Hungarian Government orders rent-free period for state and municipality owned business premises

On 9 February 2021 the Hungarian Government issued Government Decree No. 52/2021 (II.9.) on rent free period (“Government Decree”), effective from 10 February 2021.

I. Duration of the rent-free period

The rent free period lasts for 5 months, from 10 February 2021 to 10 June 2021.

II. Eligibility for the rent free period

The Government Decree establishes several conditions that shall be met in order to be exempted from paying rent for this period:

1. The owner of the premises is the Hungarian State, a local municipality, or a company under the majority influence of the Hungarian State or a local municipality – except for the Hungarian National Bank or a company under the majority influence of the Hungarian National Bank;

2. The exemption only applies to agreements concluded before 10 February 2021;

3. The tenant was already conducting its business before 4 November 2020; and

4. The tenant is engaged in one of the 25 businesses activities listed in the Government Decree:

• Restaurant, mobile catering;
• Event catering;
• Beverage services;
• Movie screening;
• Conference, organization of trade shows;
• Sports and leisure training;
• Performing arts;
• Complementary services to performing arts;
• Operation of art facilities;
• Museums;
• Operation of a zoo, plant- and/or nature conservation area;
• Operation of a sports facility;
• Sports association;
• Exercise services;
• Other sports activities;
• Theme and amusement parks;
• Physical well-being services;
• Other entertainment and leisure services;
• Hotels;
• Holiday and other temporary accommodation services;
• Camping services;
• Other accommodation services;
• Travel agencies;
• Travel arrangements; or
• Other land passenger transport.

III. Unsuitability for the rent free period

The Government Decree does not apply to a) restaurants and buffets at workplaces; b) restaurants and bars located at hotels, hostels and other kinds of accommodation; c) canteens and buffets of public educational institutions and vocational training institutions; and d) restaurants and buffets located in health-care institutions.

IV. Possible future effects of the government decree

The future impact of the Government Decree on court decisions in disputes related to the payment of rent during the Covid-19 epidemic cannot be predicted. Tenants of non-Government owned properties may refer to the new Government Decree in order to support their arguments for exemption from/reduction of rent payment during the Covid-19 epidemic. On the other hand, the Government Decree explicitly does not extend to the private sector, which follows the concept of the earlier Government Decree No.47/2020 (III.18.), where only a moratorium was ordered on the termination of lease agreements and on increasing rent until 30 June 2020 (see our earlier Newsletter in this regard).

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