Terms of Hungary's new HUF 50 million preferential housing loan revealed

• Housing subsidy: From September, a 3% subsidised loan scheme for first-time homebuyers will be introduced, offering a maximum loan of HUF 50 million. However, this is subject to strict conditions, but may be combined with other subsidies.
• Budget and state-owned companies: The 2025 budget uses bond issuance to replace old loans, and state-owned companies must cut spending by 5%. A 15% increase for officials in small municipalities has been approved, which could result in an additional spending of HUF 10-11 billion next year. No decision has yet been made regarding government officials.
• Drought and irrigation: the budget will provide HUF 10 billion for free irrigation water, and EU funds will be used to develop the irrigation system.
• EU sanctions and Ukraine: Hungary will block any attempt to have its veto circumvented on sanctions against Russian energy import and will continue to oppose the opening of accession negotiations with Ukraine.
• Tax treaty: The renegotiation of the US–Hungary double taxation treaty will not be finalised by the end of 2025 due to delays in the US legislative process.
• Pensions and doctor shortage: the inflation-linked pension supplement is expected in the autumn, and more training for doctors is hoped to ease the shortage of paediatricians.
• Finances of the capital: The capital's financial situation has temporarily stabilised. Further steps are planned after the due diligence process is complete.

When it came to housing policy, Gergely Gulyás confirmed that the first-home subsidy would not be available to those who have ever owned more than 50% of a residential property. He explained that the reduced 5% VAT rate had been introduced to stimulate supply, but that it would not reduce prices, merely moderating the rate of increase.

The government does not support the social rental housing programme, viewing it as a legacy of socialist housing policy.

However, there are a limited number of possible municipal partnerships for this purpose. he government's fundamental stance is to support access to owner-occupied housing.

According to the government, the CATL factory in Debrecen will not replace Hungarian workers with Chinese workers, said Gergely Gulyás. He also mentioned that the company had denied doing so at a meeting with the Ministry of Foreign Affairs and Trade.

A new double tax treaty with the United States is unlikely to be finalised before the end of 2025 due to the slow pace of US legislation, although the Hungarian government is working hard to ensure the treaty is finalised as soon as possible.

Although the cost of the programme is not specified in the budget, the government claims that there is sufficient reserve funding available. The recently issued $4 billion (approximately HUF 1,300 billion) foreign currency bond is intended to replace loans taken out on less favourable terms previously, rather than to finance specific budget expenditures, according to the minister of the Prime Minister's Office.

The government will launch the preferential housing loan scheme in September. Only those who apply for a loan from 1 September or have not yet signed an existing contract will be eligible,

Gergely Gulyás clarified in response to a question.

Those who cannot repay the loan will have to repay the interest subsidy, plus a penalty charge. The exact rules will be set out in a government decree.

While the cost of the scheme is not specified in the budget, the government claims that there is sufficient room for manoeuvre in the reserves.

The government has decided to extend the margin caps until 31 August. The decision on whether to phase out or extend the measure will be made at the cabinet meeting in August.

Gergely Gulyás announced that the HUF 10 billion required to provide free water for irrigation would be allocated in both this year's and next year's budgets. He stressed that there are currently tens of billions of forints' worth of EU-funded projects to expand irrigable agricultural land, given that Hungary is in an even worse situation now than during the regime change. The aim is to improve the irrigation infrastructure year on year, with EU funds being used for this purpose.

Regarding the construction of the hydroelectric power plant in Málinec, central Slovakia, Gulyás said that no decision has been taken on Hungarian participation. However, if electricity is produced there, Hungary is welcome to buy it, provided the price is competitive.

Gergely Gulyás admitted that the 3% subsidised loan could stimulate the real estate market, meaning that prices would not fall as a result. However, he believes that only the rate of prices increase may change.

The government is supporting the supply side by offering a 5% preferential VAT rate on new housing.

The technical accounting of the interest rate subsidy is still being negotiated with the banking association, and a possible solution is a one-year period.

