The National Bank of Hungary (MNB) has classified Central NOK Szervező as a "trustworthy organizer" and has licensed it to organize national home-building societies (NOKs) in a resolution dated April 11 and published late Tuesday, Hungarian wire service MTI reported.
The MNB also approved a public invitation by Central NOK Szervező for future members to join a 120-month and a 180-month NOK. The fund operating in Hungary has capital of HUF 100 million, the legal minimum.
Central NOK is held by the asset manager Carion Holding and by Poligrupo Holding. It earlier organized group purchase schemes under the name Poligrupo Hungária.
Hungaryʼs Parliament approved legislation allowing the establishment of such societies, based on the model of building societies in the U.K., in spring 2016. Members who save enough to make a 20% down payment on a new home are selected either through a bidding process based on the size of their contributions, or through a lottery, if contributions match, to get an interest-free home loan.
NOK members get a 30% state subsidy on their contributions up to HUF 25,000 per month that can only be used for the purchase of new homes. The subsidy is available, however, only if the organizer of the given NOK is classified as a "trustworthy organizer" by the MNB. The criteria for classification as a "trustworthy organizer" include having participated in the sale of at least 1,000 homes and having submitted mandatory data to either the MNB or, in the case of organizers of group purchases, the Consumer Protection Agency, for a period of at least two years after being licensed.
Critics of the law said at the time that there was only one company which met the criteria necessary for its NOKsʼ members to enjoy the state subsidy.
Under the law, NOK members must decide on the size and frequency of their contributions, as well as a maximum price for the home they wish to purchase when they join a society. Home prices may be between HUF 10 mln and HUF 40 mln, though members may make up the difference for more expensive homes in a lump sum upon purchase.
Members are not paid any interest on their contributions, nor are the contributions covered by the National Deposit Insurance Fund (OBA), as are deposits at home savings banks.
Societies must have at least 120 members, and they may remain established for no less than ten years but no more than 15.
Closed companies limited by shares that are registered in Hungary and have share capital of at least HUF 100 mln may operate a society or societies, collecting contributions and managing assets. The organizations managing societies will have to maintain a minimum amount of reserve assets as stipulated by law and societies cannot be dissolved until every member receives a home.
The organizerʼs assets must be kept separate from the funds of the building society it operates, the law stipulates.