Budapest Bans Short-Term Rentals in Terézváros

Starting from 1 January 2026, Budapest authorities will restrict short-term rentals in the Sixth District, which includes Andrássy Avenue and the Hungarian State Opera, reports Travel and Tour World. Housing, including units listed on platforms such as Airbnb, will no longer be allowed for this purpose. The measure aims to reduce tourism pressure on local residents and preserve the district’s historic character.

Reasons and Details of the Restrictions

The decision affects one of Budapest’s most popular districts, which has long remained a cultural hub with theatres, museums, and restaurants along Andrássy Avenue. In recent years, the number of tourists and short-term rental listings grew so rapidly that residents began to be displaced from their own homes. Listings increased by 80% since 2020, and in some buildings the share of Airbnb-rented apartments reached 50%. Mayor Tamás Soproni emphasizes that the ban is necessary to restore the residential balance, especially in buildings where tourist apartments exceed half of the housing stock. The decision was supported by 54% of participants in an online referendum, with a turnout of 20.5%.

The ban received legal backing after a session of the Hungarian Supreme Court, which allowed such restrictions to be introduced. The measure applies only to short-term tourist rentals; hotels, guesthouses, and traditional accommodation formats will continue operating as usual. The atmosphere of Terézváros is expected to change. Authorities hope to bring back a calmer character to the district and reduce the volume of visits. At the same time, the city will continue to attract guests with its thermal baths, museums, historical quarters, and the Danube embankment.

Impact on Travellers and the Market

The key consequence for travellers will be a reduction in available options in the central part of the city. Booking will need to be done in advance, especially during peak season. Experts expect this to reshape the accommodation market: rates are likely to rise, and demand will shift toward hotels, official B&Bs, and districts outside the core tourist routes.

According to Homever, landlords focused on the short-term segment will face declining profitability, as demand for daily rentals moves into the hotel sector. For some owners, this will mean switching to long-term rentals or revising their investment strategy. At the same time, increased activity is expected in the long-term rental market. More listings will appear in the city centre, which may temporarily lower rents in the segment of small renovated apartments previously aimed at tourists.

The Rentalscaleup portal published calculations from homeowners’ associations warning of income losses, reduced business activity, and a decline in tax revenues of around 1 billion forints (2.6 million euros) per year. They note that the restrictions will affect compliant owners yet fail to resolve structural issues such as illegal rentals.

Hungarian authorities had previously limited new licence issuance and allowed districts to set their own rules. The Sixth District became the first to use this right, creating a precedent that other parts of the city may follow.

Gross and Net Yields

Budapest follows the broader European trend of tackling the overcrowding of major tourist centres. Barcelona, Amsterdam, and Florence have already introduced similar restrictions in an effort to restore housing affordability for locals and reduce pressure on historical districts. Analysts at International Investment note that the recent changes mean investors must prepare to adjust their strategies: shift to medium-term rentals, consider districts with softer regulation, or exit the segment altogether. Experts emphasize that even before the new restrictions, the Budapest market was characterized by a high entry threshold and moderate yields, and the updated rules further reduce the attractiveness of the short-term segment, which many had viewed as a way to offset rising operating costs.

Even in the tourist district of Terézváros, the maximum gross yield does not exceed 5.59% — achievable when purchasing a three-bedroom apartment for €397,000 and renting it out for €1,850 per month, according to Global Property Guide and Real Estate Hungary. One-bedroom units priced at €204,800 can generate 4.63% annually, while studios offer 4.44%. However, net profitability is significantly lower due to maintenance expenses, taxes, vacancies, and commissions. In most cases, it stands at 2–3%, and may fall even further with any decline in occupancy. Average gross yields in Budapest are estimated at 5.03%, with net yields around 3%, while the national averages reach 5.25% and 3.25% respectively. Under these conditions, investors risk not only losing expected income but potentially posting negative returns if occupancy deviates from projections or operating costs increase.