Decision 25/2021. on certain rules related to the Rent and the Sale of Flats and Premises
11 August 2021
Decision number: Decision 25/2021. (VIII. 11.)
Subject of the case:
Preliminary norm control aimed at establishing the lack of conformity with the Fundamental Law and annulling Section 1 to 3 of the Act (Bill No. T/16223) adopted on the Parliament’s session of 15 June 2021 on the amendment of the Act LXXVIII of 1993 on certain rules related to the Rent and the Sale of Flats and Premises and the Act CXCVI of 2011 on National Assets (right of option over flats located in a national heritage building)
The Constitutional Court ruled on the motion of the President of the Republic that the provisions of the Act adopted by the Parliament but not yet promulgated, which would have granted buying option right to the tenants who have rented a state-owned or municipally-owned apartment in a national heritage building for not more than 25 years, are contrary to the Fundamental Law. In its decision, the Constitutional Court also ruled as a constitutional requirement that in the case of the exercise of the right of option granted to the tenants of flats in a national heritage building, the heritage protection authority must give its consent to the sale by taking into account the aspects of national heritage protection. The procedure of the Constitutional Court was based on a motion by the President of the Republic, in which he requested an examination of the conformity with the Fundamental Law of Sections 1 to 3 of the Act amending the Act LXXVIII of 1993 on certain rules related to the Rent and the Sale of Flats and Premises and the Act CXCVI of 2011 on National Assets. The purpose of the provisions of the Act affected by the motion is to enable the tenants to acquire ownership of the flats they rent, provided that these flats are located in national heritage buildings previously excluded from the right of option applicable to state and municipal flats in the context of the privatisation of exclusive state property prior to the change of the regime. In the view of the President of the Republic, the legislative objective and the right of option established in the contested draft amendment to the Act are incompatible with the constitutional requirement to protect and preserve the built environment as part of the cultural heritage, in particular the buildings under national heritage protection. While under the current legislation, a flat in a national heritage building can only be sold with the consent of the heritage protection authority, in accordance with the provisions of a specific law, the new provisions laid down in the proposed Act would establish a right of option to the entire range of state- and municipality-owned national heritage properties in the World Heritage Area and its protection zone. According to the President of the Republic, this is contrary to non-derogation, which guarantees the protection and preservation of cultural values, and the need for such a restriction municipality ownership is unjustified and disproportionate. In relation to the restriction of the right to property, the Constitutional Court explained that the right of option may result in the termination of the right to property, which is a heavy burden and requires compensation. The municipality must receive a consideration for the flats lost due to the right of option that keeps in its assets a value commensurate with the value of the flats it owned. The method of securing the proportionality of values must be formed by the legislature. Any variation or amendment to the existing provisions satisfying the constitutional condition that the principle of proportionality is respected is possible. The Act has defined three categories of persons entitled to the right of option: those who have been renting the flat for between 5 and 15 years, those who have been renting it for between 15 and 25 years and those who have been renting it for more than 25 years. According to the reasoning, the law-maker considered the conditions under which tenants – who had previously acquired a right of option – in a similar situation to the tenants concerned now, could exercise it under the statutory and municipal rules established in the 1990s, to be the relevant conditions. However, in the Constitutional Court’s view, the provisions of the Act are only consistent with the law-maker’s objective in the case of tenants whose tenancy exceeds 25 years. However, the exceptional nature – as required by the Fundamental Law – of the regulatory solution concerning the other two categories of subjects has not been justified by the law-maker. The Constitutional Court has therefore declared the provisions of the Act relating to the right of option of the tenants who have been in a tenancy for less than 25 years to be contrary to the Fundamental Law. The Constitutional Court further explained in its decision that the requirement of non-derogation previously established in relation to the right to a healthy environment is constitutionally applicable to the obligation undertaken by the State in the context of the protection of national heritage buildings. Its essential aim is to ensure that the level of protection once achieved is not lowered. It is a constitutional requirement that, in the case of the sale of national heritage buildings, the State should provide appropriate guarantees to ensure that the relevant building is managed after the change of ownership in accordance with its level of national heritage protection. This is a particularly important guarantee in the case of the flats covered by the Act under review, most of which are being taken out of state or municipal ownership for the first time. The Constitutional Court has therefore stressed that the State has a duty to incorporate into its legislation guarantees that contribute to maintaining the level of protection, even in the case of legal transactions concerning national heritage buildings. Therefore, the Constitutional Court established as a constitutional requirement under Article P (1) of the Fundamental Law that the agency exercising the regulatory right to protect national heritage buildings should not subordinate the interests of the protection of heritage buildings to other aspects in its decision-making, and thus it should give consent to the sale, as a precondition of exercising the right of option, by taking into account the aspects of the protection of national heritage buildings.