Housing Standards 2002/03: Financial Affordability and Attitudes towards Housing

2. Municipal housing policy in the Czech Republic compared to selected Central and Eastern European countries

Summary

In many EU countries, municipalities are one of the major operators of social flats. Although the tendency to transfer the housing stock and finances to independent operators of social flats (housing associations) is quite clear, municipal rental housing is a prominent part of the social housing stock. In Central and Eastern European countries municipal housing generally constitutes the only financially affordable housing on the market.

Nevertheless, even municipalities cannot remain immune to the general tendency to increase efficiency and effectiveness of housing stock management. In order to assess the performance in the field, performance indicators have been developed in some EU countries; this data has had a direct impact on the allocation of future state subsidies. In the Local Government and Housing project, the international team has attempted, perhaps for the very first time in the region, to measure selected performance indicators in selected transforming countries. The main results of comparison the reader can find in the book "Housing Policy: An End or a New Beginning" or in the article of Lux 2003: Efficiency and effectiveness of housing policies in the Central and Eastern Europe countries in the European Journal of Housing Policy. Here we will present only very briefly the main conclusions applied for the situation in the Czech Republic.

Unlike many other Central and Eastern European countries, in the Czech Republic municipal housing constitutes a significant portion of the total housing stock. The rejection of the "Right to Buy" often applied in other countries has "saved" a large portion of municipal flats for rental housing and at the same time allowed a relatively substantial rent increase. It is precisely because municipal housing has not become residualised (i.e., has not become the domain of the socially least adaptable or most marginalised households) and also quite clearly because of the positive economic development, that rents could have been de-regularised more than elsewhere (almost one half of municipalities have stated that the existing income from rents suffices to cover the costs related to the maintenance of the existing standard of the housing stock). On the other hand, however, unlike in Bulgaria or Estonia, the state has retained the right to define the maximum rent (rent control), and the continuing rigid regulation has resulted in rampant growth of a housing black market, and has also had other negative consequences.

Czech municipalities, however, cannot excuse their own performance only by referring to the shortcomings of the central housing policy. Although, of all the compared countries, rent debt in the Czech Republic constitutes the smallest percentage of the potentially collected rent, we must keep in mind that in many of these countries the municipal housing sector is much smaller. If we controlled for this fact, the difference would definitely not be so stark. Municipal housing in the Czech Republic has a very small turnover (lower, for example, than Estonia), but this is typical for the entire region. Only a small portion of Czech municipalities with a population over 10,000 (far less than in Poland or Romania) has an approved housing policy plan with clearly defined priorities.

The needs-based allocation system, which is based on the assessment of social neediness using a point-awarding system and which usually includes other additional criteria which allow unjustified transfers on the waiting list or allocation of flats regardless of the waiting lists, has great shortcomings. With the exception of the City of Brno, the income from rents and privatisation serves to cover activities that are not in any way related to ensuring or increasing the housing standards. In such a situation, it is difficult to say whether the rent income covers the costs of housing stock maintenance. There are a host of other issues concerning the efficiency of the management by Czech municipalities, especially insufficient tenant participation in decisions related to, for example, the regeneration of the housing stock.