What is social housing?

Social housing in Hungary is regulated under the so-calledHousing Law. It does not give a general definition of social housing, but only refers to social housing as rental unit owned by municipal governments and allocated based on social criteria. Publicly owned housing in Hungary has decreased from 20% to 3.7% over the latest twenty years, and today it is concentrated in the biggest municipalities. The privatisation process was already ongoing before the 1990s, but the mass scale privatization started in 1990, when the public stock was sold to tenants at a give-away price (10-15% of the market value). Sitting tenants who could afford it generally bought their flats, and households who remained tenants in the public sector were essentially the neediest ones. At the same time, the government moved out of the housing sector and local governments were given increasing responsibilities in this field and there have been no programmes for social housing development since 2004. As a result of decentralisation, local governments are free to decide how to manage their housing stock and different approaches have emerged.

Who provides social housing?

Local governments are responsible for local housing policy making, which in practice consists of rent setting, managing the municipal housing stock and operating local subsidy schemes. Social rental units are owned by local governments, but while smaller cities tend to manage directly their housing stock, in larger cities the typical solution is to create companies (joint stock companies or limited liability companies) owned by local governments.There is also a very limited number of social housing units owned and managed by NGOs or Public Companies.

How is social housing financed?

Public housing is basically financed from the municipal budget. It is up to the local governments to define rents: rent levels areusually very low, but there are big differences between towns and according to the quality of the stock. The central government may contribute through different programmes to the capital cost (municipal rental construction grant, interest rate subsidies, etc.) and to the rental payment (housing allowances). From 2000 to 2004, for instance, the central government operated a programme to increase social rental stock providing investment grant to the local governments up to 75% of the investment costs (to construct or acquire housing for the purpose of social rental, cost based rental ,young family housing, elderly homes, and pension homes). Within this programme, rents were based on the principle of long-term recovery and as a minimum of 2% of the construction cost.

Who can access social housing?

Although the Housing Law specifies that the allocation should be based on ‘social criteria’, there are not specific definitions of these criteria. Generally, target groups of social housing provision are young married couples, single parents and families on low income.

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