The new social-political program called CSOK was introduced on July 1, 2015. The name means “kiss” in Hungarian, but actually it’s only the abbreviation of a technical term for the new kind of government incentives offered for the housing of families.
However, the changes introduced from January 1, 2016 were the ones that caused a real uproar in society. CSOK is both for family founders – young couples who have yet to bear children, or adopting parents, or families with one, two, three or more children – and for builders who are planning new constructions or making additions. Buyers can be looking for condominiums or single-family houses.

10 + 10 million

Families with three children may receive a HUF 10 million grant for the construction or purchase of adequate housing as a government incentive, and they can finance the project with a low-interest loan up to another HUF 10 million. For constructions they may also benefit from the decreased value added tax rate of 5%, which the builders can enjoy up to the total invoice value of HUF 5 million.
The government declared that it is willing to help “several hundred thousand” families with the comprehensive program. A logical question is, how will the state budget be able to finance all this? However, the answer takes us closer to reality: families will get the spectacular funds only if they meet a number of conditions.
The bottom line is that not only the political opposition but also quite a lot of families living in the poorer part of the country have realised that the Orbán government is (again) launching a program with a much more social aim than a welfare aim. Only these poorer families are seemingly able to benefit from the program.
While the Socialists used to simply pour their “welfare program” evenly over the masses, Fidesz has been working on building a new middle class. It is the middle class that has already been carrying the country on its shoulders in terms of paying tax, and now in the future shall have even more fun by having children.
Through this program a particularly powerful layer will be reproduced, having been selected for the upcoming baby boom that used to be rather characteristic of poor slums in Hungary up until now.

Significantly less for exchanging flats

Perhaps in order to keep peace within society, the politicians announced in the first half of January that there will be a special CSOK program offered for the participants of public work programs. From the point of view of commercial banks these people are not creditworthy, since they receive less from the state than the minimum wage regulated by law. So for them, the possibility of taking a HUF 10 million low-interest loan is ruled out right from the start.
But what does the state ask for the free money? Everyone is talking about the grant of HUF 10 million, however this is only applicable for newly built housing and with a commitment of raising three children (they can be born later on or even be adopted). If we are talking about change of ownership on the open real estate market, the CSOK-compatible families will only receive one or two million instead of the rich ten million, depending on the number of square metres and children.
If they have four children and more than 100 square metres of housing a grant of HUF 2.75 million can be received. In a similar manner, if a couple does not wish to take on more than two children and wishes to buy a newly built home, they will only be honoured by HUF 2.6 million by the state. For families with a single child the top amount is HUF 600,000; such families would have been better off without the CSOK and with the conditions of last year.

Miraculous inflation at New Year

The government managed to heat up the real estate market so much that the “free millions”, as the Hungarians refer to the present from the state, are likely to end up with the real estate developers and construction companies rather than the families for which they were intended.
The laws of the market are going to take care of that: there have been low numbers of newly built housing estates for several years in a row, and now comes the potential demand of several thousand, if not a hundred thousand families, which is surely going to make the selling prices rocket.
The real estate sector has already registered a miraculous price increase of 10-30% for the already built apartments that have been standing empty for years in different residential parks. Mind you, nobody wanted these apartments so far and the value added tax sank from 27% to 5%, which, considering the per-square-metre prices between HUF 150,000 (in villages) and HUF 350,000 (in large cities) and the required minimum size of CSOK-compatible apartments, is not a small amount.
In addition the sellers have set their prices quite high, since they know that as soon as the banks are going to give the green light to their clients, the families are going to take a look at the offerings on the market right away.
The government well knows that even the CSOK millions are not going to make housing dreams come true in Budapest. The aim is much more making the rural zones attractive. The program, which is planned to last for four years, is considered as “open” in budgetary terms, meaning that the funds are surely not going to run out within this period, according to the government’s statement.
In other words, anyone who satisfies the conditions and applies can hope to receive the support. It’s not surprising that commercial banks are doing overtime at the moment; several financial institutions introduced special customer service days on Saturdays to satisfy the enormous thirst for information.

All kinds of reasons for exclusion

The Orbán government apparently does not want to roll any larger stones in the way of families; compared to the original CSOK launched in mid-2015, several conditions have been eased. Nevertheless, the statement according to which young couples who commit themselves to have three children within ten years will be able to get their own house without bringing in any of their own equity, is only a sentence serving political PR.
Spouses are excluded, since the law renders the marital bond of a man and a woman necessary. Those who are de facto unemployed are also excluded from the great “kiss”, the gift of HUF 10 million, since they will not be able to buy the newly built apartments over 60 square metres or the houses of at least 90 square metres even in the countryside.
(Not to mention that the newly built housing which meets the conditions prescribed by the CSOK system have been almost exclusively built in Budapest and other large towns, but surely not in the provincial areas.)
Considering the number of bad loans in the previous decade, the number of families excluded from the program due to being on bank blacklists is not to be underestimated. Another characteristic of the labour market is that not all the workers are registered properly in the social security system, thus also excluding them from the list of prospects.

What if interest increases?

Economic experts see the greatest risk on the side of the state budget. Fidesz already supported the construction industry in its first governance (1998-2002) with generous interest rate subsidies that proved to be one of the skeletons in the budget closet inherited by the Socialists. The latter chose the path of least resistance, letting the inherited system run out and directing the masses towards foreign-currency loans – the consequences of which are still not forgotten.
Now the Orbán government promises to offer an interest rate never higher than 3% in support of the HUF 10 million loans. Inflation and the base interest rate are both hitting rock bottom today, and for this reason the banks are able to meet these conditions also without receiving any support from the state. However, what happens when interest increases?

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