Budapest’s Plan to Ban Short-Term Rentals Faces Opposition from Tourism Industry

The Hungarian government’s plan to ban short-term rentals, such as Airbnb, in Budapest has been met with strong opposition from 26 professional organizations in the tourism industry. These organizations are calling for a compromise between a complete ban and the current regulations.

The Controversy

The issue of short-term rentals in Budapest is complex, with both housing and social aspects on one side and tourism considerations on the other. The problem is primarily concentrated in the inner districts of the capital, while outer districts and rural cities remain largely unaffected. Opponents argue that a complete ban in some districts while allowing short-term rentals in others would further disrupt the already chaotic real estate and rental markets.

Impact on Tourism

The tourism industry organizations believe that a total ban would have a significant negative impact on businesses operating in Budapest, including restaurants, attractions, and the Budapest Liszt Ferenc International Airport. They argue that the city’s tourism relies on the sharing economy model, as visitors increasingly prefer this type of accommodation in line with the “be like a local” trend.

Respecting Local Concerns

While the industry opposes a complete ban, it acknowledges the need to respect the interests and opinions of locals who understandably object to the sporadic signs of overtourism. The organizations describe a total ban as a legal nonsense and economically irrational, instead proposing a compromise between a complete ban and the current regulations.

Proposed Solutions

The professional organizations have put forward several suggestions for the government to consider:

• Moratorium: Suspend the issuance of operating licenses for private and other accommodations in Budapest until January 1, 2026. During this period, no new accommodation classification procedures should be initiated for this type of accommodation. For those accommodations that have already started the classification process, it should be completed, and the operating license should be issued. The classification of existing private and other accommodations should continue and be completed by January 1, 2026.
• Impact Study: Engage a consulting firm with international experience to conduct a comprehensive analysis of the accommodation market, particularly focusing on the quantitative and qualitative characteristics of the short-term rental market and its impact on the overall accommodation market and Budapest’s tourism performance. The deadline for this study is January 31, 2025.
• Regulation: Based on the results of the impact study, develop a regulatory concept that takes into account the interests of all stakeholders. The organizations suggest maintaining the well-functioning flat-rate taxation system, as it does not impose an administrative burden on entrepreneurs and does not encourage tax evasion. However, they recommend reviewing the rate and calculation method of the flat-rate tax, which has remained unchanged since 2018. The determination and possible limitation of short-term rental market capacity, such as reducing supply, tightening classification criteria, or capping the number of rentable days, should be regulated based on best practices in European cities and considering surveys and studies on the topic.

Conclusion

The 26 professional organizations in the tourism industry hope that their proposals will help create an effective regulatory solution for short-term rentals in Budapest. The issue remains contentious, with the government needing to balance the concerns of local residents with the economic benefits of tourism. As the debate continues, it is clear that finding a compromise will be crucial in ensuring the long-term sustainability of Budapest’s tourism industry while addressing the challenges posed by short-term rentals.

Image source: cacor