Translation:František is buying a house in that city.
While the sentence can be read as though the action is being done multiple times, the translation of "František buys a house in that city" is a valid statement in the English language for him buying a house once, though it may sound like an uncommon way to phrase it. This should be an accepted answer - reported for hopeful inclusion.
I totally agree. Simple present does not always imply a repeated action. This example in simple present may be uncommon as a standalone sentence, but it's a natural choice in many contexts. Just have a look at https://www.google.com/search?q=he+buys+a+house . Moreover, this is not a course on the usage of English tenses, or is it. It's very annoying to always pay attention to the authors' maggots... I don't remember any other course that would try to enforce this so inflexibly.
Proč není uznáváno "v tom městě" in the city? "In that city" by mělo být v tamtom městě?