At the Annual Congress of the UAE (Union des Avocats Européens) in Barcelona, I will speak about how the free movement of capital can be reconciled with the protection of housing and broader social interests.
The issue could hardly be more timely. According to Eurostat data, between 2010 and 2024 housing prices in the EU increased by 53%, while rents rose by 25%. In Hungary, the same increases were 231% and 107% respectively, alongside exceptionally high inflation (86%) and a 172% rise in construction costs. While the EU average increase in construction costs was also significant at 56%, it remained well below Hungarian figures. In recent years, the Hungarian housing market has become one of the most remarkable cases in the European Union. According to the Hungarian National Bank’s Housing Market Report of November 2025, in the second quarter of 2025 housing prices in Hungary rose by 17.9% year-on-year, which at the time represented the highest nominal housing price growth in the EU.
It is important, however, that the Hungarian housing crisis cannot be explained solely by foreign buyers or global capital. According to data from the Hungarian Central Statistical Office (KSH), in 2023 the share of residential properties purchased by foreign nationals accounted for 5.9% of all transactions in Hungary. This share was higher in Budapest, particularly in inner districts, than in other regions. In other words, foreign demand is strongly concentrated in certain urban micro-markets, but at the national level it is only one factor among supply constraints, domestic investment demand, credit market developments, and state subsidies.
Legal background
Examining this issue requires consideration of numerous legal aspects in order to assess the associated risks and determine whether Hungarian and European legal systems provide adequate responses.
Real estate sale contracts concluded by consumers, along with related agreements such as loan contracts, security arrangements, and other contracts, are typically based on pre-drafted and complex sets of terms. Consumers often do not fully understand their economic consequences, which has led to significant systemic problems in recent years.
Due to the free movement of capital, Europe seeks a coordinated regulatory approach in the field of housing. The European Commission’s planned Affordable Housing Act aims to equip Member States, regions, and municipalities with tools to address housing pressure, reduce housing and construction costs, tackle housing shortages, and regulate short-term rentals, particularly in areas affected by housing crises. According to analyses by the Commission and the Joint Research Centre (JRC), Europe would need more than two million new homes annually—approximately 650,000 more than current construction levels.
EU law must protect the free movement of capital while also safeguarding consumers against unfair contractual terms. Striking a balance between these objectives is not straightforward, as both are underpinned by significant interests.
The starting point of EU law remains the freedom of the internal market. Article 63 of the Treaty on the Functioning of the European Union (TFEU) prohibits restrictions on capital movements not only between Member States but also between Member States and third countries. The European Commission explicitly considers cross-border real estate purchases and investments as falling within the scope of capital movements. However, this does not mean that real estate markets cannot be regulated: restrictions may be compatible with EU law if they pursue a legitimate public interest, are proportionate, transparent, and non-discriminatory.
On the other side stands EU consumer protection law. Under Directive 93/13/EEC, a contractual term not individually negotiated with a consumer is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer; such a term is not binding on the consumer. In the context of residential mortgage agreements, this is complemented by the Mortgage Credit Directive, which aims to ensure that consumers taking out loans for housing receive adequate information and protection against risks.
The Hungarian experience
From a European perspective, Hungary’s experience is important not only because of housing prices but also because Hungary has played a key role in the case law of the Court of Justice of the European Union (CJEU) on unfair contract terms. The best-known example is the case of Kásler and Káslerné Rábai v OTP Jelzálogbank Zrt., referred to the CJEU by the Hungarian Supreme Court (Kúria) for a preliminary ruling.
The case concerned a foreign currency-based consumer loan agreement. The loan was disbursed in Hungarian forints but denominated in foreign currency; the bank applied a buying rate at disbursement and a selling rate when calculating repayments. This resulted in an exchange rate spread and raised the question of whether such a contractual clause could be assessed for fairness, particularly when it relates to the main subject matter of the contract or the adequacy of the price.
The CJEU established three key principles. First, terms relating to the main subject matter are not automatically exempt from review; exclusion applies only if the term is clear and intelligible. Second, “clear and intelligible” does not merely mean grammatical clarity—the consumer must be able to assess the economic consequences of the contract based on clear criteria. Third, if the removal of an unfair term would render the contract non-viable, the national court may, under certain conditions, replace it with a dispositive rule of national law to avoid particularly detrimental consequences for the consumer.
