Budapest's District VI has seen a marked shift in its rental market since its ban on short-term accommodation took effect in January. According to Ingatlan.com data shared by Terézváros Mayor Tamás Soproni, the number of apartments available for long-term rent has risen by 32%.
Average asking rents have fallen from HUF 300,000 to HUF 280,000 per month.
That contrasts with Budapest overall, where rents are around 5% higher than last year.
Has the Ban Pushed Down Rents?
“The 32% rise in long-term listings is significant, but for landlords the other important number is the fall in asking rents from HUF 300,000 to HUF 280,000,” says Alex Markus, Chief Executive, City-Lets Ltd.
“We are seeing the increased competition ourselves. At City-Lets, a newly listed District VI rental previously took an average of three viewings to find a tenant. That has now increased to seven.
“For landlords, that means tenants have considerably more choice and properties have to compete harder for the right tenant.”
The figures show what has happened since the ban, but they do not prove that the ban alone caused rents to fall. Housing construction, vacant homes, borrowing costs and household incomes can also influence rental prices.
What Has Happened Elsewhere?
International experience suggests that restricting short-term accommodation can increase the number of properties available for long-term rental, although the effect on rents has often been more limited.
In New York, tighter short-term rental rules significantly reduced the number of Airbnb properties available. However, the changes have not produced clear evidence of a substantial reduction in rents.
Barcelona has also imposed extensive restrictions on tourist accommodation. Research there found that the measures mainly reduced illegal short-term rental listings and prevented more homes from being converted to tourist use.
These examples show that restrictions can change how existing properties are used, but the effect on rental affordability is less clear.
The Longer-Term Risk for Landlords Is Investment
“If regulation reduces the returns available from residential property, some owners may sell, while prospective buyers may put their capital elsewhere,” Markus said.
“Budapest cannot expect landlords to keep providing rental homes while continually making them less attractive to own.”
Terézváros Is Also Adding Housing
Terézváros is pursuing other measures alongside its Airbnb ban.
The municipality is renovating around 30 vacant, deteriorated municipal rental apartments each year.
It is also preparing the reconstruction of the long-empty building at Vörösmarty utca 47/B and planning a new rental building at the corner of Szinyei Merse utca and Szondi utca.
“I would rather see more emphasis on this side of housing policy,” Markus said.
“Bringing vacant apartments back into use and building new homes increases supply. If policymakers also want more private properties offered for long-term rent, they should make it worthwhile for landlords to do so rather than relying on restrictions.
“That could mean lower taxes on long-term rental income, incentives for owners who commit properties to the long-term market, or reducing the administrative costs and regulation involved in letting a home. Give owners a genuine financial reason to choose long-term renting and investors will respond. If the returns make sense, more capital will follow and the market can do much of the work.”