Affordable housing has the green light from the European Commission. Twenty years after joining the Union, the Czech Republic can finance affordable apartments from public sources for the first time.
Minister for Regional Development Ivan Bartoš and the State Investment Support Fund negotiated with the European Commission the support of affordable housing in the Czech Republic from public funds. Thanks to this, the state can finance the creation of rental apartments with a lower than market rent, for example for young people under 35 or beneficial professions in the regions. Subsidies and favorable loans for affordable housing projects will be available to municipalities and private entities – already this year it will amount to approximately two billion crowns.
Until now, the state has financially supported the creation of social housing, which roughly 130,000 people in the Czech Republic can afford. Support for affordable housing, i.e. standard rental apartments even for the middle class, has not yet been possible. This was hindered by the lack of approval from the European Commission that it was in line with public aid rules. “Abroad, the affordable housing sector plays a key role in managing the housing crisis, but in our country, none of the previous governments even tried to negotiate it with the European Commission. In about a year, we managed to agree on everything necessary, and in the second half of the year, we launched the first program. About two million people in the Czech Republic meet the conditions for the target group,” said Deputy Prime Minister for Digitization and Minister for Regional Development Ivan Bartoš.
As part of the so-called notification, the twenty-seven countries notify the European Commission of their intentions to support certain areas from public resources. They must prove that they will not disrupt the free market, or prove that the social benefit of public support outweighs the risks. Only then can the European Commission confirm that the specific plan complies with the rules and is compatible with the internal market. “The decision of the European Commission allows us to provide support to the affordable rental housing sector in the amount of twelve billion until 2030. For the first three years, we have secured funding from the National Recovery Plan. Municipalities and other legal entities can apply for the program. It will be a combination of subsidies and favorable loans, so the invested funds will be returned to the state and will support other housing projects in the future,” adds Daniel Ryšávka, director of the State Investment Support Fund (SFPI).
The costs of construction, renovation or purchase of available rental apartments will gradually be recovered from the rent. In the long term, this will remain below the market level of rental housing in the given location and of comparable quality. “We want there to be a decent alternative for people who, for various reasons, cannot afford or do not want their own housing. We will be happy if as many municipalities as possible apply for support – according to the survey, most of them are dissatisfied with their housing stock. At the same time, we tried to set everything up so that affordable housing is also interesting for the private sector,” Bartoš declared. Subsidized apartments will be, for example, for young families, teachers, health professionals and people who do not own real estate and do not belong to the top 20% of the population with the highest incomes.
The European Commission has previously approved the notification of affordable housing programs for example in Ireland or Sweden. “The example of Ireland shows that promoting affordable housing has positive effects on the market. At a time of high mortgage rates and falling demand for real estate, construction companies can focus more on affordable rental apartments. Thanks to this, there is no such sharp decline in overall construction during crises,” added Bartoš.
The support for affordable rental apartments is part of the broader reform of Housing for Life implemented by the MMR. Among other things, it also includes a new construction law or a draft law on support in housing. The department cooperates with the European Investment Bank and other institutions to find suitable affordable housing projects and sources of financing. It also offers municipalities financial support for the preparation of housing projects and related expertise directly in the regions.