The significance of the Kásler case extended far beyond the technical issue of exchange rate spreads. It clarified that transparency in housing finance is not a formality. It is not enough for the consumer to sign the contract; it must also be ensured that they genuinely understand its economic mechanisms and risks. This is where consumer protection law becomes, in essence, a guarantee of housing protection.
The subsequent case of Dunai v ERSTE Bank Hungary highlighted this issue even more sharply. In 2019, the Court held that national legislation may be contrary to EU law if it prevents the retroactive invalidation of a foreign currency loan agreement containing an unfair term relating to exchange rate risk, where the contract cannot survive without that term. The central message was that consumers cannot be deprived of the protection that unfair terms are not binding on them.
The issue remains ongoing. In March 2026, in the UniCredit Bank and Momentum Credit case, the CJEU again ruled on a Hungarian foreign currency loan. The Court held that EU law precludes an interpretation under which a consumer may invoke the legal consequences of contract invalidity only within a five-year limitation period from the conclusion of the contract, if at that time the consumer did not know and could not reasonably have known about the unfair nature of the term. The Court also emphasized that an average consumer cannot be expected to continuously monitor national and EU case law.
Hungarian private law guarantees: from standard terms to collective actions
The Hungarian Civil Code contains several safeguards particularly relevant to real estate transactions and housing finance. Section 6:77 defines general terms and conditions as clauses unilaterally pre-formulated for multiple contracts and not individually negotiated. The burden of proof lies with the party using them.
Under Section 6:78, such terms become part of the contract only if the other party had the opportunity to become acquainted with them and accepted them. Terms deviating significantly from statutory provisions or customary practice require specific notice and express acceptance—this has practical relevance for clauses on penalties, withdrawal rights, unilateral modifications, payment schedules, or developer contracts.
Section 6:99 is particularly noteworthy: in consumer contracts, clauses requiring the consumer to transfer ownership, another right, or a claim, or to grant an option right as security for a monetary claim are null and void. This prevents circumvention of consumer protection and enforcement safeguards.
Sections 6:102–6:103 define unfair terms as those that, contrary to good faith, unilaterally and unjustifiably disadvantage the other party. In consumer contracts, such terms are null and void and may be invoked in the consumer’s interest.
Hungarian law also provides collective enforcement tools. Section 6:105 allows public interest actions against unfair terms, which may be initiated by prosecutors, ministers, government offices, chambers, professional organizations, and consumer associations. Court decisions may declare such terms invalid with effect toward all contracting parties and prohibit their future use.
Hungarian specificities: local identity protection, guest investor scheme, political change
In 2025, Hungary introduced legislation on the protection of local identity, granting municipalities new tools to safeguard local development and community character. These include pre-emption rights and restrictions or conditions on establishing residence.
From an EU law perspective, this is a sensitive area. While such measures may pursue legitimate aims—such as protecting local communities or housing opportunities—they must meet requirements of proportionality, objectivity, and non-discrimination.
At the same time, Hungary offers a guest investor residence permit for third-country nationals. This may be based on acquiring investment units of at least EUR 250,000 in a registered real estate fund or making a EUR 1 million donation. The fund must maintain at least 40% exposure to Hungarian residential real estate, with a minimum holding period of five years.
Following the 2026 elections, policy shifts may occur, with potential emphasis moving from demand-side subsidies toward supply-side and rental housing solutions, including social housing and energy efficiency programs.
European comparison: three models
Spain has strengthened enforcement safeguards and pre-contractual transparency, including notarial oversight and rent regulation in high-pressure areas.
Italy combines nullity rules with judicial and administrative control, including significant fines for unfair terms.
Greece integrates consumer protection with post-crisis debtor protection mechanisms, including sale-and-leaseback solutions for vulnerable homeowners.
Conclusion
Across Europe, there is no single model, but a common lesson emerges: housing cannot be treated purely as an investment asset. While the free movement of capital is fundamental, it must not result in consumers bearing the full burden of opaque contractual structures and excessive risks.
The legal response to the housing crisis is therefore not only a matter of public or social policy, but equally of private law: what contracts are signed, what consumers actually understand, and whether legal systems can prevent unfair terms from ultimately leading to the loss of one’s home.
Capital may move freely—but contractual imbalance must remain subject to legal control.
Author: https://studiolegale.hu/hu/munkatarsaink/dr-szervatiusz-boglar/