1 Project Title (and member state) IPRM Mostu – DEMOS (Developing Deprived Urban Residential Zones and Improving the Lives of Residents“, Czech Republic National housing issues and policies in the Member State Overview The Czech Republic has a population of 10.6 million (2011), housed in 3.9 million homes (2011). After 1989 the housing sector in the Czech Republic underwent a transformation, moving from a system based on central planning to one based on market principles. There were a number of key, housing related, events during the transformation period including the “restitution” 1 or return of around 10% of the housing stock to previous owners, and a free-of-charge transfer of all remaining state-owned housing to the local authorities. Most of the latter were then privatised during the 1990s and 2000s. Other related events included introduction of new housing policy instruments (in particular the housing allowance) and the introduction of a home savings scheme and mortgage loans. As a result the ownership structure had been altered considerably. By 2011, the owner-occupied sector grew to 64.5% of total housing stock, while rental housing shrank to 17.9%, and the housing cooperative sector dropped to 11.1% (the remaining 6.8% consists of other types of tenure -Census, 2011) 2 . A gradual deregulation of rents got underway in 1993, and by the end of 2012 this process the original rent regulation provisions will have been completely superseded. The 2011 Government Strategy for Housing to 2020 is currently the main government document defining the strategic approach to housing policy in the Czech Republic. It sets the three complementary goals of increasing housing affordability, stability, and quality. Overall national policy is the responsibility of the Ministry for Regional Development but its implementation is de facto divided between three Ministries – The Ministry of Regional Development (MRD), The Ministry of Finance (MF), and The Ministry of Labour and Social Affairs (MLSA). Several programmes prepared by MRD are operated by special State Fund for Housing Development (SFHD). Unfortunately, however, actual responsibility for housing policy is divided between the municipalities and the central government and it is often not clear who is responsible for what. Generally, most municipalities in the Czech Republic are weak financially and are therefore often unable to promote active and independent local housing policies and programmes. This means their approaches to housing are often heavily reliant on state subsidies from central programmes. This fragmentation and lack of clarity of roles, together with the general absence of any subsidy evaluation and monitoring, has led to low transparency in Czech housing policy. The main housing subsidies introduced most recently include a housing allowance (administered by MLSA), tax relief on the interest on savings to purchase housing and on mortgages (by MF), a state bonus on home savings schemes (by MF), a “supported” housing construction subsidy (by MRD), subsidies on renovations to increase the energy efficiency of housing (by SFHD) and subsidies for the construction of rental housing (by SFHD). Until recently owner-occupied housing received the lion’s share of resources, with home savings 3 amounting to €450m in 2010 1 In the former socialist countries most private property was nationalised after the Second World War, and a portion was returned to the former owners in restitution after the transition. 2 By way of comparison: Census data for 1991 gave owner-occupied housing at 37.7%, rental housing at 39.5 %, and cooperative housing at 18.8%. As far as rental housing was concerned, in 1991, 33.5% of the housing stock was publicly owned, and private rentals were only 6% of the total, while in 2001 public rentals were down to 17% and private rentals had increased to 11.6%. A similar breakdown for the Census of 2011 is not yet available. 3 Home savings banks were set up on the basis of the German Bausparkasse model. In this special financial scheme future home owners spend the initial period (4-8 years) saving their money, supported by an annual grant from the state, and at the end of the specified timeframe a fixed, low interest rate loan becomes available to purchase a home. Thus after 4-8 years the client gains access to both the savings and the loan.