Hungary has an exceptionally high rate of homeownership. Residential property serves not only as a place to live, but also as a traditional form of savings and investment. The cultural reliance on housing collided with a housing market boom. According to Eurostat data, Hungary has experienced one of the steepest increases in house prices in the EU since 2010, far surpassing the European average. This surge poses serious challenges for individuals willing to buy a home and for regulators trying to keep housing affordable.
Originally published in CEE Legal Matters.
In response, lawmakers have introduced a variety of measures to moderate the residential housing market and boost housing supply. Development subsidies in the form of favorable loan terms have been offered to encourage new residential construction and increase the number of newly built homes. To stimulate transactions, incentivized loan programs for first-time homebuyers and reduced the VAT on newly established homes have been introduced. These conventional interventions have been accompanied by a more controversial step that has sparked several debates, with attention turning to the impact of short-term rentals on housing prices, prompting the introduction of regulations to limit their effects on the market.
Short-Term Rentals in 2025
Following the rebound in tourism after the pandemic, Budapest’s central districts became extremely popular among travellers. Many visitors prefer to stay in centrally located apartments that were originally residential homes and are now being rented out by locals on online platforms. These apartments provide affordable prices and flexible accommodation services. According to many experts, this increase in tourist demand for private flats has put pressure on the inner-city housing market. Critics argue that short-term rentals have reduced the long-term housing supply, driving up property prices and rents in the city centre and its surroundings and increasing affordability issues for local residents. Policymakers decided that reining in this sector was necessary to protect the broader housing market.
Consequently, new regulations have emerged to more tightly regulate short-term rentals. Initially, the sector saw light-touch regulation, which was primarily aimed at formalizing tax and registration requirements and bringing short-term rentals out of the shadows. These rules have become progressively stricter and, as of January 1, 2025, the applicable rules will be far more stringent. Taxes on income from short-term rentals have increased sharply, and a two-year moratorium has been imposed on new short-term rental permits in Budapest. Until the end of 2026, no new similar short-term rental registrations will be approved in the capital.
In recent years, local municipalities have been empowered to set their own additional restrictions. District municipalities in Budapest, for example, can limit the number of days per year that a registered apartment can be rented out for short-term stays. Some districts have taken these restrictions to the extreme, with one of the inner districts effectively opting for a full ban on new short-term rentals by setting the annual limit at zero days. This unprecedented move means that, starting in 2026, no similar accommodation providers will be able to legally operate in that district. Other downtown districts are considering or have introduced similar measures, all with the aim of limiting short-term rental possibilities.
Industry Response and Outlook
What do these restrictive changes mean for investors and property owners? Unsurprisingly, the new rules have sparked intense debate. Some argue that they are necessary to make urban housing more accessible. However, opponents, including many homeowners and industry leaders, argue that these measures amount to overregulation and could harm Budapest’s tourism appeal or penalize those who invested in properties for similar purposes unfairly.
Some investors are changing their business models rather than waiting to see who wins the debate. A number of owners of short-term rentals have started exploring ways to convert their apartments, which are negatively affected by these regulations, into official hospitality establishments, such as hostels, guesthouses, or small hotels. By reclassifying a property as commercial accommodation, owners hope to circumvent the new rental caps. However, this is sometimes easier said than done. Such a conversion requires complying with stricter building and safety codes, obtaining new licenses, and often getting consent from local condominium associations.
Budapest’s approach is clearly aligning with trends in other major European cities. From Amsterdam to Barcelona, local governments across Europe have been grappling with how to control the explosion of short-term rentals and make housing available to locals again. Budapest’s new rules similarly signal that a more regulated framework is the future for Hungary’s private accommodations market. It’s important to remember, though, why these types of accommodations became so popular in the first place: they offer travellers a less formal, more home-like (and often more affordable) alternative to traditional hotels. The coming years will reveal whether Hungary’s tighter regulations can cool down the housing market and return apartments to local residents. Ultimately, striking the right balance between regulation and market freedom will determine whether these shifts will reshape the market for the better or simply drive it into new forms.
Author: Tamás Balogh
Tamás Balogh
Tamás Balogh
Our latest articles
Fókuszban a támogatási ügyek: ugrásszerű növekedés a perek számában
A támogatási szerződések fontos szerepet töltenek be a magyar gazdaságban, mivel EU‑s forrásokat biztosítanak vállalkozások projektjeihez, elősegítve ezzel a gazdasági aktivitást, valamint a hazai kutatás‑fejlesztési és innovációs tevékenységek erősítését.
Recent Updates on FDI Screening in Hungary
Read the interview with András Posztl, Country Managing Partner at DLA Piper Hungary.
Interview with Gábor Borbély | Know Your Lawyer
Read the interview with Gábor Borbély, Partner, Head of Finance and Real Estate at DLA Piper Hungary.