The new Social Housing Concept in Czech Republic

Key elements and first reactions from our member organisation, SCMBD

Prague, 3 November 2015 | Published in Economy, Social, Research

Housing Europe Observatory presents an overview of the new Social Housing Concept 2015-2025 in Czech Republic. Our member organisation, SCMBD comments on the latest developments.

Last October the Czech Parliament approved the “Social Housing Concept of Czech Republic 2015 – 2025”. This Concept is a document identifying the most significant issues in social housing in Czech Republic and defining the measures that have to be implemented in the next 10 years to achieve the goals set in the field of social housing. Next steps regarding this Concept will be the preparation of a new social housing Act that is expected to be finalized in mid-2016 and to come into force in the beginning of 2017.

Several social problems affecting the housing sector have caused a long-term ineffectiveness. One of the most significant and basic issues is the lack of a definition of social housing in Czech legislation that would became a cornerstone for further development of social housing policy.

Approximately 18,1 % (i.e. 776 000) of all Czech households are living in rental housing with an average share of housing costs on net disposable income of 31,3 %. With a housing costs overburden rate higher than 40 %, more than 68 % of all households in Czech Republic are living in rental housing. Although this figure has decreased, since it represented 145 000 households during 2009 – 2013, the increase of households overburdened by housing costs higher than 40 % of their net disposable income represented more than 150 000 households during the same period.

The average monthly housing costs increased during this period by 9 % in average for all households and by 34,4 % in average for rental housing households. As the main reason is considered the deregulation of rental housing and the increase of energy prices and service prices and it is important to mention that such a dynamics in price increase is not expected for the future.

Other important problems include the ineffective public finance transfers, insufficient compliance of state redistribution role in social housing and insufficient public finance resources. State and municipalities were not able to provide sufficient amount of social dwellings for those in need and public resources were often mis-distributed and to a too wide target group of social beneficiaries. In the annual comparison between 2012 and 2013 the total amount of housing allowances increased by almost 30 % (with an increase of 31 000 beneficiaries) and the amount of social housing allowances increased by almost 31 % (with an increase of 20 000 beneficiaries).

Demographic changes have also played an important role, particularly regarding the increasing number of older people. As stated in the Concept, 85 % of all seniors would like to stay in their current dwelling for the rest of their lives, what often causes problems, since these dwellings often have bigger surface than needed by the seniors, high housing costs related to their pension and these flats could be used for next generations with more family members.

The increasing number of homeless people and people at risk of being homeless became one of the biggest Czech problems as well. It was estimated by experts that in 2013 in Czech Republic 100 000 people were homeless, out of which were approximately 15 % coming from social care institutions.

So the question that arises from issues mentioned above is “What changes will bring for social housing in Czech Republic the new Concept and Act?”.

The primary goal of the Concept is that the new social housing system will only target people who fulfil certain strict criteria, so that there will be no more wasting of public finance resources and the support (both financial and non-financial) for villages and cities in the area of social housing will increase as well. The new social housing system is aiming at prevention through higher awareness of social allowances possibilities as well as at the creation of three levels of social housing.

In the new system, applicants for social housing will be divided into three types:

crisis housing
social housing
affordable housing.

Crisis housing will be available only for people in acute need. This type of housing will be available for six months with the possibility of prolonging. Social housing will be available to those, whose income will be not sufficient for paying the market rent (families with children and persons living outside/on the streets) while affordable housing will be available for specified societal groups, too, including elderly people, disabled, families with children, single parents – defined by ETHOS classification or being overburdened by housing costs (40 %); victims of domestic violence; people leaving orphanages; people leaving foster care and vulnerable families with children.

Financing of social housing stock will be provided through a system of contributors and beneficiaries combining household and individuals eligible for social housing, cities and villages with their communal housing stock and state. The basic financial account for collecting and redistributing the financial resources for social housing stock construction will be the communal fund for social housing development.

Overall, the effort in the country to address the negative situation in social housing provision may be evaluated positively. The Concept has been developed over several years and was preceded by several negotiations of experts on social issues and housing. We can only wait and see if the defined goals will be fulfilled and Czech Republic will rank among European states with well-developed social housing.

We have asked Jiri Barta, President of our Czech member organisation, SCMBD to comment on the latest developments:

How are cooperatives supposed to be affected by this development? In other words, what’s your position about this plan?

The situation of housing cooperatives in the Czech Republic has been worsening due to the need to recover debts that arise from occupancy of co-op flats. It refers mainly to debtors from socially weak population, and/or citizens who became unbearably indebted and cannot get out of it. Because of the inappropriate legislative framework, co-ops suffer from uneven treatment vis-á- vis other creditors (i.e. when the debtor has several creditors, debts to his housing co-op remain unpaid and impinge upon other users/members). We need to address and improve this negative situation.

The absence of an Act on Social housing has caused a situation where housing market speculators concentrate poor people into certain localities where – as a consequence - social tension grows. The tension grows not only inside such “communities” but also between socially excluded people and those who have better life standards and a job.

Local authorities and the national government keep safe distance from the problem and suppose that housing co-ops will resolve it. However, co-ops have no legal instruments to do so. A number of socially excluded localities have come into being in several northern areas close to German and Polish borders; socially weak people from other regions are being moved there. It is mainly housing co-ops that suffer the most from this situation.

How would you place this initiative in the wider national political context, with elections approaching etc.?

Our long-term objective is to achieve a change in legislation which will bring about the remedy of the unfavourable situation. Neither the political representation nor the public institutions show adequate interest in solving this problematic area, although politicians say otherwise. The Union of Czech and Moravian Housing Cooperatives (SCMBD) reminds the Government of the need to solve these phenomena; however, no result is in sight.

The Government addresses the phenomenon of socially excluded localities by means of establishing various agencies which spend the public money ineffectively without any obvious signs of improvement. Field workers should be really in the field – in schools, playgrounds, in housing areas etc. Someone must motivate the socially weak people to contribute to solving their unfavourable situation. Instead of field workers we see gambling houses, playrooms and pawnshops arising. Their owners drain the social benefits from the poor people and thus contribute to the unfortunate situation of social exclusion.

We are addressing politicians and trying to raise this problem as a potential theme on the election agenda. Unfortunately, it is only the right-wing extremists who have adopted this theme; thereby, however, they rather increase the social tension. The draft of the Act on Social Housing has been already approved by the Government. The SCMBD had the opportunity to comment on the text in advance. This is the first attempt in the Czech Republic to – somehow – organise the social housing sector. There is a general fear that the State – through this Act - will shift the burden towards communities that are not prepared for such complex tasks. As for the housing co-ops, no concrete role was assigned to them by this Act, despite the fact that they have carried out a significant amount of work in this sector.