January 2024 – With the adoption in 2023 of Act C on Hungarian Architecture (the "New Legislation"), Hungary’s parliament amended several laws affecting the real estate sector, some of which entered into force on 30 December 2023. At the same time, the New Legislation repeals certain laws, or provisions thereof, including Act LIII on the Acceleration and Simplification of the Implementation of Investments of Special Importance to the National Economy (2006) (the “Previous Legislation”).
Among the new changes, special attention should be given to the rules on prioritised investment projects. Below we provide a brief overview of several important provisions.
A construction works project and administrative matters relating to it may obtain the prioritised investment project status if it is fully or partially financed with the aid of European Union funding or from the Hungarian state budget and aims to implement, among others, the following:
- a building for military, defence, national security, defence industrial, law enforcement, disaster management, or water management purposes and uses;
- rail construction for energy or public utility purposes;
- a building for educational, cultural, health, social, religious or national purposes and uses;
- a building of strategic importance to the national economy, designed by an entity that has entered into a strategic agreement with the Hungarian government; or
- an investment not falling under the above points, with a value of at least HUF 100 billion and creating at least 100 new jobs.
Please note that the list above is highlighted for the purpose of this newsletter and is not exhaustive. .
The requirement in point (iv) above was not included in the Previous Legislation, and only the New Legislation provides for such investments to be considered as a prioritised investment project.
With regard to point (v) above, there is a significant change compared to the Previous Legislation, which stated that investments with a value of at least HUF 90 million and creating at least 15 new jobs could be considered to be prioritised investment project.
If a development is deemed to be a prioritised investment project, a law or government decree determines the location and the immediate surroundings of the investment ("legislation declaring a status of prioritised importance") at the same time as the status of “major importance” is declared.
Construction investment in an industrial and logistics park
Another important change is that construction projects in industrial or logistics parks for commercial, service, industrial, warehousing or logistics purposes and related administrative matters may obtain the prioritised investment project status even if they are not carried out with the aid of European Union funding or from the Hungarian state budget.
Multiple construction projects
Multiple construction projects and administrative matters related to them that are not carried out with the aid of European Union funding or from the Hungarian state budget, but which fulfil the conditions set out in point (v) above, may be collectively declared prioritised investment projects. In such cases, the construction works must be carried out on directly neighbouring real estate parcels, and the location and immediate surroundings of the prioritised investment project must be specified in a law or government decree declaring it a prioritised investment project.
The architectural-technical documentation for the prioritised investment projects specified in sub-paragraphs (iii)-(v) above, as well as for prioritised investment projects for the realisation of structures in an industrial or logistics park or within the framework of multiple construction projects, as detailed above, must be submitted to the National Architectural Design Council (in Hungarian: “Országos Építészeti Tervtanács”) prior to the submission of the application for a building permit.
The aforementioned two specific cases (construction investment in an industrial and logistics park and multiple construction investments) are also a change compared to the Previous Legislation, which only contained specific provisions for cases relating to transport infrastructure investments.
In the case of prioritised investment projects, the requirements for construction and land development specified in the applicable local building/zoning regulations (in Hungarian: “helyi építési szabályzat”), and requirements relating to the visual environment of towns and requirements laid down in local government decrees, as well as the requirements relating to local protection, local monuments and woody plants laid down by the local government, may be regulated differently in the legislation declaring the project a prioritised investment.
In addition to the above, the legislation declaring the project a prioritised investment may exclude the application of a prohibition on alterations and a prohibition on land conversion and construction, based on which the competent authority may disregard the prohibition.
If the owner or the usufructuary suffers damage resulting from the establishment of a requirement for planning, construction or land development, the owner or usufructuary shall be entitled to a lump sum compensation (except in cases provided for in Section 90(5) of the New Legislation, e.g., a change or prohibition ordered to prevent damage resulting from environmental or natural hazards).
The decisions taken by the authority acting in a case of prioritised investment project shall be made public. The date of the notification of the decision is the fifth day following the publication of the notice (unless otherwise provided for in the government decree declaring a development a prioritised investment project).
The Hungarian government may designate by decree the (capital or county) government commissioner in charge of coordination tasks regarding prioritised investment projects, whose responsibilities shall also be specified by decree.
In cases of prioritised investment projects, the application must be dealt with expeditiously, but the time limit for the administration of the case may not exceed 42 days, subject to certain exceptions. The New Legislation details the time limits for the various administrative authorisation procedures.