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In the first half of the 1930s, the number of housing developments fell sharply, and there was both an absolute and a relative shortage of small flats (the latter being due to excessively high rents). This again spurred the capital to action, which launched a campaign of small housing construction, aiming to create 2-3,000 new dwellings. The new economic conditions resulting from the Second World War eventually prevented this from being fully realized. In 1937, in the first period of the programme, the capital started the construction of nearly 800 small flats in 33 Vágóhíd Street (District 9), in Megyeri Street (District 10) and Forgách Street (District 13). In 1938, the city decided to build 189 more flats in Szél and Raktár Streets in Óbuda, and continued the construction of the Városszéli colony.

The establishment of the small flat colony in Vágóhíd Street in Ferencváros was primarily necessitated by the need to eliminate the Kiserdő slum. The initiative of the social organizations proposing the construction (the Welfare Society of the Heart of Jesus and the 9th District Public Charity Association) was taken up by the capital city, which then started the works and built 100 apartments, each with a room of 16 m2, a kitchen of 10 m2, a toilet and a hallway, in the newly cleared area of the slum. The construction also provided employment for the residents of the slum, which was still inhabited at the time. The housing estate was finally completed in June 1938, and its flats were allocated exclusively to families in the Kiserdő area who had the funds. Two years later, a cultural center was added to the housing estate, encouraged by the planned expansion of the estate.

The Eucharistic World Congress of 1938 was the occasion for the erection of the apartment buildings on Megyeri and Forgách Streets. The capital had a major role to play in accommodating the more than 100,000 guests who came to the celebrations. In June 1937, a special housing office was set up to accommodate the visitors, providing 118,000 beds in Budapest and 32,000 in the countryside, and, additionally, the Megyeri and Forgách Street apartment blocks were built. These were built in advance so that they could be used as small flats after the Congress. The original plan was to build a total of 1,040 emergency dwellings on the two sites, but negotiations resulted in the decision to build fewer but better quality apartments. The 32 m2 flats consisted of a room, kitchen, toilet and a convertible shower stall, but each house also had a shared bathroom.

The 164 flats being built in Szél and Raktár Streets in District 3 are of the same type as those in Megyeri and Forgách Streets, but the houses here have been built with a basement. The buildings in Szél Street comprise 108 apartments with kitchen+bedroom, 8 apartments with kitchen+bedroom+sleeping niche and 8 apartments with two rooms. The three-storey building with a hanging corridor was arranged in a U-shape according to the site layout, with a staircase in each of the two wings. The buildings have mezzanine floors with a bathroom and changing room, and laundry rooms in the basement. But the capital's new apartments were not a unanimous success. City councilor László Nagy told the Assembly after the inauguration: “A certain small apartment building was recently built on Szél Street. Terrible! It's the fault of the old ‘regime’ of engineers, it's horrible to look at... the gas was not installed, I don't know why, you can install cash dispensers, so the inhabitants can pay for it... The tenants have moved in and now they are installing the gas! Plastering, painting now?!??.... The plumbing was not put in the kitchen, but in the small hallway, allegedly a matter of 50 m of lead pipe.” At the same time as the construction on Szél Street, a complex of 28 one-room and 12 two-room flats was built on the corner of Raktár and Hunor Streets, with the inhabitants chosen from families with sufficient income, already living in small flat housing estates. The above-mentioned buildings, together with the commercial premises, resulted in the creation of 1,007 small flats in the introductory phase of the capital's housing programme in the late 1930s.

Housing conditions in the capital deteriorated further between 1937 and 1938. By 1938, the number of unoccupied dwellings had fallen to 2,064, including 1,928 flats with a room and kitchen, less than half the number of the previous year. Most of the empty flats were either in uninhabitable condition or offered at unaffordable prices, which meant that the situation of those looking for accommodation seemed hopeless. Private construction continued to discourage the production of low-cost housing, and the state had by then completely withdrawn from the housing market, supporting such initiatives only through tax incentives or loans.

