The rental agreement

The rental agreement

• What are the requirements for a valid conclusion of a rental contract (is written form necessary; is registration necessary and if yes, what kinds of fees apply lawfully)?

Tenancy contracts need to be concluded in writing in order to be valid, in both the public and the private rental sector. In line with the civil law practice, the requirement for written form is considered to be met if the declarations of the parties are signed by the corresponding party (these do not need to be in one single document). Agreement by postal correspondence, telegrams and telefax may also be recognized as a contract concluded in writing.

Apart from the written form, the Hungarian legislation does not provide for further formal requirements for the conclusion of the tenancy contract. There is no fee stamp required and contracts do not need to be registered. At the same time, it is of course in principle mandatory for the landlord to declare the incomes from the tenancy contract in the context of the regular tax declarations.

The parties have the option to conclude the contract in front of a notary public, which makes it directly enforceable. This costs about one or two months’ rent.

• What is the mandatory content of a contract?
• Which data and information must be contained in a contract?

Hungarian tenancy law does not define mandatory minimum requirements of a tenancy contract. However, for the valid conclusion of a contract, the parties need to agree in the essential terms. The most basic ones are the identification of the dwelling (typically the address) and the amount of monthly rent.

The legal environment of private renting is flexible to the extent that in some cases even these may be omitted; however, it is recommended to have at least as much clearly stated in the contract. Other aspects of the tenancy may be agreed in the contract, although it is not required for its validity.

• Duration: open-ended vs. time limited contracts (if legal, under what conditions?)

Tenancy contracts may be time limited or open-ended, according to the parties’ agreement. The law does not provide for mandatory maximum or minimum duration, and there is no provision on the prolongation of tenancy contracts either.

The main difference between limited time and open-ended contracts lay in the possibilities for termination and enforcement: open-ended contracts can be terminated by virtue of law any time with appropriate notice, while this option is not available for tenancy contracts for a determined period. In line with general practice, however, the parties may agree to provide for such an option in time limited contracts, too. Another significant difference is that in the case of time limited contracts, eviction may be directly initiated after the expiry of the term.

• Which indications regarding the rent payment must be contained in the contract?

Hungarian tenancy law does not specify the indications necessary for specifying the obligation of rent payment. In any case, it is recommended to agree on the periodicity of rent payment (typically per month), the due date of rent payment and the method of payment. It is also recommended to fix the method and regularity of payment of the utilities.

 Repairs, furnishings, and other usual content of importance to tenant

In Hungarian tenancy law, parties have a large freedom to agree on the maintenance and furnishings of the dwelling, as well as and other details of the tenancy relationship.