The government and the municipality of Budapest plan to restrict short-term house rentals in the capital, which could completely transform the real estate market in the city center. The government would mainly act to help the hotel industry, while the capital would intervene to normalize apartment rental prices in Budapest. Although they have a common goal, they haven’t agreed on anything yet. However, it still seems inevitable that Airbnb sublets will soon be restricted.
As in San Francisco, Paris, Amsterdam, London and other cities around the world, short-term housing rentals may soon be limited here in Hungary as well. The government has instructed the Hungarian Tourism Agency to develop a framework of restricted conditions – primarily in the interest of the hospitality industry, which employs many people and has been hit hard by the coronavirus outbreak. City leaders in Budapest are also backing the idea, but for another reason: just like other big cities, they’ve realized how Airbnb and similarly profiled businesses make long-term rentals less efficient for landlords, which leads to an increase in the prices of apartments and housing. in the capital.
While customer traffic has peaked in recent years, the number of nights spent by foreign customers in accommodations fell by 98.7% in April due to the coronavirus epidemic, while domestic customer nights have dropped by 95%. Moreover, while tourism is reviving in the countryside thanks to domestic travel, there are hardly any signs of this in Budapest. Thus, according to Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ), the capital should be treated separately, and several measures should be considered to help the hotel industry in Budapest, including the stricter regulation of accommodation rentals. short term.
Tamás Flesch, president of the Hungarian Hotel Association, said that according to their information, neither the government nor the MTÜ plan to ban short-term accommodation rentals. On the other hand, stricter regulation is needed, as hotels are at a disadvantage with respect to short-term rentals.
He added that there are currently 20,000 hotel beds in Budapest and there are around 10-12,000 apartments for rent, so at the moment the private apartments can accommodate almost the same number of guests as the capital hotels. At the same time, the regulations concerning each of the two types of accommodation differ on many points, such as fire prevention and health and safety rules. On top of that, hotels are also inspected much more frequently than AirBnBs.
Flesch considers it very likely that a time restriction will be introduced in the Hungarian capital, so the number of days guests can be accommodated at private property for short-term accommodation will be limited. The president of the hotel association expects a decision on the subject within a few weeks.
However, this problem is not new, Airbnb offered 5,200 accommodations in Budapest in the fall of 2015, this number has almost doubled in the last five years. According to a rental housing market monitoring site, there are currently 9,725 Airbnb apartments for rent in the capital, and 300 apartments can be booked on the Vrbo platform, which operates on a similar principle. Most of them, nearly 3,000 apartments available, are located in the so-called party district (7th arrondissement). Here, the number of properties offered to tourists has tripled in five years.
Last year, the real estate site ingatlan.com examined how long-term apartment prices have been affected by the increase in private short-term housing. According to data provided by Forbes, the monthly rent for a 50 square meter apartment has increased by an average of 13 to 27,000 forints (35 to 75 euros) due to the proliferation of Airbnb in inner neighborhoods. It has come to the point that renting an apartment in downtown Budapest is no cheaper than in Vienna.
Thus, the capital sees this as unsustainable, which is why the metropolitan municipality also supports the restriction of short-term housing rentals. According to the city administration, the main problem is that the supply of long-term rental accommodation is shrinking, which explains the increase in rents.
On the other hand, the slowdown in tourism caused by the coronavirus pandemic is also having an impact on the real estate market. According to analysis by ingatlan.com, at the end of June the average apartment rent in Budapest fell by 10% compared to the pre-pandemic period, but there are places where the drop even reached 20%.
Ádám Ribarics, head of Budapest Residence, a company that rents and operates nearly two hundred Airbnb apartments in Budapest, talk to 24.hu on plans to limit short-term rental transactions. According to him, “the restrictions would not achieve the objective set by the hotel association and the government”. Ribarics said the vast majority of their customers are young people and many people choose these accommodations over a hotel specifically because of the “Airbnb sentiment”. According to him, these young people would not go to the hotel industry if short-term accommodation was not an option.
According to Ribarics, the plans would ruin the Budapest Airbnb market, as the necessary profit could not be made in 120 days. In this way, everyone would rent their apartment in the medium and long term, which would cause a serious oversupply and revitalize the underground economy. Ribarics also referred to the fact that in the last weekend of June they were already operating at 62% occupancy, although the previously cheaper apartments (40-50 EUR) can now be rented for only 25-30 EUR.
featured photo: pixabay
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