Tuesday, 2 December 2025
Hungary has introduced a new legal framework for residential developments with the adoption of the társasházi építményi jog, or condominium building right. The legislation, passed by parliament on 18 November, amends several statutes and is designed to provide stronger protection for purchasers of off-plan apartments while supporting the government’s Otthon Start housing programme. The core provisions will take effect from 1 February 2026.
The new condominium building right gives buyers a registered real right in the land registry during the construction phase, replacing the weaker “future buyer’s claim” used previously. Once a developer has registered the preliminary formation of a condominium, purchasers can have their building right recorded on the plot, enabling them to secure their position and, if necessary, use the right as collateral for state-subsidised or commercial housing loans. When the project is completed and the condominium officially created, the right is extinguished and converted into full ownership of the unit, with any related encumbrances transferred accordingly.
Legal analysts say the reform brings Hungary closer to the off-plan purchase protection standards used in several Western European jurisdictions. By enabling early financing and improving security in the event of developer insolvency, the system aims to increase predictability for all parties. Developers may also benefit from more reliable pre-sales and earlier access to bank financing.
However, despite broad support for the concept, market participants note several implementation challenges. The success of the new framework will depend on the capacity of the land registry to process preliminary condominium formations and building-right registrations without added delays. Banks are also expected to take a cautious approach until mortgage procedures and risk models are fully adapted to the new form of collateral. Developers, particularly smaller firms, face increased administrative obligations at an early project stage, which could raise costs and affect project launch timelines.
Questions also remain about the handling of insolvency scenarios, the coordination of ranking rules between developer lenders and unit-buyer lenders, and the practicalities of transferring building rights on the secondary market. Lawyers point out that the system relies heavily on the accuracy of preliminary documentation, which may be subject to change as construction progresses.
While the reform is viewed as a significant step toward strengthening buyer protection and stimulating residential development, industry observers expect a transitional period in 2026 as the market adapts to the new legal structure and clarifies procedural uncertainties.
