Czech senate approves statutory definition of affordable rental housing

The Senate has approved a legal definition of what can be considered affordable rental housing. It decided to do so today despite objections from senators of the ruling parties. The definition will be contained in an amendment which the government says will simplify support from the State Fund for Promotion of Investment (SFPI) and expand the range of areas in which money from the fund can be used. The fund will be able to finance the creation of rental apartments with below-market rents. The amendment will now be submitted to the President for signature.

Under the amendment, tenants in affordable housing would generally have a lease agreement for up to two years with the possibility of a fixed-term extension. Affordable rents should initially not exceed 90 per cent of the local customary rent.

Hana Kordová Marvanová of the ODS and TOP 09 clubs opposed the amendment, saying that such a rent would not constitute affordable housing and that the Union of Towns and Municipalities also disagrees with it. Hynek Hanza (ODS) said that affordable housing would not be ensured by subsidies, but by a sufficient supply of flats. Miroslav Adámek (ANO) pointed out that the definition of affordable housing was only included in the government amendment in the Chamber of Deputies and will cause problems in practice. However, the amendment was ultimately supported by 41 of the 75 senators present, with the exception of the ANO and SOCDEM caucuses.

In affordable housing provided, for example, by the state, regions and municipalities, the rent in the first year should not exceed the amount calculated from the costs associated with the construction or acquisition and operation of affordable rental housing. At the same time, it would have to be lower than the comparable normal local rent. In subsequent years, the affordable rent could increase by inflation, but not more than four per cent per year. Rent price maps would be produced by the Ministry of Finance. Critics say the difference between the potential rent levels would put private affordable housing providers at a disadvantage to public providers and may violate the Charter of Rights and Freedoms.

Households without their own housing up to a certain level of net income, victims of domestic violence or people in so-called preferred occupations could qualify for affordable housing. These include health care workers, teachers, police officers, paramedics and social service workers.

The state will be able to provide up to CZK 12 billion in support to the affordable rental housing sector by 2030. Funding will be provided from the National Recovery Plan for the first three years. This year, the Ministry of Regional Development expects to provide two billion crowns.

According to the justification of the government amendment, the current law on SFPI does not define all the activities that are necessary to fulfil the mission of the fund, such as financing investment preparation of projects. According to the explanatory memorandum, a simpler setup is important to support investments that will lead to the growth of gross domestic product. The Fund's income is now to include repayable financial assistance.

Source: CTK