Privatisation and rehabilitation in the Budapest inner districts

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Abstract
Inner‐city areas of Budapest have been almost exclusively dominated by public (state‐owned) rental housing since 1952 when massive nationalisation turned private rentals into state rentals. The last four decades have shown a slow but gradual deterioration of this housing stock (except for the CBD area) due to the problems of rent policy, bureaucratic and inefficient organisation of maintenance and also the slow, but continuous, exchange of population. Even if inner‐city areas never became low prestige contagious slum areas, young families tended to leave this part of the city, moving to the new flats on state‐built housing estates or self‐help building areas. At the end of the 1980s many aspects of inner‐city housing suddenly changed and this led to a completely new scenario. By far the most important change was, however, the implementation of a Right to Buy policy which made it possible for sitting tenants to buy their units under very favourable financial terms (at a very discounted market price with the possibility of a loan with a huge interest‐rate subsidy), without real constraints on re‐sale. In the meantime, privatisation of the economy and the growing number of Hungarian and joint ventures dramatically increased the demand for office space and other commercial properties. Researchers hypothesised the speeding up of the segregation processes, and the increase in the difficulties for the rehabilitation and renewal processes in the inner city. In this paper we use the results of a recent empirical survey in order to analyse the effects of privatisation on the possibilities of rehabilitation. Particular attention is paid to the connection between privatisation and equity issues in terms of the distribution of rent subsidy and value‐gap among the different social groups.

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