Utility reduction decree – Is it also a significant factor in case of luxury properties?

Is the change in utility reduction also a significant factor in case of luxury properties? In today’s article, we are looking for the answer to this, since the new regulation undoubtedly affects the real estate market. In August 2022, the utility reduction decree, also published in the Magyar Közlöny, determined how much consumption the previous discounted price is valid for, and what price should be calculated in case of above-average consumption.

At first, many people think that utilities are not relevant in the case of premium real estate, but the situation is more nuanced than that.

Utility reduction decree – Is it also a significant factor in the case of luxury properties?

The changes have an impact on the real estate market, energy-efficient, modern properties are more sought after, as everyone calculates how their utility costs will develop.

Luxury has no special definition, it is a concept. In the case of real estate, the floor space, environmental awareness, the existence of smart technology, premium construction, style, and location are all the cornerstones of the road leading to the top-class real estate indicator.

It is expected that environmentally conscious and energy-efficient properties that satisfy all needs will become more and more popular, and if you have to consider the floor area and the expected overhead costs, it is likely that even in the case of expensive, luxurious properties, the favourable monthly maintenance will be more welcomed.

What does the utility reduction mean?

The question that concerns many people, what is meant by reduction, is worth looking at in 2 time frames. What did reduction mean up until now, and what does it mean now and then?

When buying or renting real estate, in the vast majority of cases, the maintenance cost of the real estate is an influencing factor. This is especially true now, when the reduction regulations in force since 2013 have been changed in several points.

The introduction of the reduction in the sector of energy and utility providers meant a transition to official prices instead of free-price pricing on the residential end-consumer side. The introduction of the overhead reduction in 2013 was also supported by the then very low world market price of fossil energy carriers.

Currently, everyone who consumes more than the legally defined average must pay the market price for electricity and gas.

Does it apply to both electricity and gas?

The utility reduction, which has been in effect for 9 years, was also valid for electricity and gas, and is still valid up to the level of below-average consumption.

If we look at the monthly electricity bill of an average consumer, the fee payable today is HUF 7,750, while without the utility reduction it would be HUF 50,883. In the case of an average gas consumer, the monthly fee is HUF 15,833, which would be more than HUF 131,000 without utility reduction.

Utility reduction reduction 2022

Based on the utility reduction decree that came into effect in the summer of 2022, essentially a reduction took place, in Hungarian the utility reduction valid since 2013 in the original structure has partially ended.

They set a limit until which everyone receives gas and electricity at a reduced utility price,

• this limit for natural gas is 1729 cubic meters/year, i.e. 144 cubic meters/month,
• for electricity, 2523 kilowatt hours per year (kWh), which corresponds to a monthly consumption of 210 kWh.

According to the utility reduction decree, in the case of electricity consumption up to 2,523 kWh/year, the price remains HUF 36, while – for consumption above this, it is HUF 70.10.
In terms of natural gas consumption, the HUF 102 tariff remains below the annual consumption of 1,729 cubic meters, above which HUF 747/cubic meter must be paid. Overhead table below

Utility costs in downtown apartments

The utility costs of apartments and houses are significantly influenced by the property’s condition, floor area, energy efficiency, and modernity. There can be a huge difference in utility costs between a newly built, energy-efficient downtown property and an outdated, out-of-date downtown property. Expected utility costs and predictable maintenance expenses are key when buying or renting real estate, just like location or price.

There is no doubt that every real estate buyer who makes a conscious decision, whether in the case of an exclusive property or an average property, will consider the expected utility costs of the given property before making a choice, since it does not matter whether it is a premium apartment with an AA++ energy rating (= minimal energy demand) or a property that falls into a much lower energy range must be maintained in the future.

It is important to point out that currently only less than half a percent of certified properties in Hungary fall under the AA++ classification.

Price change in case of downtown properties

In addition to the other factors influencing individual consideration, which have been taken into account so far, the change of utility costs plays an even more central role in the development of downtown real estate prices. The Luxury real estate expert, Kenway has already predicted that energy efficiency, long-term sustainability, and affordable utilities will be key factors in the change of housing prices this year, which make one downtown property more attractive compared to another.

Utilities for luxury apartments

There are also utilities to be paid for premium apartments, but it matters how much. Since the utility reduction decree entered into force, the number of properties advertised with the label “luxury apartment with low utilities” has increased considerably, which also confirms how central a role utility has become for those looking for a high-end home.

Of course, not all expensive apartments are energy efficient, but it can be expected that in the future, apartments bearing the label of luxury real estate will have to be truly environmentally conscious and have low overhead costs. Just think that a 70 m2 quality apartment with a BB rating can cost HUF 85,000 per month (electricity + heating), while for an apartment of the same size but with AA++ efficiency, the same can cost HUF 25,000. The expected monthly energy and gas costs of an apartment, house, or downtown property can be easily and accurately calculated from the utility table or utility calculator.

Utility table 2022

The utility table below 2022 illustrates how the utility-reduced price, the residential market price and the competitive market price will change in the case of electricity and gas consumption.

ELECTRICITY

GAS

Utility calculator 2022

Since the announcement of the changes to the utility reduction decree, almost everyone has calculated how their expected utility costs will develop in the future. With the electricity and gas calculators available on the providers’ websites, or even with the help of the complete utility calculator 2022, you can easily and quickly get an idea for planning expenses by entering some data. The utility calculator 2022, also known as reduction 2022, accurately calculates the amount to be paid to service providers, even in a monthly breakdown.

If you have questions about the utility reduction decree or the utility calculator regarding the sale or lease of your property, or if you are about to buy or rent a property, contact us, Kenway will find the best solution for you, whichever side you represent.