What does the Airbnb ban in the 6th district mean for real estate investors in Budapest?
In September, Budapest's Terézváros district, also known as the 6th district, voted to ban Airbnb and other short-term rental in a referendum. A majority of 450 votes now decides on a daring experiment with an uncertain outcome.
The decision, which was extremely close at 54% (20% of the 35,000 residents took part), will come into effect from January 1, 2026 and will mean that short-term rental will no longer be permitted in Terézváros, or that the number of days that an apartment can be rented out via Airbnb & Co will be reduced to zero.
This has sparked discussion about similar regulations in other central districts. Alexandra Szentkirályi from the Fidesz party in Budapest even suggested that she would like to extend the regulation to Budapest or even the entire country.
Now Fidesz is the opposition party in Budapest, so nothing of the sort is to be expected, at least in the capital.
observer point out, however, that her party and the corporate groups associated with it (including the Prime Minister's son-in-law) have invested heavily in hotels in recent years and would benefit immensely from such a ban.
On the other hand, the government is also aware that such a step could seriously damage tourism. Statistically, Airbnb tourists spend around 500 euros during their stay and it is considered very unlikely that these travelers will simply switch to hotels. They would rather choose a different destination.
This becomes all the more explosive in light of the fact that a recently published... McKinsey investigation predicts enormous potential for capital tourism. But then the question is:
1. What to do with the 5.9 million overnight stays that would then no longer be legal?
2. Where should you accommodate the new guests, who are expected to increase by around 12% per year?
3. Tourism in Budapest alone would contribute 2.5% to Hungary's gross national product in 2023. But only if we manage to accommodate all travelers and have appropriate offers available.
After all, they have now overtaken Berlin in terms of numbers and would actually like to shorten the gap to their rival Prague. Against this background, it seems more than questionable to jeopardize this goal with an Airbnb ban.
How are other districts in Budapest reacting?
Mayors of other inner city districts appear to reject the ban as a method. Peter Niemüller, the mayor of 7th district, known for its party scene and ruin bars, expressed concerns about a blanket ban. There are currently around 4,400 short-term rental here, which strongly shape the image of the district. They want to work towards a better situation for operators and residents through collaborative approaches.
Similar statements came from Krisztina Baranyi, the mayor of the 9th district (Ferencváros), and Andras Piko, mayor of 8th district (Józsefváros). They prefer tailored regulations that take local circumstances into account rather than blanket bans.
In the 5th district (Belváros-Lipótváros), the economic center of Budapest, regulation was introduced in 2020. Mayor Péter Szentgyörgyvölgyi explained that the feedback from residents was positive and that the existing regulations had proven successful. However, the 5th district is also notorious for the fact that most apartments are rented out illegally or unregistered.
Politicians are well aware that bans will not end the existence of short-term rental, but rather banish them underground. But what this definitely puts an end to are serious investments in the segment.
Can the ban solve the problem of rising prices and rents?
Unlikely. On the one hand, there are now statistical studies on the large metropolises in which Airbnb was banned or strictly regulated, which did not record a decrease in prices.
On the other hand: "In Budapest, the proportion of unoccupied apartments is 17%, which is one of the worst values in the world. Of the 19 unoccupied apartments, one is an Airbnb apartment and 18 are vacant for other reasons. According to housing activists, half of them, or nine, are empty and unrenovated. The most affected are V., VI. and VII. In the districts there is an inverse relationship between unoccupied and short-term rented apartments. This means that the 5th district has the most unoccupied apartments (37%) and the fewest Airbnb apartments (4%). Incidentally, the 5th district has practically stopped issuing new Airbnb permits, but both rent and sales prices are rising the most in the inner districts. Short-term rentals contribute to the renewal of the housing stock and reduce the number of apartments that are completely taken off the market without renovation.said Iván Somló, Vice President of the Association of Responsible Accommodation Providers
What does the vote mean for investors?
The potential restrictions raise questions about the future of the Airbnb market in Budapest. Investors who rely on short-term rental income should be aware that stricter regulations or even bans in other districts cannot be ruled out, even if this remains unlikely. Experts say comprehensive restrictions on short-term rental could have a negative impact on tourism, as many tourists would then choose other cities such as Prague or Krakow.
However, the Hungarian government has not yet made a final decision and is awaiting proposals for new regulation.
The Tourism Consulting Body, an advisory body to the government, recently discussed the situation. The discussions revolve around the impact of Airbnb on the housing markets and the tourism industry. New regulations are not expected until the coming months at the earliest.
The 6th district is therefore a pilot project that can easily be ended, for example by reducing the number of rentable days from zero to e.g. 90 or 120 is increased, as in many other metropolises. But you first have to wait and see how everything develops, which will only be seen from 2026.
