Eight-hundred million grant was approved by the government to to support rental housing to help combat housing unaffordability in the Czech Republic. The money will be provided from public sources and some of it will go to commercial housing developers for the first time.
The government proposal splits the financial support into two parts: the larger part of the funding will be offered as a loan with a maximum of three per cent interest, while a non-repayable subsidy can be paid up to 25 per cent of the cost. In total, the share of subsidy and loan can thus be up to 90 percent of eligible costs.
Half a billion of the eight hundred million subsidy will go to municipal projects. The Ministry of Local Development plans to send three hundred million to projects such as charities or developers. Municipalities will also benefit from projects supported by private investors. In this case, local governments will be able to determine to whom at least a quarter of the flats will be rented.
The reason why the Ministry of Regional Development plans to spend public money on construction is that housing is becoming an increasingly unaffordable commodity. Mortgage interest rates are rising and families on lower or middle incomes can no longer afford them. The influx of refugees as a result of the war in Ukraine has also contributed to this, with 40 to 45 percent of newly rented apartments in Prague being rented to Ukrainian citizens, according to the largest real estate agents.
Financing housing with public money is not entirely new. In the past, however, support could only be paid to municipalities. The current proposal was criticized by the Ministry of Finance during inter-ministerial comments, which pointed out that support in the form of low-interest loans was sufficient to get the housing market moving, while subsidies would only distort the market.
The construction of new apartments can be positive for the housing market as it can help increase supply and reduce rental prices. However, critics point to the risk that the subsidy could be abused by commercial firms, which may make money from building apartments, but will only enjoy favorable rental terms in the short term. In addition, the aid could lead to an exaggeration of housing prices and an increase in speculation on the real estate market.
At the same time, there are concerns about whether public money is being used properly and efficiently. It is important that the construction of housing is properly controlled and that the money gets into the hands of those who really need it. There should also be sufficient transparency and public scrutiny of the process.
Overall, government support for rental housing can be a step in the right direction if it is properly designed and implemented. However, it is important to monitor how the housing market situation will develop in the long term to avoid any negative consequences and to ensure that public money is used efficiently and to the benefit of society as a whole.
Source: idnes.cz
