June 2016 - At the beginning of January this year, new provisions entered into force in Hungary affecting the permitting requirements for new residential buildings with a maximum useful net floor area of 300 square meters. These rules allow for the construction of such buildings without a permit, requiring only a simple notification.

Despite a generally positive reception, certain aspects of the newly implemented provisions have received criticism. It seems that the Hungarian legislature has heard the complaints, as – based on a legislative proposal submitted to the Hungarian Parliament – some of the more controversial aspects of the new rules are about to change.

New possibilities introduced by the “Simplified Construction Rules”

The new rules require no building permit, but only notification prior to the commencement of construction of new residential buildings with a maximum useful net floor area of 300 square meters. The statute sets out the required content of this notification.

The most significant difference compared to the permitting procedure is that the floor plan is not a mandatory element of the notification, which focuses on the appearance of the building, rather than on the inspection of its compliance with construction laws.

Only certain elements of the usual construction permitting documentation are required to be attached to the notification, rather than all plans. This may be a relief at first sight, but there are risks too: identical sanctions apply both to “notified” and “permitted” buildings (e.g., fines or even demolition). Given that the authority permits the construction of the building after examining its plans, in order to avoid or mitigate these risks it may be advisable to obtain a building permit prior to commencing the construction (or at least to produce detailed plans for the building).

In addition, the building must be constructed within ten years from the notification of its construction, and an official certificate must be obtained verifying the fact of the construction completion.

Observing the local construction code

In case of the regular construction permitting process, the statutory rules adopted by the local municipality (the so-called “local construction code”) must also be taken into account. The local construction code is critical, since it contains the main rules and parameters for construction of new buildings (e.g., their maximum height, the maximum extent of buildable area, and local building customs), and is the main vehicle by which the local municipality forms its cityscape. The new rules require that only certain elements of the local construction code be taken into account – namely, the maximum allowable coverage of the plot, the maximum allowable building height, the line which isolates the public area and the non-public area, and the type and location of the building.

Since these obligations affect only a small part of the construction, and exclude other important parts of what are often-complex local construction codes, industry experts and local municipalities have warned that allowing the major part of a local construction code to be ignored may harm the cityscape.

To enforce the local construction codes (despite the newly permissive provisions), the local municipalities intend to fight back. For example, one of the districts of Budapest is considering the implementation of a new tax (the so-called “kitsch tax”), which would be payable by the constructor if its building does not meet the criteria set out by the local construction code.

As a solution to this issue, the proposed legislative amendment would widen the scope of the elements that must be observed during the construction of residential buildings, such as local zoning, the rules of sanitation and cleaning, the number of buildings to be constructed on one plot, as well as other rules, such as those relating to archaeology and heritage protection.

The reasoning of the proposed legislation is that the lack of permitting for the construction of buildings means that a new form of cityscape protection is required for local municipalities, with respect to which further statutory provisions will be implemented. The content of these future regulations is still unknown.

In our view, the fact that the notification procedure does not require prior examination of compliance with a local construction code (some elements of which are mandatory) could in fact pose a risk for the builder. In the event that the building authority examines this compliance during the construction and determines that it is lacking, the measures necessary to achieve compliance with the applicable building regulations at that later stage could result in significant costs. Furthermore, should the completed building not meet the mandatory requirements, the building authority may impose fines, or even may order the demolition of the building.

his Article was originally published in Issue 3.2 of the CEE Legal Matters Magazine.