This document summarizes key housing issues in the Czech Republic. It outlines the country's territorial structure of municipalities and regions. It also describes the institutional framework for housing policy, involving several government ministries. Responsibilities are divided between central, regional and local governments. The document reviews the history of housing finance and construction in the country. It discusses past issues with rent control regulations and challenges facing housing policy, such as the privatization of social housing and lack of funding at local levels.

1. HOUSING
Selected issues
Czech Republic
Fiscal Network Annual Meeting
OECD
2.12.2019

2. Distribution of population by
tenure status, in % (SILC, 2018)

3. Distribution of population by
tenure status, in % (SILC, 2018)

4. Recurrent taxes on immovable property
as a % of total tax revenues (OECD, 2017)

5. Recurrent taxes on immovable property
as a % of GDP (OECD, 2017)

6. Share of home owners across the income
distribution (OECD, 2014 or latest)

7. Public social expenditure on housing
as a % of GDP

8. Territorial Structure
Subnational governments
• Basic territorial self-governing units
⁻ Municipalities (villages, towns, cities)
⁻ 1950: 11 000 municipalities
⁻ 1970: 7 500 municipalities
⁻ 1988: 4 100 municipalities
⁻ 2018: 6 254 municipalities
• Higher territorial self-governing units
⁻ Regions
⁻ until 1960: 12 regions + Prague region
⁻ until 2000: 7 regions
⁻ since 2000: 13 regions
⁻ Prague
⁻ fulfills both functions of a municipality and a region

9. Territorial Structure
Regions

10. Territorial structure
Municipalities

11. Housing – Institutional framework
• Number of departments
⁻ M of Regional Affairs:
⁻ general housing policy and planning, national priorities
⁻ M of Social and Labour Affairs:
⁻ social (support) dimension of housing
⁻ M of Finance:
⁻ building loans and savings legislation, mortgage banks regulation
⁻ M of Justice:
⁻ Civil Code legislation (e.g. renting)
⁻ M of Environment:
⁻ building law, environmental standards
⁻ Czech National Bank:
⁻ macroprudential policy (e.g. mortgage providers)
• Fragmentation vs. system of checks and balances
⁻ The “right” degree of decentralization
⁻ Decentralization in recent decades

12. Different levels of Government
• Central government
⁻ General law and standard setting (legislative framework for housing)
⁻ Country wide policies (e.g. housing subsidies)
⁻ Grants provision rules
• Regional governments
⁻ will become part of the system only in 2020 (no role until now)
⁻ Grants distribution and subsidy provision
• Local/Municipalities level
⁻ Housing provision – ownership and operation with housing stock
⁻ Social (affordable) housing provision
⁻ Apply for assistance in form of grants and loans
⁻ Grants allocation and distribution
⁻ Urban planning and use – primary tier

13. Social Housing
• Central government
⁻ providing grants and loans to social housing providers at the
municipal/local level for the construction and maintenance of
affordable rental housing and cooperative tenancy housing
⁻ provision of allowances to individuals according to general
law (housing allowances)
• Local governments
⁻ Apply for financial resources within the grants and subsidy
system
⁻ Primarily source of finance: budget resources and EU operational
programmes
⁻ Grant programmes focused on certain target groups
⁻ Housing provision to individuals
⁻ Subsidized flats and rents

14. History of Housing finance
• State responsible for housing construction and
maintenance
⁻ state financing was essential
⁻ state as an investor, a developer and a “landlord“
⁻ overall poor effectiveness of the system
⁻ dwellings with low technical quality
⁻ poor, inadequate and insufficient maintenance of the existing housing
stock
⁻ Rents were inadequately low – social policy
• Late 1990s and onwards
⁻ Low level of average incomes compared to prices of newly
constructed houses
⁻ Continuing housing market distortions
• e.g. non-targeted rent regulation

15. Rent Control and Regulation
• Restitution of large part of the housing stock after 1989
• Rent ceilings were obligatory for all “old” lease contracts
• Regulated rent determined only on the basis of the size of a
flat for all “regulated“ tenants, regardless of their:
⁻ social circumstances
⁻ income
⁻ location of the flat
• Price distortions
⁻ Similar goods for different prices (old vs. new lease contracts)
• Social (in)equality
• Constitutional Court ruling June 2000
• Rent regulation ruled as unconstitutional for the 1st time

16. Rent Control and Regulation
• Price distortions
• city centre vs. outskirts
• Regulated vs. unregulated rent (no income conditionality)
• Difference by multiple of 4-5 for the same size of a flat (until 2006)

17. Challenges for housing policies
• Privatization trap
⁻ When social/public rental housing is built, sooner or later there is a
demand for its privatization; or it is transformed into de facto
homeownership support through subsidized sales
• Paradox of decentralization
⁻ Small and politically weak municipalities do not have sufficient
fiscal sources to maintain active social housing policy and refuse to
make financially costly and politically unpopular decisions.
• Prague (population of 1.5mil inhabitants)
⁻ owns 31,000 flats (5% of total housing stock) in the city.
• Decreasing possibility of providing rental housing for those people and
families who cannot afford market rents.
• New municipal housing construction, end of privatization, more
efficient use of the existing housing stock.

18. HOUSING
Selected issues
Czech Republic
Thank you for your attention
Petr_Gandalovic@mzv.cz