Hungary: new law affecting greenfield development

New laws have been introduced to protect agricultural land from development, following concerns expressed by environmental groups and NGOs about increasing investment in greenfield land.

Some protections in the new Act are substantially the same as those in the 1994 Agricultural Land Act, but there are others setting out the obligations of owners and occupiers of agricultural land and stressing the importance of using and cultivating land which is fertile.

It is still not possible under the legislation for either Hungarian or foreign companies to acquire agricultural land, while most of the rules for getting the land reclassified as non-agricultural land have not changed either. These rules are that:

• a land registry permit is required
• the change of use can be temporary or permanent
• permission to develop a greenfield site is only possible if permanent change of use has been permitted by the land registry, and
• any temporary change of use lasts for five years and the land then has to be returned to its original agricultural state

There are now two ways to remove land from agricultural cultivation so that it can be used for greenfield development.

First, the owner may apply to the land registry to change the use of the land for development purposes but without making it part of the urban area. The land can only be sold to a company after the change of use has been registered. This is only possible when:

• the development is permitted by local zoning regulation, even though it is not part of an urban area
• the land registry consents to the change of use
• the developer applies for a building permit once land registry consent has been obtained
• change of use is registered once the land is no longer suitable for agricultural use (for example the fertile topsoil has been removed during construction work)

The second way is to reclassify the agricultural land as part of the urban area. Requests to do this may only be made by the relevant municipality, backed by:

• a decision of its general assembly setting out the purpose of the land becoming urban area, and
• evidence that the land is included in the local development structural plan with a specific development purpose

The request will be rejected if the land is not in an area specified for development within the next four years in the local development structural plan. It can also be rejected at the discretion of the land registry if the land is not adjacent to the urban area.

The introduction of these conditions make reclassification more difficult and time-consuming for municipalities as it might require the local development structural plan to be amended.

The legislation also introduces a “soil protection fee” payable where any topsoil removed as part of the development is not re-used on the property. The charge ranges from HUF150-250/m2 (c. €0.60-1/m2), which means that a 10 hectare area with a half-metre depth of unused topsoil would be charged between HUF 7.5-12.5 million (c. €30-50,000).

Law: Act 129 of 2007 on the Protection of Agricultural Land; Act 55 of 1994 on Agricultural Land