Hungary introduces new legal framework for condominium building rights and housing support
The Hungarian parliament passed legislation which amends several statutes on housing and establishes the condominium building right (társasházi építményi jog) as a new legal institution that supports the Otthon Start programme, which provides state support for home buyers. The changes are designed to enhance legal certainty in residential property development and stimulate the construction sector.
Introduction of the condominium building right
A central point of the legislation is the creation of the condominium building right, which is intended to provide greater security for all parties involved in developing and selling new residential units.
When a future condominium is recorded for a residential building under construction in the land register, the purchaser of a yet-to-be-built condo can have the “condominium building right” registered on the plot, entitling the purchaser to complete the purchase of the condominium unit once the building is completed and the conditions of the purchase are satisfied. The holder of the condominium building right has mortgage-like security rights for the amount of the purchase price or instalments already paid to the seller, particularly in the event of insolvency proceedings against the seller. In the case of several condominium building rights registered for a yet-to-be-built building, the mortgage-like security rights of the purchasers will have the same ranking as the ranking of the first condominium building right that was registered, thus creating an equal security position to all buyers of future residential units.
The right is established in favour of the buyer, and the amount paid for the right is credited towards the purchase price. The right is transferable and can be encumbered with a pledge or other security, which are registered in the land registry. The beneficiary of a pledge registered under a condominium building right will have rights similar to a sub-mortgagor. Upon completion and registration of the condominium, the building right is extinguished and replaced by the buyer’s ownership, with any mortgage or encumbrance on the condominium building right transformed into a security encumbering the residential condominium unit that is the subject of the purchase.
This new legal tool partly replaces less secure “future building buyer’s right” for yet-to-be-constructed buildings in which the future condominium has already been registered, and provides a more robust framework for protecting buyers, developers, and lenders during the construction phase. The detailed regulations have been incorporated into the Condominium Act.
Amendments to the land registry and notarial procedures
The legislation adapts land registration to accommodate the new condominium building right. The land registry may record the preliminary establishment of a condominium and the associated building rights. In addition, for state‑subsidised housing loans, a standardised template prescribed by ministerial decree by way of a unilateral declaration must be used for notarial deeds related to the condominium building right and associated mortgages.
Entry into force
Most provisions of the legislation entered into force on the day following promulgation. Certain sections, including the core rules introducing the condominium building right in the Condominium Act, take effect on 1 February 2026.
For more information on laws governing the development of condominiums in Hungary, contact your CMS client partner or the CMS experts who wrote this article.
The article was co-authored by András Rezsnyák.
