State support for housing: billions spent, only marginal impact on the housing market, problems with affordability and quality persist
PRESS RELEASE ON AUDIT NO. 22/27 – 15 January 2024
Over the last seven years (2016 to 2023), the SAO has already carried out five audits focused on funds earmarked for housing support. The most recent one, which ended last July, focused on state funds spent by the Ministry of Regional Development (MoRD) and the State Fund for Investment Support (SFIS). The two institutions spent a combined total of CZK 13.9 billion on housing support between 2016 and 2021, subsidising more than 4,500 projects. Although the amount of money which the state puts into solving housing problems amounts to almost CZK 3 billion per year, the impact on the housing market is marginal. The main problems of housing policy, in particular the availability and quality of the housing stock, have persisted for a long time and the implementation of the objectives of the housing concepts has not led to their elimination.
The subsidy and loan programmes of the MoRD and the SFIS are aimed, among other things, at investment support for the acquisition of social and rental housing. While 234,538 flats were completed in the Czech Republic between 2016 and 2022, a total of 1,894 social flats for people with difficult access to housing was built with the support of the MoRD by the end of 2021 (data for 2022 were not available to the SAO from the MoRD). The SFIS grant and loan programme "Construction for Municipalities", aimed at building social and affordable housing, was to provide and improve housing for at least 2,375 households. However, by the end of 2022, only 226 of these flats had been completed. The projected indicator was only met at about 9.52% during this period, which is disproportionately low. The role of the construction of supported flats in relation to the total volume of completed flats and the number of occupied flats (there was 4,480,139 occupied flats in the Czech Republic in 2021) is marginal. The construction of supported flats is not able to influence the situation on the housing market substantially.
The MoRD has insufficient information on the number of target groups, the size and quality of the housing stock, especially that used for social housing. Neither the MoRD nor the SFIS has an overview of the actual occupancy of social and rental flats.
The SAO also audited the 'Rental flats' programme managed by the SFIS. Its purpose is to support the construction of rental flats and houses for a defined group of inhabitants, such as people over 65 years of age or people with health or income limits. According to the terms of the programme, the priority is not the protection of the persons in the target group, but the recoverability of funds. Therefore, there is no limit on the amount of rent for the supported flats. This makes the housing unaffordable for the intended target group and the tenant is forced to apply for housing allowance up to the maximum possible amount. For example, in one project the rent increased from the original CZK 135 per m2 to CZK 569 per m2, so the rent for an individual started at CZK 19,000 per month, not including the cost of energy, waste or any assistance services. This, however, raises additional financial requirements for the state budget in the form of entitlement to a social benefit - housing allowance. And its costs are rising year on year: while from January to July 2022 the state paid a total of CZK 4.6 billion in housing allowance, in the same period in 2023 it was already CZK 9.8 billion.
Since 2016, the SAO has been pointing out that there is no systemic solution to the issue of housing support, including its legal regulation. The draft law on housing support was prepared by the MoRD and the Ministry of Labour and Social Affairs in 2023. According to the assumption of these Ministries, the law should be adopted this year and should be effective from the second half of 2025. A significant shift in the housing sector cannot take place without a greater joint and well-coordinated effort of the state and active involvement of local self-governing units.
Communication Department
Supreme Audit Office