Czech Senate passes housing support laws which toughen eviction procedures. Experts applaud, opponents allege this means a "state real estate office" will incur disproportionate spending

The law was supported by 35 of the 65 senators present for the vote and must now be signed by the president. Related legislation was also adopted that allows pension funds to invest in housing.

The housing support law targets households whose incomes are up to 1.43 times the subsistence minimum. One component of it will be a network of 115 contact points which are meant to provide advice and aid with finding housing or staying housed.

The contact points will open primarily in places with a high risk of housing precarity and localities where the Labor Office already has branches. Other municipalities will be able to join the scheme voluntarily.

Another component of the new treatment of this issue is a voluntary system of what is called “guaranteed housing” , i.e., a financial guarantee to private owners of rental units, as well as bridging assistance meant to help tenants with moving in and adapting to their new rental arrangements. According to the law, the state is meant to provide financial contributions to municipalities which rent apartment units owned by them to people in need.

The decision as to who is in need of housing will be issued by the local Labor Office on the basis of criteria involving the tenants’ assets and income. “This is the first normative system to conceptually address systemic precarity,” said Minister for Regional Development Petr Kulhánek (for Mayors and Independents – STAN), although he admitted the law is imperfect.

According to the minister, more than 160,000 people in the Czech Republic are in housing precarity and ten times as many risk losing their housing. Introducing the system should cost CZK 600 million [EUR 24 million], and once it is fully in operation it will cost up to CZK 1.5 billion [EUR 60 million] per year.

Kulhánek argues that housing precarity is already annually costing the state CZK 4.1 billion [EUR 164.4 million]. “This law is an effective instrument that has managed to tame the problem of housing precarity elsewhere,” he said.

Reactions: Experts welcome the law, opponents warn of a “state real estate office”

The bill has its fans and its harsh critics. While the For Housing initiative and the Platform for Social Housing welcome it as an important step toward addressing the growing unaffordability of housing, those opposed to it say it will be ineffective.

“We at the For Housing initiative welcome the adoption of the law on housing support, as we have long been warning that such a law is lacking and necessary. Even despite all the political compromises which happened during the legislative process, we consider the approval of this legislation to be good news, not just for people in housing precarity, but for society as a whole. We are aware the housing support system will take effect gradually,” said Mikoláš Opletal of For Housing.

According to the director of the Platform for Social Housing, Barbora Bírová, the adoption of the law is an important sign that politicians are starting to realize how big a problem the ever-rising unaffordability of housing in the Czech Republic is. “The law could be stronger, and we believe time will show that we can be more ambitious as a country in our aid to those vulnerable households whom we often perceive as being at risk on the regular housing market and who never access standard housing,” she said.

Support was also expressed by organizations such as the Czech Streetwork Association, People in Need, the Salvation Army, and municipal representatives. “From the start of next year the law will start aiding people where it is necessary. While it will not solve all the problems, it is an important piece of the functional mosaic of the state’s housing and social policy,” said the Deputy Mayor of Chomutov, Milan Märc (New North – Nový Sever party).

A more critical stance has been taken by former Minister for Regional Development Ivan Bartoš (Pirates): “The coalition has turned this into a half-hearted compromise, and while it will aid people somehow, it will not assist anywhere near the number of people who need help.” On the other hand, Senator Martin Krsek (SEN 21 and Pirates) claims that “this law will strike a blow against trafficking in poverty with regard to its economic attractiveness.”

Opponents such as Martin Bednář (Association of Dissatisfied Citizens – ANO) and Vladimíra Ludková (Civic Democratic Party – ODS) characterize the law as allegedly involving excessive administration, the birth of a “state real estate office”, and disproportionate expenditure. Senator Zdeněk Hraba (ODS and TOP 09) has also criticized it, warning that its provisions also apply to foreign nationals who are asylum-seekers or granted subsidiary protection.

Follow-up transformations: Investment by pension funds, tax breaks, and eviction procedures in the Civil Code

The Senate has also adopted an act on amendments to other laws related to the housing support legislation which makes it possible for pension funds to invest in building housing units. Such investment must not exceed 20 % of a fund’s assets, and the fund will be permitted to invest 10 % of its assets at the most per housing construction project.

“The amendment allows pension companies to invest to a certain degree, for instance, into real estate funds, which on the one hand strengthens the diversification of the portfolios of those participating in additional pension insurance, and on the other hand aids in developing the domestic housing market,” said the president of the Association of Pension Companies of the Czech Republic, Aleš Poklop. The Finance Ministry expects that investment into such funds could reach CZK 20 billion [EUR 800 million].

Thousands of new housing units are projected to be built thanks to the amendment. It will also allow Czech taxpayers to deduct from their income tax base the interest they have paid not just on their own home loans, but also the interest paid on housing cooperative loans.

The condition there will be that the taxpayer is a member of the cooperative, pays this interest, and that the cooperative collects just the interest owed by the cooperative from its members. That innovation was added to the law in the Chamber of Deputies on the basis of an amendment by Finance Minister Stanjura and ODS lawmaker Jiří Havránek.

The related amendment law also introduces orders to vacate housing units into the Code of Civil Procedure. Such orders are intended to speed up disputes over evictions of tenants from illegally-occupied housing.

“Thanks to these transformations, landlords will get faster access to their apartments or houses if tenants refuse to move out once their lease ends, which should motivate the leasing of housing through long-term contracts,” the Government’s explanatory report on the law says.