Mar 22, 2016 - Zoltán Kovács

“We want our politics built on families” – PM Orbán on the Family Housing Support Program

As the cost of raising children increases, Hungary’s government has singled out soaring housing prices as a major hindrance to families who want to own their home and have more children. To ease the financial burden, the government has passed legislation that provides support for home ownership.

“We want our politics built on families,” said Prime Minister Orbán. “Make families again the core of European politics. Families and children are really a blessing—not just for the nation, but for the entire European community.” 

In that spirit, the Family Housing Support Program (CSOK) offers up to 20 million HUF of financial support per family for home ownership. This support allows married couples with children to buy new and used homes with financial assistance in the form of grants and low-interest loans from the government. These benefits will work in tandem with a reduction of Value Added Tax on the sale of new homes from 27 percent to five percent; in addition VAT on construction materials for families deciding to build their own homes qualifies as tax-deductible.

The Family Housing Support Program also provides some stimulus to the construction sector, with new-builds expected to increase to 40,000 units, up from 8,000 at present, and to bolster the market for contractors in the construction industry. In an effort to further lower the costs of home ownership, these homes must be equipped with energy efficient features aimed at reducing utility costs and emissions. Ultimately, these measures are intended to put home ownership within reach for more couples, encouraging them to have large families in the struggle against current demographic trends.

Population decline has become a critical issue across Europe, particularly as the costs of child-rearing increase. For 25 years, Hungary’s birth rate has failed to keep up with the mortality rate contributing to the country’s population decline. Considering families as the bedrock of Hungarian society, the guarantors of strong, future generations, plans such as CSOK aim to combat the financial barriers to raising children. For each additional child, couples will receive increased financial support toward homeownership. CSOK also extends these benefits to legal guardians of adopted children. However, the plan stipulates that if a family does not meet the number of children they forecast upon enrollment in the program, then they must return the government subsidies after a period of time, excluding circumstances arising from health conditions.

Families must meet eligibility requirements, of course. Applicants must meet specific social security insurance system criteria, have a good credit rating and no criminal record.

 Government-sponsored economic support programs for families, like CSOK, have begun to emerge slowly, but if properly enacted, will gradually have a positive impact. The Orbán Government has already made strides to assist families with two working parents by increasing benefits for grandparents who assist in childrearing. With economic policies such as CSOK in place, confidence will increase, economic conditions likely will improve and, as new homeowners, families will be willing to have more children – repopulating Hungary in the long-term while contributing to strong economic growth in the country’s construction sector that is still recovering from the economic crisis.