Housing and farmland: how indexation would work – based on the draft

Indexation would not be available for every historical price

Section 15(3) would restrict eligible transactions by age: they would have to precede the reference year’s final day by more than twelve months but no more than ten years. There could also have been no material value-affecting change in legal, technical or use condition. Indexation would therefore not provide unlimited updating of any historical acquisition figure.

The condition would particularly cover substantial renovation, linked by Section 2, point 19, to costs reaching twenty per cent of transaction value. Under Section 17(2), eligible indexed value would follow where the recent-transaction rule could not apply. Missing eligibility conditions could not simply be remedied by selecting an arbitrary price indicator or an older observation.

The formula would adjust the starting value rather than replace it

Annex 2, points 1.1–1.2, would multiply the starting value by the closing indicator divided by the transaction indicator. The transaction value would remain the foundation, while the indicators would adjust it over time. A statistical average price would not replace the property’s individual transaction value; the relationship between periods would instead be applied to that value.

Annex 2, points 1.3–1.4, would assign MNB housing indices and KSH farmland-price data, excluding other property from that annex. This would not prohibit all other property indexation: Section 15(5) would provide a separate KSH-index route beginning with the calendar year following the transaction. Housing and farmland indicators could not, however, be transferred to other property merely by analogy.

Housing location would determine the data series

Annex 2, point 2.1, would use the MNB’s nominal housing-price index adjusted for changes in housing-stock quality composition. Point 2.3 would assign Budapest’s index to Budapest housing. For towns, the regional urban index covering the property’s county would apply; villages and large villages would use the village series. A single national indicator would therefore not automatically govern every dwelling.

If the appropriate territorial index were missing for either transaction or closing period, point 2.4 would require the national nominal MNB index for both. Substitution would be paired: a regional observation for one period could not be combined with a national observation for the other. This would preserve a comparable basis for the ratio while providing a defined fallback.

The year-end publication cutoff would fix housing data

Annex 2, point 2.2, would select the latest applicable housing index published by the reference year’s final day as the closing indicator. Later publication or revision would not alter that year’s indexed value. Under point 2.5, the transaction indicator would concern the transaction’s calendar quarter and likewise be published by year-end. Publication timing would therefore restrict the usable data.

If only the transaction year were identifiable, point 2.6 would use the arithmetic average of that year’s four quarterly indices. If even the year were unknown, or necessary data remained unavailable after national substitution, point 2.7 would prohibit indexation. Partial date information would thus permit a limited fallback, but complete uncertainty about the year would not.

Farmland indexation would cover a narrower list of cultivation categories

Annex 2, point 3.1, would use national annual KSH average prices per hectare, separated by cultivation category. Point 3.2 would permit indexation only where year-end registration classified land as arable, meadow, pasture, vineyard, orchard or forest. Meadow and pasture would both use the grassland series rather than two independently selected data series.

This list would not equal the full farmland definition in Section 2, point 36, which would include further categories. Classification as farmland under the draft would therefore not itself establish annex-based indexation eligibility. Buildings erected on the parcel would also fall outside that farmland definition, so availability of farmland-price data would not automatically extend to valuing those buildings.

Missing farmland data and category changes would prevent indexation

Under Annex 2, points 3.3–3.4, the closing indicator would be the appropriate data for the latest calendar year published by year-end; the transaction indicator would concern the transaction’s calendar year. If either necessary observation were unavailable by the final day, point 3.5 would prevent indexation under the annex. No substitute national series comparable to housing’s fallback would be provided.

Point 3.5 would also prevent later publications or revisions from affecting the given year. Point 3.6 would create an independent obstacle: a registered cultivation-category change between transaction and reference date would prohibit this indexation. Even with annual price data available, selecting the series matching the final-day category would therefore be insufficient if the registered classification had changed meanwhile.

Earlier appraisals, the mandatory calculator and retained calculations

Section 19(5) would allow updating a domestic-property appraisal dated more than twelve months but no more than ten years earlier, without material legal, technical or use changes. Annex 2, point 1.5, would substitute the expert’s market value for transaction value and the appraisal’s reference date for the transaction date. The method would thereby accommodate a different source for the historical value.

Section 17(6) would require the authority’s online calculator for both transaction and expert-value indexation. Section 15(6) would require the starting value, date, indicators and calculation to be retained until the assessment limitation period expired; subsection (7) would require rounding to a thousand forints. Calculator use would therefore not replace substantiation of the underlying data or eligibility.

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