On Tuesday night, Deputy Prime Minister Zsolt Semjén submitted a legislative proposal concerning the protection of local identity, initially signaled by Minister Tibor Navracsics for Regional Development.

This proposal responds to concerns raised by some municipalities that face demographic shifts, as an influx of newcomers is perceived to disrupt traditional community structures and identity.

Contrary to earlier versions of the proposal, the submitted draft is considered more moderate, notably omitting a provision that would enable municipalities to outright ban property purchases by non-residents.

However, local governments would still gain significant authority to influence residential patterns.

Under the proposed legislation, municipalities could regulate property purchases and the official registration of new residents, with the ability to impose a residence tax on buyers.

Specifics regarding this tax would be delineated in regulations governing local taxation.

Additionally, the law stipulates that imposed conditions must be reasonable.

Homebuyers would also be afforded pre-emption rights, allowing any resident to exercise this right alongside the local municipal authority.

A novel aspect of this legislation permits individuals purchasing property with state support—such as through 'csok plusz' or 'village csok' programs—to relocate to the municipality without restrictions or conditions.

There remains ambiguity as to whether this clause applies to individuals seeking worker loans or 'babaváró' loans.

However, those applying for state-subsidized loans may receive favorable treatment in practice, as noted by industry experts.

László Balogh from the property website ingatlan.com remarked that the more lenient nature of the law compared to its draft version could leave property owners feeling somewhat reassured, yet it may also prompt more municipalities to consider possible stipulations and restrictions regarding local residency.

This regulatory shift arrives during a particularly sensitive period in property price trends.

Data indicates that, as of April 2025, property prices in Budapest increased by 19% year-on-year, contributing to an ongoing trend of migration out of urban areas.

In Pest County, the monthly rate of property price increases rose from 0.8% in March to 1.7% in April.

The surrounding agglomerations of Debrecen and Szeged are also likely to be affected by the regulation due to recent industrial developments that have led to above-average price hikes in these cities.

A detailed analysis of the legislative proposal has been made public, suggesting that electoral considerations may also underlie the government's focus on local protections.

The ruling party is reportedly concerned about the migration of younger, more mobile families away from urban areas, where its support has notably diminished between 2022 and 2024.