Budapest renovation

Hello all
I bought an apartment in Budapest in 2003. I had the interior renovated and fortunately its been rented out most of the time since. I have been contacted by the management company who informed me that a developer wants to renovate the entire building in return for placing a new floor of apartments on top. From reading previous threads, I know there are members who have a lot of experience of the Budapest property market. I’m wondering if all the apartment owners or a majority have to agree to this development? I have been told the work will take over 9 months and as my apartment is on the top floor, it will be impossible to rent out. Will the developer be insured for any damage caused to my apartment? I realise that when the work is finished it will add value to the apartment and rent but I’m just wondering what usually happens in this situation ? Any advice greatly appreciated

Hello Patrol,

As a property manager, I am in the same situation in district 6 Vorosmarty street. There is a developer that wants to renovate the entire building for placing new floor (extra 2 storey). I was participated on general meetings in December '06 and February '07. I give a short summary of the process:

- first the foundation agreement of building needs to be modified by 100% of owners
- then 100% of the owners need to agree with selling the loft
- finally 100% of the owners need to agree which developer can do renovation

It means if one owner did not agree with this, selling the loft and or renovation would not be taken place.

With regard to compensation - expected financial loss due to high chance of vacancy during renovation - your management company/property manager should act on behalf of you in this matter because top floor owner always get compensation. In my case, the apartment is at floor 2 (3 storey building) but I am sure we must have difficulities in enquiring a tenant.

Anyway, added value would be much higher than your financial loss from lack of tenancy.

Please keep us posted how you get on

Cheers

Hi Patrol,

Where is your apartment located?

You will have more difficulties getting a tenant if they start renovation on the building, but assuming that it's only a noise issue and your apartment won't be directly affected, there may be ways of managing this, such as making the tenant aware of what will happen and reduce the rent accordingly. Builders tend to work from 7am-4pm and on Saturday mornings only, so if the tenant works all day, it may not be a huge problem.

The long-term prospects of having a totally renovated building hugely outweigh the short-term downsides. It's vital to make sure that a reputable developer does the work. I've seen many poorly executed or unfinished loft conversion projects.

I wouldn't plan too far in advance either just yet as selling the attic space can take a very long time and can easily fall through in the early stages. In my own building, the entire process took almost five years.

Renovating the entire building makes not only noise but also dust (impossible to open doors and windows and the apartment would be always dusty). Further, the building can be covered outside so the apartments might become dark and the building would look like as a construction area with workers. I do believe tenants are very concerned with construction and renovation.

The rent should be minimised otherwise tenant would not stay with you.

I want to ask you, budapest, how the things are going in your building. I have seen some progress with renovation. Is this an entire renovation with construction(inside out with new storey)?

When buying in a period house in Budapest you have to be aware that this is one of the hazards. On the plus side however, the sale of the air space usually results in a greatly enhanced buiulding for all owners. I know of several buildings where such a project resulted in lifts being installed and the common areas being upgraded beyond all recognition.

If you are on the top floor you are entitled to disturbance payments; agree a lower rent with the tenant and claim the difference from the developer is the best way to go. Otherwise, don't sign the agreement to allow work to commence.

Thanks all for the replies. My apartment is on the top floor so just wanted to find out how the process worked. Will report back on any progress.