Government modifies farmland auction regulations

Telco

Following the recent launch of farmland auctions, the Hungarian government modified a regulation for a preferential credit line from the Hungarian Development Bank (MFB) for state-owned farmland purchases, so that credit would only be available to those buying land through their pre-emption rights, a resolution in official gazette Magyar Közlöny shows.

Previously, credit was also available to buyers without pre-emption rights, MTI noted. The resolution also increases the number of potential buyers eligible to make a 10% down payment in the event that they are buying land which they currently rent. This is in contrast to the 20% down payment required from buyers who are not in a rental contract, MTI said.

Currently MFB is offering a HUF 150 billion preferential credit line, however, Cabinet Chief János Lázár said on November 26 that since local farmers showed “strong” interest in the auctions of state-owned farmland, and almost the entire HUF 150 bln preferential credit line had been used up, he proposed the credit line be raised to HUF 300 bln.

MFB loans have a maturity of 20 years, with an interest rate fixed at 1.95% in the first ten years, and around 2% in the second ten-year period, MTI reported. MFB provides loans between HUF 3 million and HUF 300 mln, MTI added.

Auctions are underway in 19 counties to sell 380,000 hectares of state-owned land to local farmers, MTI said earlier, adding that only local farmers may bid in the auctions.

Critics of the farmland auctions argue that the auctions provide yet another opportunity for “government friendly oligarchs” to increase their wealth.

Reports by Hungarian online dailies origo.hu and nol.hu on the auctions described them as only one bidder showing up, and the auction being closed in a matter of seconds, without a competitive bid being launched.

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