In June 1939, the General Assembly of the capital approved the Mayor's housing programme of 3,000 flats covering 3 years by Resolution 417/1939. The main aim of the plan was to abolish barrack colonies and to help poor families with many children, as landlords were still reluctant to accept large families into their homes.The choice of dwelling type was made with a view to minimizing construction costs and maximizing the floor area available, while providing private spaces for people of different sexes.

The kitchens were designed to be larger than usual, replacing the previous room+kitchenette design with a living room kitchen. The smaller flats of 37-38 m2 were planned to consist of a 16 m2 living room kitchen, 2 bedrooms of 17-18 m2 in total, a toilet and a hallway. For the better-off families, two-room apartments of 47 m2 were created, with 2 bedrooms of 14-16 m2 each, a kitchen of 8 m2, a hallway, a toilet and a pantry. The flats also had a furnace basement, a common drying room, a laundry room, air-raid shelters and bathrooms for every 10/16/20 flats. As in the small flats built in 1938–1939, the buildings were constructed with a concrete foundation, with walls of fired clay or calcium silicate bricks, ceilings of hollow bricks or reinforced concrete slabs between iron beams, and slate cladding on wooden roof trusses. The construction cost of a single dwelling was calculated at 5,900 and 7,500 pengő respectively, with an estimated investment cost of 18.3 million pengő.

As the building proposal was designed to cover the construction costs from the future rental fees, the monthly rents were capped at 35 pengő for the flats with a living room kitchen and 45 pengő for the two-bedroom flats, including the interest and management costs. One of the basic conditions for the return on the construction was that the Ministry of Interior would provide tax exemption for the investment. The Ministry therefore stipulated that the capital could only qualify for tax exemption if the rent of the apartments did not exceed the agreed 35-45 pengő and the tenants were selected from needy families with several children, who would receive a rent reduction of 20-50% depending on the number of children (this meant a rent reduction of 20% for 4 children, 25% for 5 children and up to 50% for 6 or more). In December 1941, it was also decided that, in addition to families with multiple children, young people about to start a family and low-paid employees of the capital would also be given preference in renting. As a result of this campaign, two buildings in Tímár Street (District 3), a small flat complex in Taksony Street (District 13), two buildings in Nagyfuvaros Street (District 8), a 20-house estate in Pongrác/Tomcsányi Street (District 10), and a complex of semi-detached houses consisting of 102 apartments in Álmos Street (District 14) were completed.

However, of the planned 3,000 small flats, just 1,161 were completed. The main problem was the increasing cost of labor, transport and building materials. Costs were further increased by the fact that, contrary to the original plans, the apartments in Álmos Street were equipped with bathrooms and those in Nagyfuvaros Street with showers, while the rent of the apartments also increased (flats with a living room kitchen: 36-47 pengő, 2-bedroom flat: 41-49 pengő, Álmos Street semi-detached houses: 67 pengő), but the large family discount was still maintained under these circumstances. In the following years, the Tomcsányi Street estate was landscaped and a bathing complex with 10 baths and 10 showers were added besides a doctor's office, a school and a kindergarten.

The start of work on the second campaign was delayed by an increasingly acute shortage of building materials. This, together with the exhaustion of the loan, led to the premature completion of the entire construction programme. Nevertheless, the capital has completed another 691 small flats, as the second cycle has resulted in the completion of a small apartment building in Szél Street (District 3), two three-storey buildings in Szövetség and Alsó erdősor Streets, a complex of six buildings at 17-29 Vágóhíd Street (District 9) and a group of two buildings at 30-32 Vágóhíd Street. The programme also concluded with the construction of a 180-apartment complex of four buildings on Hamzsabégi Road and the handover of a 79-apartment block on Gyarmat Street. The Szél Street area was extended independently of the capital's housing programme, but with a similar aim, as part of an investment by the Metropolitan Public Works Council.

The third campaign could not be realized due to the depletion of funds, and only two thirds of the programme was finally completed. In some of the colonies that were built, more flats were built than originally planned to make up for the shortfall caused by the cancellation of construction work, but the surplus was generally made up by subdividing the two-room flats (as in the case of Taksony Street and 30-32 Vágóhíd Street).

Laura Umbrai (Translation from Hungarian: Barbara Szij)