Building Constructions in Hungary

In the last decade the construction market was blooming in Hungary. Although the growth of this segment of the market is slowing in our days, a significant future growth can be prognostisated. Despite the present stagnation of real estate prices according to the market forecast a yearly 5-10 percent growth of prices is predictable in the short run.

Regarding the boom of the construction industry in the near past, plenty of foreign and Hungarian companies remained active on the Hungarian real estate market.

One segment of these firms are dealing with the sale and purchase, and the managements of real estate, while other part of the companies are engaged exclusively in construction works.

Apart from the services offered by these companies, it is useful to avail oneself of the services of a law firm concerning the management of legal and bargaining issues (e.g plot-shaping procedure, bargaining with the municipality etc.) regarding real estate investments and construction works in Hungary.

In this article I would like to outline the main features of construction procedures in Hungary.

Main Legal Rules Regarding Constructions in Hungary

The granting of the building and other permits regarding construction works belong to the competence  of the local municipality authorities.

According to the main rule of the Construction Act every building activity is bound to administrative permit except those which are enumerated in the Construction Act, e.g

• construction of fence not taller than 1 meter,
  
  
• pool under 30 cube-meter,
  
  
• garden roof under 20 square-meter etc.

The main legal requirements with regard to the process of construction activities are described in the the following regulations:

• Act LXXVII of 1997 (Construction Act) and its executive decree (37/2007 OTM decree),
  
  
• the Governmental Decree 253/1997 on the National Requirements of City-Planning and Construction.

Other relevant legal provisions can be found in the

• OTM Decree 9/2008 on the National Requirements of Fire-protection,
  
  
• Act XCIII of 1993 on Labour Protection,
  
  
• and other relevant decrees on energy engineering, public utilities (water, sewage, gas, electricity etc.).

Besides the above national acts and decrees the local municipalities have their own regulations regarding construction requirements. The latter are based on the requirements set by the national law but in some respect they can differ from the provisions set by the national rules.

The local construction authorities shall apply both the national and the municipality regulation by considering the request of the building (or other) permit of the client.

Process of Obtaining Building Permit in Hungary

There exist plenty of permits regarding construction (e.g. wrecking permit, plot-shaping permit etc.) among which the process of the obtainment of the building permit is the most complex.

At the first step a certificate of ownership and a site map shall be obtained from the land registry.

Before the submission of the building permit to the municipality, the architect shall conduct previous consultation with the special authorities (fire service, the National Public Health and Medical Officer Service, chimney sweeper) and public supplier (water, gas, elctricity), and shall make a statement regarding the building plans are in compliance with the construction requirements prescribed by law provisions in force.

In some cases a so-called preliminary environmental impact assessment report must be prepared about the impact of the construction on the environment. The report must be submitted to the competent environmental protection authority.

The second step is the request of the building permit. The deadline set by the law is 60 days regarding  the termination of the permit procedure by the construction authority. The authority is allowed to extend the deadline for a further 30 days.

A written authorization from the water utility (Budapest Water Company), the electricity (Electricity Company), the sewage (Metropolitan Sewage Company) must be obtained. The authorization must be obtained before the building permit is issued, but it can be processed simultaneously with the building permit.

You must notify the start of the building activity to the construction authority 15 days prior to the commencement of the building.

When the building is completed and the municipality has been notified, the builder (owner) must arrange for a site inspection by the municipal authority and special authorities such as

• the fire service,
  
  
• the National Public Health and Medical Officer Service,
  
  
• chimney sweeper,
  
  
• and public suppliers such as water, electricity, and sewerage providers.

After the on-site inspection, all the inspectors must declare that the building has been completed in compliance with the technical plans or identify any unfinished work.

If there is any unfinished work, the deadline for completion must be stated in a document issued by the authority or by the supplier.

After completion, the construction authority issues the occupancy permit.

Lastly the owner submit a “realization plan” to the Land Registry in order to record the new building and the owner’s name in the land registry.

Budapest, July 2008

DISCLAIMER:
The information contained in this article is provided for general information only. Considering the nature of online advising is inadequate for all-around complete advising Dr. Andras Toth-Kalaszi Law Firm is no responsible for the on-line advices, and it's not amenable to any action.

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