The draft of the new Hungarian Construction Act was recently published for public consultation. Although the act only lays down the general rules, and details will be laid down in other regulations that are not yet known, several new features can already be seen in the draft. In our short article we summarise a few important changes.
Aim of the new Construction Act
The intention of the legislator is to make a new construction act which is more transparent, modern, simpler than the current act, and more uniform.
We can agree with the above, as the current Construction Act, which has been in force for more than 25 years, has been amended many times, consequently, its text is often incoherent. Moreover, in many cases the different parts of construction law are regulated by other legislations, which does not help transparency.
Unified regulation of construction
In line with the above, the new Construction Act will govern more matters than the current Act, as it will include provisions on professional chambers of design engineers and architects, and provisions on the protection of the townscape, which are currently covered by separate acts.
New general principles
The new Act sets out more general principles and in much more detail than the current Act. The new Act lays down its own objectives, as well as the principles to be applied, in contrast to the few lines of the current Act's "essential requirements". The new Act’s general principles include, among others, the principles of “civic sense”, construction quality, protection of the environment, quality of human life, furthermore, the principle of universal design, the principle of digitalisation etc.
The principles have a so-called gap-filling function, i.e., if there is no specific legal regulation on how to deal with a given issue, the building authority, the chief architect etc. can rely on the principles to make their decision.
Brownfield areas
The new Act places more emphasis on the recovery of the brownfield sites.
According to the new Act, the use of brownfield land shall be preferred (e.g., through tax reductions) to greenfield land, moreover, a new digital public register of brownfield sites shall be also created.
Design architect's mandatory site supervision
According to the current Act, the designer architect may provide site supervision if the builder requests it.
In contrast, under the new Act, it will be obligatory for the designer architect to provide site supervision services.
General construction manager
The new Act makes it the defaults that the general construction manager is an employee of the contractor as this will ensure the proper performance of the activity, in particular regarding quality and safety.
Pursuant to the new Act, the general construction manager can be hired under a mandate contract only in the exceptional cases specified in a government decree.
Terms of the building permit
Under the current Act, a building permit is valid for 4 years, during which time construction must begin. The building shall be completed within six years of the start of construction.
According to the new Act, a building permit will be valid uniformly for 10 years, consequently, the construction can be started at any time within term of the building permit, but it shall be completed within the 10-year-term of the building permit.
New rules regarding the commissioning of the buildings
Consent of the designer: A declaration of consent from the designer will be required for the commissioning of the certain buildings. In the declaration, the designer shall confirm that the construction has been carried out in accordance with the plans and specifications.
Service Logbook: According to the new Act, after the building has been commissioned, a service record book must be kept for certain building types on information and documents related to future maintenance, renovation, conversion, and extension.
Questionable provisions regarding Hungarian constructions products
The draft of the new Act contains certain questionable provisions, mostly in connection with Hungarian construction products.
According to the draft, to ensure the supply chain of construction materials in Hungary, construction materials of strategic importance may be defined. The export and import of these materials shall be notified to the competent authority.
Furthermore, in certain cases, the Hungarian State shall have the right of pre-emption in respect of construction materials, if the domestic use of the construction material is necessary for the performance of a public task or for the achievement of a similar purpose.
The minister responsible for the construction industry could also ban the export of strategic products from the country in certain cases, e.g., in the event of a disaster or in the event of a shortage or price increase of strategic products, etc.
Moreover, in the event of the transfer of ownership of a factory producing building materials of strategic importance, the Hungarian State shall have the right of pre-emption on the factory in question.
Entering into force
The new Law would enter into force on 1 February 2024, but some of its provisions would apply later, between 2025 and 2027.
Details
We would like to point out that the draft Act for public consultation is known, so the final text of the Act may differ significantly from this version.
Moreover, many details are not yet known as they will be covered by separate government or ministerial decrees.
By Peter Korozs, Junior Associate, SmartLegal Schmidt & Partners
