Plans to Restrict Real Estate Purchases

Surprising Draft Law to Protect Small Settlements

Recently, Tibor Navracsics, the Minister of Regional Development and Public Administration, presented an extraordinary draft law aimed at protecting small settlements. The proposal seeks to preserve the identity, community, and economic stability of rural towns against real estate market speculation.

The draft law includes several unexpectedly strong measures, including:

Prohibition of Real Estate Transactions – The proposal seeks to restrict real estate transactions in certain small settlements to prevent the depletion of local communities and the growing dominance of foreign investors.
Extension of Pre-Emption Rights – Local governments will be granted pre-emption rights to protect the settlements from unwanted sales and to enable them to recover valuable land.
Conditions for Real Estate Purchases – Real estate purchases in small settlements would be subject to stricter regulations to ensure the protection of the interests of local residents and the community.
Establishment of Local Tax Obligations – The draft also includes provisions for determining local tax obligations, which could help ensure the financial stability of municipalities.

Some argue that these proposed measures are crucial to preserving rural communities, while others believe they could represent excessive state intervention. However, some believe these steps are necessary to save small settlements.

The draft law is still in its early stages and will require further consultations. The effects of the proposed measures could have broad implications for our clients’ real estate investments, so we are closely monitoring developments.

We will continue to keep you informed of any new updates.

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

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