In response to a question from RTL Klub, the minister said that a 15% pay rise for local government officials in municipalities with fewer than 30,000 inhabitants could cost HUF 2.5 billion this year, while HUF 10-11 billion is planned for this purpose next year. No final decision has yet been made regarding the pay rise for government officials.

Gulyás described the recently announced HUF 1,386 billion bond issue as a success. He said that it would ensure Hungary's creditworthiness and allow for lower interest rates.

Under the latest government spending cuts, public sector organisations will have to reduce their staff costs by 5% compared to 2024 (with the exception of 30 companies).

They will have to pay this money into the budget. If they fail to do so, they will have to double the amount in 2026.

Gulyás said that the government has had a deficit reduction target for years, which it has been following. He added that it is important for state-owned enterprises to contribute to achieving this goal too. For this reason, the government has decided that certain state-owned companies must reduce their expenditure.

He stressed that

savings cannot be achieved by reducing wages; however, deductions from individual purchases and various material expenses are permitted.

This is partly contradicted by the text of the legislation, which says:

Wholly state-owned companies that were set up before this Regulation came into force must achieve savings by 2025, primarily from personnel costs.

The minister promised to provide a precise figure after the press conference, but the government expects revenues of around HUF 10 billion.

The government granted exemptions to companies where cost-cutting was deemed to have a critical impact on operations, such as Paks II.

On GPs, Gulyás said that the government had increased the budget for medical schools years ago and implemented a historic pay rise, which he said could address the shortage of paediatricians in the longer term.

Regarding the pension supplement, he confirmed that the autumn payment would be made in accordance with the legal provisions, adjusted for inflation.

According to Gergely Gulyás, this is thanks to the court's temporary legal protection, but the government will wait for the conclusion of the audit carried out by former State Audit Office (SAO) President László Domokos before taking further steps.

According to Gergely Gulyás, the government firmly opposes the European Commission's attempt to adopt the EU's ban on Russian energy imports, which was previously agreed unanimously as a sanction, as a trade policy measure by a qualified majority. The minister said that,

if Brussels were to bypass the veto in this way, Hungary would block any similar sanctions.

According to the government, this goes against both the spirit of the EU's founding treaties and the previous practice of the European Council. Gulyás recalled that, in 2022, Hungary was exempted from Russian energy sanctions, a decision that he claims the EU is now seeking to circumvent.

When asked by ATV about the Pride demonstration in Budapest on Saturday, Gulyás stressed that politics must not interfere with the application of the law. While the government believes the event may have been illegal, he added that the legal assessment of the participants must also consider that the local government and police had different interpretations of the law. In his view, the absence of an on-spot call [for the dispersal of the march] could affect any proceedings by the authorities.

Record turnout at Budapest Pride despite ban attempt 

The 30th Budapest Pride, renamed as 'Budapest Büszkeség - Festival of Pride', took place on June 28th with a record attendance of over 200,000 participants according to organisers, despite attempts by the government and police to ban the event, Telex reported in the wake of the event. The march was so large that when its front reached the Technical University stage, the tail end was still at Deák Square, filling the Elizabeth Bridge completely. Several prominent figures spoke at the event, including Budapest Mayor Gergely Karácsony, European Parliament Vice President Nicu Ștefănuță, and numerous Hungarian actors.

The far-right Mi Hazánk party organised counter-protests, with a handful of protesters occupying Liberty Bridge, which forced the Pride march to use an alternative route via Elizabeth Bridge.

Despite the official ban, which the organisers did not challenge in court, the authorities did not prevent the march from taking place. Political analysts noted that the government's attempt to ban the event backfired, instead unifying opposition forces and creating a powerful symbol of resistance. 

Major international media outlets prominently featured the Budapest Pride march, which proceeded despite the Hungarian government's ban, attracting thousands of participants. Reuters and Associated Press described the event as an anti-Orbán demonstration, while noting Justice Minister Bence Tuzson's warning of potential one-year prison sentences for organizers. Spain's El País highlighted how the Pride has evolved beyond an LGBTQ+ rights march into a symbol of broader civil rights protection. French newspaper Le Monde emphasized that Hungary's new assembly law violates EU agreements accepted in 2004. The New York Times linked the ban to the rise in popularity of Péter Magyar, while The Guardian described the 30th Budapest Pride as a bittersweet celebration amid the government's intensified attacks on the LGBTQ+ community. Italy's Reppublica reported solidarity demonstrations at Bologna's Pride march, with protesters showing support for both Budapest and Gaza. The event remained peaceful despite the presence of counter-protesters, with coverage also appearing on BBC and CNN. 

