The Hungarian Government would designate additional areas of Budapest as immediate ‘Rust Belt’ areas, where the related development regulation will be applicable.
The Rust Belt areas are defined as areas with transport, utilities and institutional infrastructure, or which can be sustainably provided with such infrastructure, suitable for residential and other uses, typically including brownfield sites. An immediate Rust Belt action area is a Rust Belt area where preparatory works for the construction works do not need to be carried out, are in progress or can be carried out within a short period of time, and where the owners or developers plan to carry out a construction project that is authorised or under preparation, and where the introduction of the related incentives could lead to a rapid start of construction.
The Government intends to designate the following areas as new immediate Rust Belt action areas: in the 11th District, the area between Fehérvári road - Galvani road - Szerémi road - Barázda street would be demolished and then, after the area is cleared, residential housing would be built in several phases. In the 14th District, the planned investment will also be property development. In the 15th District, a residential area with commercial and service functions would be created.
The essence of Rust Belt area development is that investors in such areas benefit from a variety of advantages. On the one hand, the status as a priority investment in the national economy means that the building permit is not dependent on the local government and the procedure is faster and simpler. On the other hand, 5% VAT is applicable without a time limit and can be reclaimed by prospective home buyers.
By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm