The Budapest government and municipality are planning to restrict short-term house rentals in the capital, which could completely transform the downtown real estate market. The government would act mainly to help the hotel industry, while the capital would step in to normalize the prices of apartment rentals in Budapest. Although they have a common goal, they still don’t agree on anything. 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 restricted here in Hungary as well. The government has entrusted the Hungarian Tourism Agency with developing a restricted conditions framework – mainly in the interest of the hotel industry, which employs many people and has been hit hard by the coronavirus outbreak . Budapest city management also supports the idea, but for another reason: just like other big cities, they have realized how Airbnb and companies with similar profiles make long-term rentals less efficient for owners, which leads to an increase in the prices of apartments and housing. in the capital.
While guest traffic has peaked in recent years, the number of overnight stays by overseas guests in accommodation fell by 98.7% in April due to the coronavirus outbreak, while overnight stays by domestic guests increased. dropped by 95%. Moreover, as tourism is reborn in the countryside thanks to domestic travel, there is hardly any sign of this in Budapest. So, 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 Budapest hotel industry, including stricter regulation of rental accommodation in Budapest. short term.
Tamás Flesch, president of the Hungarian Hotel Association, said that according to their information neither the government nor the MTÜ were considering banning short-term rental accommodation. On the other hand, stricter regulations are needed, as hotels are at a disadvantage compared 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 private apartments can accommodate almost the same number of guests as hotels in the capital. At the same time, the regulations for 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 that the number of days that guests can be accommodated in private property for short-term accommodation will be limited. The president of the hotel association expects a decision on the issue 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 website monitoring the rental housing market, 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, ie nearly 3,000 apartments available, are located in the so-called party district (VII. District). Here, the number of properties offered to tourists has tripled in five years.
Last year, the real estate website ingatlan.com examined how the prices of long-term apartments have been affected by the increase in the number of private short-term dwellings. According to data provided by Forbes, the monthly rent for a 50 square meter apartment has increased on average from 13 to 27,000 forints (35 to 75 euros) due to the proliferation of Airbnb in central areas. It has gotten to the point that renting an apartment in downtown Budapest is not cheaper than in Vienna.
Thus, the capital considers that this is not sustainable, so the metropolitan municipality also supports the restriction of short-term housing rentals. The main problem, according to the city administration, is that the supply of long-term rental housing is declining, which is why rents are rising.
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 the analysis of ingatlan.com, at the end of June the average rent for apartments in Budapest fell by 10% compared to the pre-pandemic period, but there are places where the drop has even reached 20%.
Ádám Ribarics, director of Budapest Residence, a company that provides rental and operation of nearly two hundred Airbnb apartments in Budapest, talk to 24.hu on plans to limit short-term rental operations. 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 feeling”. According to him, these young people would not go to the hotel if short-term accommodation was not possible.
According to Ribarics, the plans would ruin Budapest’s Airbnb market because 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 lead to serious overproduction and revitalize the gray economy. Ribarics also touched on the fact that by the last weekend of June they were already operating at 62% occupancy, although previously cheaper apartments (40-50 EUR) can now be rented for only 25-30 EUR.