The National Investigation Bureau of the Standby Police (KRNNI) has launched an investigation against unknown perpetrators regarding the Budapest Pride march, which was officially banned but took place on Saturday, with a historic high attendance.

While the exact focus of the investigation remains undisclosed 'due to procedural interests', the police are examining the events related to the participants. The march was initially banned following recent constitutional amendments that prioritised children's rights to healthy development over assembly rights.

At the press briefing, they said that the expected annual budgetary burden of the 3% subsidised housing loan could be less than HUF 50 billion this year and next.

It is estimated to be between HUF 50 billion and HUF 150 billion between 2027 and 2029.

However, the exact amount depends on the number of applicants and how the housing market reacts.

For a HUF 50 million loan, the interest rate subsidy could result in state contributions totalling between HUF 15 and 25 million over the entire term, depending on future market interest rates.

The loan can also be combined with other home-building programmes, such as CSOK Plus. This means that a young couple, especially if they have children, can receive significant support of up to HUF 100 million. The government is consulting with the banking association to simplify the application process and speed up the loan assessment process, since the cost of the interest rate subsidy is covered by the state anyway.

It has also been clarified who is eligible for the loan. Those who do not own more than 50% of a residential property are eligible to take advantage of the facility.

Agricultural land, garden plots and small or undivided inheritances do not disqualify you. Special mitigating rules may be introduced for such cases.

Like Poland, Hungary continues to oppose the EU-Ukraine trade agreement and maintains customs controls. According to Gulyás, this is necessary in order to protect Hungarian agriculture, as cheap and allegedly inferior Ukrainian products could threaten Central European farmers' markets.

The drought task force began its work in May, supporting farmers with HUF 4.7 billion. Gulyás said The minister said that they currently store water equivalent to a third of Lake Balaton, which they will be able to use during the dry season, which is now. Additionally, the government is providing farmers with HUF 10 billion worth of water to alleviate the financial strain of the drought.

Although the government says the EU will not support this being provided free of charge, the cabinet wants to mitigate drought damage as much as possible, so access to water for irrigation will be free.

At the EU summit, the government did not veto the accession negotiations with Ukraine, but did not support launching the process at this time. This decision was justified on security grounds: in the 2004 eastern enlargement, member states first joined NATO and then the EU because there was no longer a threat to their sovereignty by that point. The situation in Ukraine is different because of the war.

The government has examined house prices and concluded that they would still be rising in Budapest even without the subsidised loan. Prices here are above those in Bucharest, but property prices in Bratislava and Prague are also rising,

Gergely Gulyás added.

They have agreed with the Banking Association that

the loan will be available from September.

Creditworthiness will be subject to normal banking rules.

The detailed rules on subsidies for first-time home buyers will be published soon.

The government has approved the 3% Home Start programme. Gergely Gulyás explained that the Prime Minister's annual assessment had already foreseen that the Demján Sándor Programme would support affordable housing. This would include expanding dormitory accommodation, renovating rural homes, introducing tax relief for employees and capping bank interest rates at 5%.

We've created a new product that hasn't been seen for decades — it could represent a significant advance in home construction. It is not related to starting a family or having children,

said Gulyás. He said that a high proportion of people are homeowners, 80% of those over 40 live in their own homes. For younger people, however, the figure is only 40%.

• The criterion to take out the loan is that the applicant must not own at least 50% of the residential property in question.
• The applicant must have paid social security contribution for at least two years at the time of application.
• The maximum amount is HUF 50 million and the co-payment is expected to be as low as 10%, in line with the central bank's requirements.
• Only properties costing less than HUF 100 million can be purchased, with a price per square metre of no more than HUF 1.5 million.
• This loan can also be combined with other loans and discounts.