Green lease law and regulation in Hungary

Buildings must be designed and constructed in such way to be compatible with the characteristics set out in the legislation with respect to thermal transmittance of doors and windows; the specific heat loss; aggregated energetic parametres; and the risk of overheating during the summer period (Article 3 of the Decree of Minister without portfolio No. 7 of 2006 (7/2006 (V. 24) Tárcanélküli miniszteri rendelet, “Ministerial Decree”)

In the case of new buildings where the usable floor space exceeds 1,000 square metres when making the project plans attention must be given to technical, environmental and economic considerations i.e whether it is possible to adopt: a decentralised energy supply systems using renewable energy sources; district heating/cooling systems, or block heating/ cooling systems; and heat pumps (Article 5 of the Ministerial Decree)

In the case of already existing buildings of which the usable floor space exceeds 1,000 square metres, when renovating or modernising compliance with the requirements of the above mentioned Article 3 must be ensured, provided that it is possible after having regard to both technical and economic considerations (Article 6 of the Ministerial Decree).

From 1 January 2012 building owners must hold a valid certificate as to the building’s parametres of energy efficiency in the following situations: newly constructed buildings; selling of existing buildings or when leasing them for a lease term exceeding one (1) year (in respect of these actions the requirements are mandatory from 1 January 2012 only); and those state-owned public buildings where the floor space exceeds 1,000 square metres and which are used by public authorities (Article 1 of the Governmental Decree No. 176 of 2008 (“176/2008 (VI.30.) Kormány rendelet, “Governmental Decree“).

The provisions of the Governmental Decree are not applicable to the following: buildings where the usable floor space does not exceed 50 square metres; those buildings which are intended to be used for less than four months a year; buildings used for religious purposes; those buildings which are categorised as monuments, as well those which are situated in protected areas; agricultural buildings; buildings in which the heat gain, due to the applied technology, exceeds 20 W/m3, or during heating season the necessary ventilation is twenty times more; buildings that are used as workshops; and tent systems which are inflated with air and of which the purpose is longer term residency.

The provisions under the Ministerial Decree mentioned in a) are of general application subject only to the exceptions listed above.

This is becoming increasingly more important to the market and this will continue once obtaining the certificate becomes mandatory on 1 January 2012. In the absence of the energy certificate the occupancy permit will not be issued and the land registry will not register the transfer of title.

There are only very few developments in Hungary at the moment due to the economic crisis, however a relatively high proportion of developers seek to obtain LEED or BREEAM qualification.

The tenant must pay rent in the amount and time stated in the lease contract (LXXVIII of 1993 on the regulations of lease and the selling of flats and other premises (“Housing Act”). This is also applied to premises not serving as residential purposes.The Housing Act does not stipulate any obligations on the landlord to charge operating costs following consumption therefore the parties have to agree upon the operating costs in the lease contract.

In the case of a lease of office or commercial space the lease contract usually sets out the list of services the landlord will provide and it is a generally accepted principle that all service costs (including property tax and insurance) of the building are recharged to the tenants proportionately. Generally, the tenant pays the operating costs in advance and in each year the parties makes a settlement of the actually incurred costs. Recently big tenants are often able to introduce caps or certain other control mechanisms to the service costs born by them.

In the case of residential premises the operating costs like utilities and minor repairs are in general paid by tenants directly to the service providers. Tenants are obliged to show the landlord the receipt and bills confirming the payments when required by the landlord.

Under the Housing Act the landlord shall arrange for the maintenance of the building and shall guarantee the working order of the central equipment and shall repair any defects of the equipment serving the common area. Other maintenance and repair works of the building shall be carried out as agreed by the parties. The landlord shall carry out the above works immediately in case of defects which require immediate intervention. The works necessary to avert a threat to life can be performed without advance notice to the other party, but at the same time the other party shall be notified as soon as possible.

In case of renovation measures and failure of the cable system the landlord shall arrange such necessary works in the building. The tenant is obliged to tolerate the works in relation to the maintenance, renovation, restoration, transformation, expansion and modernization of the building and other works for which the landlord is responsible provided that such works do not result in the destruction of building. The landlord is obliged to perform its obligations so that the use of the building, if possible, is not hindered. The tenant shall be notified in advance on the commencement of the work and its expected duration.

The Housing Act sets out that the costs arising from the maintenance, renovation and replacement of doors, windows and equipments of the premises shall be borne by the landlord and the tenant in accordance with their individual agreement. In the absence of such agreement the maintenance and renovation costs are to be paid by the tenant while the replacement costs shall be borne by the landlord.

Pursuant to the Housing Act the tenant shall be entitled to claim from the landlord the reimbursement of its costs incurred in connection with urgent works if those have been carried out by the tenant. If the landlord does not perform its obligations in the case of non-urgent works despite the tenant’s notice, the tenant shall be entitled to request the court to force the landlord to complete these works or may be entitled to complete the works in the place of the landlord and at the landlord’s expense.

There is no specific law or contractual standard which sets forth the rights and obligations in the case of construction measures aimed to improve energy efficiency, it may be stipulated in the lease contract at the parties’ discretion. The Housing Act applies to such cases which prescribe the general liabilities and obligations of the parties.

Besides the provisions of the Housing Act described in the above, the landlord and the tenant shall specifically agree as regards the respective rights mentioned in b) and c).

No such contractual standards or specific rules exist. The parties are free to agree on how to allocate the costs, obligations and responsibilities in connection with sustainability measures.

Point 2.c) above.