The Housing Policy Changes and Housing Expenditures in the Czech Republic

Martin Lux

Part 1

.....Portrait statistique du logement dans les États membres de l’Union Européenne 1995/96 is another resource of international comparisons; it is published by CECODHAS, Paris. Figure 2, shown below, indicates comparison of countries, based on the height of the rate of burden by housing expenditures - now in their classical relationship to total net income (the coefficient of burden). For a greater transparency, we have also indicated data, comparable to a certain extent, concerning some countries from the Central and Eastern Europe. The entry about Hungary refers to 1997 (complete housing expenditures except households living in market rental sector), the entry about Poland refers to 1998 (basic housing expenditures except market rental sector), the entry about the Czech Republic refers to 1996 (complete housing expenditures except market rental sector), and the entry about Slovenia refers to 1994 (basic housing expenditures except market rental sector).

According to the information from the Ministry of Housing in Haag the average coefficient of net rent burden (the share of net rent on total net income) was 21,1 % in the Netherlands 1995. With the assumptions that imputed rent in the ownership sector is generally higher than in the rental sector and that the rent forms two thirds of total housing expenditures, we can expect the coefficient of burden was in reality between 6 and 7 percentage points higher in 1995 than the Figure 2 shows (Ministerie van Volkshuisvesting 1998). According to Housing Finance Review 1999/2000 from Steve Wilcox the average coefficient of burden was 25 % in the Great Britain 1998, i.e. 5 percentage points higher than it is indicated in the Figure. Similarly, the results from the representative survey Enquete Logement 1996/1997 realised by INSEE (French Statistical Office) show the difference of three percentage points; the average coefficient of burden was 26,7 % in the rental sector without housing allowance and 23 % with housing allowance, the average coefficient of housing burden was 24,1% in the ownership sector and 23,1% with housing benefit. According to our estimation the real coefficient of burden (with housing allowance) was then around 23 % in France 1997.

From the above mentioned, it becomes clear that the real up-to-date coefficient of burden (in reference to total net incomes of households) is in the countries of the European Union higher than it is shown in Figure 2 (drawing from resources of COCEDHAS organisation). The gap between the situation in the Czech Republic and in the EU countries is therefore deeper than it is shown in the Figure. Between the years 1994 and 1998 the basic and complete housing expenditures of Czech households had a significantly lower share in family budgets than it was common in the countries of the European Union (and it cannot be expected that the current situation should be distinctly different). The coefficient of burden rose by imponderable percentage share for both basic as well as complete expenditures between the years 1994 and 1997. The coefficient of burden for complete expenditures counted for weighted FBS 1996 (its height is 14.77 %) can be taken for the most representative data. Even though the household income is an important factor of the height of basic housing expenditures, it plays only an insignificant part in the explanation of the variation of rent expenditures. Households with higher income spend more money on services. However, this does not mean that they would pay more also for basic rent - it is influenced by a non-addressing rent regulation. The social group of retired people is certainly an endangered one (not families with more children). Even more so because of the way of disbursement of housing allowance in the Czech Republic, which does not take into consideration the height of real nor tariff housing expenditures and which contrasts with the construction of housing allowance models in the countries of the European Union completely. Similarly endangered is the group of non-residing households. Even with the increase of 13.5 % of basic housing expenditures included (as of 1 July 1998) and with the knowledge of economical recession in the Czech Republic (the decrease of growth of incomes) - it can still be assumed that the average coefficient of burden of residing households (for complete expenditures) did not reach 17 % (18,5 % for rental sector) in the first half of 1999. Social tensions that are naturally created by such a policy of “idleness” are very bluntly underestimated......