weekend houses or suburban homes registered as garden plots, the new rules represent a significant opportunity. If their municipality adopts the necessary decree, they will be able to regularise their property’s legal status, avoid restrictive agricultural rules, and benefit from simpler, faster, and more valuable transactions.

Until then, the message is clear: follow your local municipality’s announcements closely. The possibility to reclassify may be the long-awaited solution to aligning use, legal status, and market value for thousands of Hungarian properties.

Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)

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