Budapest attracts more and more foreigners. Perhaps they have found their ideal job, partner, education or temporary home here. Whatever, more and more non-Hungarians are looking for affordable accommodation and more and more often they are encountering increasingly serious problems.
HUF 100,000 a month rent plus utilities for almost 65 square metres in the trendy Pest district Újlipótváros. Although this is cheaper than the usual price in this neighbourhood, newly contracted real estate agent Nóra trusted the offer; at least she had a contract and a company stamp in her pocket.
The future tenant quickly agreed and signed a preliminary contract. The deposit was handed over along with the first month’s rent. Nóra immediately gave the money to her “manager”. Next day the rude awakening came: both the tenant and the newly hired agent had been set up by fraudsters, who use false names and papers to “rent out” vacation homes to home seekers.
Nóra’s case is currently being handled by the prosecutor’s office, and similar stories are popping up all across different Facebook forums. In such cases a contract does not offer protection from fraud. In general, the real estate market in Budapest has become rougher and more competitive.
News portal VS.hu recently used the line “Do you eat or do you have somewhere to live?”. At first this might seem like a journalistic overstatement, but if you think about it, it’s not so far from the truth. It’s a fact that in the past month or so rental prices have increased drastically, especially in the central districts of the capital.
Flats not larger than 40 square metres and in a renovated and furnished state are rented out for more than EUR 400 a month without any problems – not forgetting utilities. Prices over EUR 10 per square metre are not a rarity in Budapest any more.
Even if this is not yet comparable with the prices in Munich, say, the average rental price in all Germany is currently EUR 11.25.
Brigitte Berdefy, real estate agent at Duna House, has a simple explanation for the increasing prices: “Renting was always expensive in Budapest. While in Berlin about 85% of the apartments are available in rent, this ratio in Budapest has only been around 30% for a long time.”
Many Hungarians wanting to be able to secure their living by buying their own place took out loans based in foreign currency. The effect of the collapse of the loan market can still be felt. As a matter of fact, this is also part of the reason why rents have increased; many of the former flat owners could not afford to repay their loans any more and had to move from their dream home to something smaller.
Some of them have managed to keep up their repayments by renting out their mortgaged real estate and paying the instalments from the rent. However, these are not the only people seeking tenants.
“The increase of rental prices surely has to do with the fact that more and more people are buying apartments as an investment,” Berdefy explains. For the same reason it happens more and more often that in advertisements the rent is only given in euros.
She explains: “Everyone wants a ‘safe’ tenant, of course, minimising the chance of non-payment. This is why many owners are targeting clients from abroad. Rentable apartments that are affordable to the Hungarian average citizen are indeed quite a rarity.”
If you suspect that demanding payment in euros is unlawful, you are wrong, since owners are free to choose how they receive payment. However, flat hunters should not be discouraged by this because they can use their negotiating skills to convince the owner to accept payment in forints.
Who has what rights?
In general the following is true for all rental cases – each party has to adjust to the rules accepted by both in the lease. The tenant may also have to accept such conditions as a late-payment fee.
Moreover, more and more landlords opt to sign the contract with the seal of a public notary, so that the long court process can be avoided in case of eventual dispute or rent arrears. Scams such as the one involving Nora can be almost completely avoided this way. Unlike in Germany, in Hungary there is no specific tenancy law that regulates the rights and obligations of both parties.
What should you do to avoid the pitfalls and scams? Trusting a real estate agent is often more worthwhile to the home seekers than you would think, since “the seeker does not have to pay”, Berdefy explains. The costs of a real estate agent’s services are paid by the owner in Hungary.
The expert also suggests taking a look at the numerous online forums and Facebook-groups that are offering living space for rent. Check carefully because more and more fraudsters are renting holiday apartments for just a few days, advertising them to home seekers, pocketing the cash and disappearing, as Nora knows.
Taxman to check Bed and Breakfasts
The National Tax and Customs Administration (NAV) has warned that it will check whether landlords are declaring income from accommodation offered for rent via airbnb and other popular holiday rental sites. NAV said tax officials will rent rooms and apartments as part of the investigation. The number of places available for rent in Budapest via airbnb has climbed from 1,500 last December to 7,000 today.