Tenancy law in Hungary

Many of our foreign clients contact our law office because they want to rent an apartment or house for a long-term stay in Hungary, or they want to rent out their property for investment purposes. In this regard, some of our important advice stands as follows:

• It protects both the tenant and the landlord, and it is also mandatory to put the lease agreement in writing. A simple email is not enough. Have the agreement printed and incorporate it into a private document with full evidential force, certified by two witnesses.
• We also recommend that to prepare a rental contract as detailed as possible. Although many conditions bind the contracting parties based on statutory law (even if not put into the contract separately), the contracting parties have a lot of freedom to establish their own rules, which can be used to prevent later misunderstandings. Make the contract as detailed as possible! In particular, regarding periodic maintenance and renovation costs, as well as the tenant’s obligations to restore the property to its original condition when moving out of the property. The tenant should not agree to anything, since in the case of a long-term apartment lease, there is obviously a natural wear and tear of the apartment, which the tenant should preferably not take on himself. It is important to know that if the contracting parties do not agree otherwise, the costs related to the maintenance and renovation of the coverings, doors, windows, and equipment of the apartment are borne by the tenant, and the costs related to substitution and replacement are borne by the landlord.
• It’s definitely worth mentioning in the lease agreement whether the public utility meters (gas, electricity) remain in the name of the landlord or are transferred to the name of the tenant (note that there are pros and cons for and against both constructions), as well as who pays for the lock change (when the tenant moves out), and whether it is possible to sublease the apartment. It is also worth regulating in the contract who and how many people the tenant can accept in the apartment – so that it does not end up opening an Airbnb apartment or a workers’ hostel there.
• It often happens that if the tenant is a foreigner, the landlords try to ask him for a much larger than the average security deposit. Please note that the average deposit at the time of signing the contract is equal to the amount of 2-3 months of the rental fee. If the landlord asks for a significantly higher deposit than this, it is already suspicious. Even the Civil Code of Hungary says that in the case of an amount higher than three months’ deposit, the tenant can ask the court to reduce the deposit.
• From the point of view of foreign investors and landlords, it is important not to save on the so-called “immediately enforceable eviction declaration” prepared by a notary public. This costs a few tens of thousands of forints, however, if the tenant signs it, then in case of non-payment of the rent or utility costs, or other serious breaches of contract, the landlord will have a declaration in the form of a public document, with which the landlord can immediately, without the need to initiate a lawsuit, with the involvement of the executor (and, if necessary, the police) take out the tenant from the apartment. In other words, long years of litigation can be prevented with a notarial deed.
• Since foreign tenants are generally not familiar with Hungarian rules and records, we recommend that they, before signing any rental contract, even with the help of an attorney, request a so-called “land registry extract” about the property, where they can check whether the landlord is really the owner, and also what legal encumbrances are on the property, which may cause problems later. When signing the contract, it is worth checking the landlord’s identity card, address card, and tax card to clarify that he is really the person he says he is. It is also worth writing in the contract that the amount of the rental fee is a gross amount, i.e. it already includes all taxes and contributions, so the tenant does not have to pay any additional taxes and contributions instead of the landlord.
• One could write at great length about the Hungarian rules for terminating a rental contract. Most legal disputes erupt around the legal or illegal termination of property leases. However, a detailed examination of this issue is beyond the scope of this article. We may deal with this in another, separate article. However, one thing is very important. As a foreigner, please, think a hundred times before signing a fixed-term rental contract for many, many years, because, as a general rule, a fixed-term rental contract cannot be terminated without serious consequences. It is a serious risk that in such cases the landlord can not only take the deposit but also can claim the full rent and even utility costs for the remaining period until the end of the fixed period. And don’t forget, in certain cases, the landlord may have a lien on the tenant’s movables brought into the apartment.

In summary, since 75% of our law firm’s clients are foreigners from all over the world, we have gained a lot of experience in reviewing various contracts, and we are absolute of the opinion that if someone as a foreigner wants to rent or rent out an apartment in Hungary, then it’s better to come to our law firm BEFORE signing any contract, and preferably not when there is already a dispute. Of course, we can and will help to sort out a legal dispute as well. But it is better to prevent a costly legal debate with a good contract than to litigate for years.