The February Tea  & Talk event was held on 07 February 2012 in Budapest. The Tea & Talk series are monthly informative discussions, open to members and non-members as well. This time local real estate developments were discussed by over 30 professionals.

One of the initiatives of the RICS Board in Hungary for 2011 was to work on proposels improving the legal environment of local real estate development projects. Issues raised among others were VAT of assets transferred to public sector as part of a development project and the regulation on Zoning Agreements. The goal was to improve the efficiency and transparency of this type of contract from a legal point of view.

Current legislation related to agreements between the private and public sectors related to the  modification of zoning regulations, in order to enable development projects to commence is  not detailed enough. Several practical issues are not regulated with regard the implementation of zoning agreements. The contractual practice and the level of commitments often depend on the local governments’ individual decision that also raises an issue of transparency.

When regulating bigger plots, multiple developers and owners – often with conflicting interests – need to be involved, causing unnecessary delays, complications and inefficient provision of public utilities.  The two-tier governance system of Budapest Municipality further complicates the process as in most of the cases the developer needs to sign a contract both with the Municipality and the local government.

To resolve the issues listed above, RICS has prepared a proposal together with the Roundtable of Real Estate Developers uniting the most influential players ont he market. The proposal refines the current system and extends it with a normative levy type instrument. On the 7th of November the proposal was discussed as part of the monthly Tea&Talk sessions RICS Hungary organises for its members. This time the discussion was moderated by Dr Gábor Czike FRICS of CMS Cameron McKenna and Dr Ádám Kaplonyi of Salans. Our special guest was Dr Péter Szegvári of City Consult, who currently serves as chief advisor to the mayor of Budapest. As a result of the very lively discussion it has been agreed that a working group shall be organized with city officials to further refine the proposal and present it to decision makers as a joint initiative of the private and public sectors.