Since the general restrictions were launched back in 2020, no new regulation has been introduced in Hungary with respect to limiting private accommodation services, including Airbnbs. As discussed in one of our earlier blog posts, under the new provisions introduced in the past year, local municipalities are now authorized to determine – within their area of competence – the number of days in a year that short-term private accommodation services may be provided in each private accommodation facility (for example in apartments).
The Hungarian Hotel and Restaurant Association (HHRA) recently articulated its suggestions regarding the potential future restrictions on Airbnb services. If these regulations were introduced, they would fundamentally change the market for private accommodation.
The HHRA suggests that the approval of the condominium (in which the apartment offering Airbnb services is located) should be a precondition for obtaining an operating licence to provide accommodation services. This would mean that the operating license could only be granted for a fixed period. Therefore, it would be necessary to renew the licence from time to time. HHRA has also raised the possibility of suspending the issuance of operational licences for 1 to 3 years, stating the pandemic as its reason for this. This measure would strongly affect the provision of non-commercial accommodation as well. HHRA would also add two further preconditions to the provision of Airbnb services: round-the-clock availability of the service provider and the provision of parking spaces.
According to HHRA’s proposal, a service provider would only be entitled to list properties on accommodation brokerage platforms that are in possession of a special identification number issued by the National Centre for Touristic Data. HHRA would oblige each service provider to indicate this identification number together with the name of the service provider by the front door of each of the accommodation facilities. With one identification number, one service provider would only be allowed to provide accommodation services in one single property.
HHRA thinks that it would also be worth considering collecting the tourism tax from the accommodation brokerage platforms directly. This would also contribute to the “whitening” of the tourism industry (with workers no longer being paid cash-in-hand for services they provide off the books) thereby helping to prevent illegal working practices and, in particular, tax evasion.
In addition to the above, HHRA is convinced that there should be a limit on the maximum number of flats that can be used to provide Airbnb services in a single condominium, and that a limit should also be placed on the number of Airbnb flats one person can own.
HHRA’s proposal did not go unanswered. The Association of Hungarian Apartment Rentals (AHAR) demonstrated why they think it is unnecessary to place limits on the Airbnb sector.
AHAR argued that the provision of short-term accommodation is not the only reason behind the significant price increase in the housing market. In its view, the price increase is the result of numerous factors. In support of this statement, AHAR pointed out that the number of Airbnb flats significantly decreased in Budapest after the first wave of the pandemic, but that the average rent for a flat is still very high.
In AHAR’s view, it is precisely the hotel market that prevents affordable housing from being built in Budapest as hotels are generally erected in locations that would be perfect for the construction of new condominiums.
AHAR also noted that hotel guests generally eat many of the meals at their hotels as well, whereas Airbnb guests tend to support small local enterprises (such as small restaurants).
AHAR highlighted that as a result of the pandemic, many tourists are looking for more isolated accommodation. Therefore, the need for private accommodation will continue to increase, and private accommodation services will play an important role in the recovery of the tourism industry. According to AHAR, if guests cannot find private accommodation in Budapest, it is possible that they will choose another destination rather than book a room at a hotel.
AHAR expressed that it strongly supports the repression of unlawful practices, and also the concept of strict controls. In its opinion, a wage increase in the tourism sector would also contribute to “whitening” the sector.
AHAR suggests that the regulations for short-term accommodation services should be the same in all districts of Budapest, and therefore it does not support the municipalities’ discretional right to introduce restrictions within their territory of competence, at least as long as the tourism industry has not fully recovered.
Practice of the municipalities
The municipality of District VI of Budapest was a pioneer in adopting a special regulation with respect to placing a limit on short-term private accommodation. The regulation was also submitted for review to the Hungarian Competition Authority and the Government Agency of the Capital City of Budapest.
The new regulation implemented by the municipality of District VI of Budapest includes, inter alia, the following obligations for accommodation service providers:
a) the service provider must obtain the prior approval of all owners of apartments in the condominium building in order to operate an Airbnb apartment there;
b) the service provider must display its identification number at the front door of the accommodation facility;
c) the service provider is obliged to display the house rules of the condominium in English within the accommodation facility;
d) the service provider must be available 24 hours a day for the other occupants of the condominium, and must display its own phone number (or that of its agent) by the front door of the accommodation facility.
The regulation of short-term accommodation has just embarked upon a long path that could lead to the full scale regulation of the sector. However, recent discussions show that further regulation of this segment is actually a “hot topic”, and all affected parties must cooperate to achieve sustainable equilibrium on the market for private accommodation.