Rental housing with state support is still in sight. The promise of 25,000 rental apartments per year is only on paper. The truth is that almost four years after the We Are Family movement came to power, not a single apartment is worth renting. There is a framework according to which the apartments should be built, the first investors who complain about the functioning of the system spoke up, and one move also took place – the agenda of state-supported housing is no longer directly under the thumb of the Government Office, this hot potato is now in the hands of the Minister of Transport Jozef Ráž.
Rental housing with state support was under the control of the Deputy Prime Minister for Legislation and the We Are Family nominee Štefan Holý. This position was created by the coalition government led by the Ordinary People and Independents movement. In the following government, this post remained vacant, and after changes in the Competence Act, the Government Office gets rid of this topic completely and transfers it to the Ministry of Transport. The resort avoids questions about when the first apartments might be ready, or when the first tenants might move in. Currently, it is really difficult to say when the rental apartments will become available and when the first tenants will be able to move into them.
The only thing that is certain is that no download is planned yet. Slovakia does not have the green light to launch the rental housing program as proposed by the current opposition. It is still not clear whether the state can provide support to developers as promised. Most recently, Prime Minister Robert Fico (Smer) announced in a video on Facebook that he wants to solve this issue in the government. “In February, the government will adopt a definitive solution on the subject of rental housing. I completed very constructive preparatory meetings in this spirit,” said Fico. But the government does not talk about other details. The Government Office did not respond to Pravda’s questions by the closing date of the article.
Read the most important questions and answers about rental housing with state support.
When will the state hand over rental apartments?
That is not yet clear. The state has not started building the housing stock because the program has not yet officially started. The state will acquire apartments either by including existing housing units in the rental housing program, a significant part of rental apartments will be created through construction. The state has contracts with two investors for the first thousand apartments, but the state-supported rental housing program has not even started yet.
Why hasn’t the rental housing program started?
Slovakia needs the approval of the European Commission to start the program. Part of the benefit for investors is that they can claim a lower rate of value added tax on built apartments. “The reduced VAT rate aims to achieve affordable rent, which should be twenty to thirty percent lower compared to commercial rent,” explains the Agency for State-supported Rental Housing.
The European Commission considers the rental housing program in the form in which it is proposed to be state aid. He is now investigating whether Slovakia has good reasons to provide investors with an advantage in the form of more favorable taxation, for example.
What is the position of the European Commission?
Unknown yet. The Ministry of Transport is currently waiting for an opinion. “In accordance with the Competence Act, the agenda of state-supported rental housing has passed from the competence of the Government Office and the Ministry of Finance to the Ministry of Transport from February 1, 2024. We confirm that we have already established communication with the European Commission,” says the Ministry of Transport.
When is the opinion of the European Commission expected?
That is also not clear. The original expectations were that the opinion of the European Commission would be known as early as last year. This, of course, was not confirmed. The launch of the state-supported rental housing program continues to be postponed. “The original expectation was that it would be in October, but the assessment process is difficult and the number of officials dealing with this notification is undersized in the European Commission. Considering that, the process will probably drag on until the first quarter of next year,” Martin Galo, director of the real estate department of Kooperativa poisťovňa, said in an interview with Pravda newspaper at the end of last year. This insurance company is one of the confirmed investors in state rental apartments.
“Until the assessment in the European Commission takes place, we cannot proceed with the next steps necessary to launch the entire ecosystem. We are in constant communication with the European Commission. As soon as we have the final opinion of the European Commission, we will inform about it,” said Jana Jurčišinová from the Agency for State-supported Rental Housing.
It therefore applies that the state only prepares rental housing. “The agency for state-supported rental housing continues the process of preparing rental apartments. At this time, we are fine-tuning internal processes and the system where the selection of apartments will take place. We are in constant contact with investors,” adds Jurčišinová. According to the original promises of the We Are a Family movement, at least 75,000 rental apartments should have been available at this moment, and at worst another thousand apartments should have been handed over. The movement’s original pre-election promises spoke exactly about the pace of construction at the level of 25,000 apartments per year. Even then, the leader of the movement, Boris Kollár, and other members of the party faced criticism that these promises were not realistic.
Due to the fact that investors do not build within the state-supported rental housing program, the public sector hardly builds apartments. Between January and the end of September last year, 153 public sector-owned flats were completed, so the state is really waiting for the investors with whom the contracts are signed to start construction.
How many apartments will be created?
There are approximately 200,000 rental apartments missing in the country. The state has contracts for several thousand apartments. “A total of 9,000 rental apartments for the lower and middle income group of residents could be built for one and a half billion euros,” noted the Agency for State-supported Housing regarding the first phase of apartment construction. The state can relatively easily acquire additional apartments by connecting existing apartments to the system.