Parliament has banned the construction of retail units bigger than 300m2, whether new-builds or extensions, between 1 January 2012 and 31 December 2014.
The ban is likely to be challenged by developers at the constitutional court and various EU forums.
The ban will apply to retail units for which pending building permit applications have already been submitted. It will also apply to retail developments with a valid preliminary permit, as their effect (the building authority is usually required to approve any plans principally accepted in the preliminary permit) has been suspended, even though the permit itself will remain valid until 31 December 2014.
Exemptions from the ban may only be granted by the Economy Minister once a committee has evaluated the planned retail development in terms of:
- its impact on the environment, local community and surrounding area
- existing retail services in the local area
- local market conditions
Details of the exemption procedure and criteria will be set out in a forthcoming government decree.
The call for a ban on shopping malls initially came from LMP, the opposition green party, in the spring of 2011. It then withdrew its proposal following a complete re-write of the draft legislation by the governing Fidesz-party.
The ban thus reflects Fidesz’s idea of putting a temporary stop to large-scale commercial developments in order to encourage development of the small-scale retail sector.
The 1% of retail businesses controlled by large and medium-sized companies accounts for almost 70% of retail turnover in Hungary, with the other 30% of sales coming from the remaining 99% (ie small businesses).
Hungary’s real estate sector has been declining since the 2008 financial crisis. Interest groups of property developers and shopping centres have lobbied against the proposal, arguing that it would cause further job losses within the already-suffering construction industry.
Law: amendment to Act LXXVIII of 1997 on the Protection of Built Environment