The Czech government unveiled its affordable program yesterday. It’s offering an initial CZK 8 billion to support cheap loans land to towns and private investors so they can build residential projects. In return, those projects have to offer flats to people who meet a series of criteria and less than commercial rents.
It’s about time. Residential prices have just begun rising and new government figures suggest that up to 2 million people could find housing beyond their reach. “We’ve been waiting for this kind of program for 20 years, but no one even tried to do it,” Minister of Regional Development Ivan Bartoš told Czech Radio.
There are four groups of potential tenants: 1) Everyone except the top 20% income bracket, so long as they don’t any residential properties. 2) People under 35 who aren’t among the top 10% income bracket; 3) Workers in essential professions, such as health workers, police, social workers and others. They can own residential property so long as it’s in a different region than where they’re applying for a flat under the program; 4) Victims of domestic violence.
The government’s support can be used not just on new projects, but on repairs or expansion projects. Up to 90 percent of the cost of the project can be covered by a mix of subsidies and 2% loans. The Minister of Finance Zbyněk Stanjura said municipalities can use the funds to buy existing flats, to build new ones in partnership with private investors or private investors can build on their own. Additional investment models for towns will be created in the coming months.
The CZK 8 billion currently allocated for the program isn’t final. The government is negotiating with the European Investment Bank to unleash further capital as well as with major insurance companies and pension funds. Minister Bartoš claims the state has around 200 plots of land suitable for affordable housing projects that could be transferred to municipalities.
Premier Petr Fiala admitted that concrete results from the program could take three years to be felt. “Residential construction isn’t as active as we’d like and there aren’t enough flats,” he said at a press conference. “In Prague alone roughly 5,000 flats are built but twice as many are needed.”
