In a significant stride towards addressing the pressing issue of affordable rental housing, the Czech Republic has moved closer to defining a framework that sets the maximum affordable rent at 90% of the market rate. This legislative proposal, recently approved by members of parliament, marks a pivotal step in the country’s quest to enhance housing accessibility. However, despite this legislative progress, the Czech Republic continues to grapple with a shortage of affordable housing, posing challenges for individuals and urban centers striving to accommodate their essential workforce.

Nearly a year ago, Česká spořitelna initiated the concept of affordable housing in collaboration with developer Finep, unveiling plans to construct 254 apartments in Prague’s Prosek area, primarily targeting public sector employees. These apartments, earmarked for personnel from institutions like Motol University Hospital, law enforcement agencies, and educational institutions, promise rental rates approximately one-fifth lower than prevailing market prices, with the most economical units priced around 10,000 crowns per month.

As part of its European corporate social responsibility initiatives, Česká spořitelna has been actively engaged in similar projects, with an estimated 700 affordable apartments in the development pipeline, as indicated by data from consulting firm BTR Consulting.

Nevertheless, private sector involvement in such initiatives remains limited, a challenge attributed by Zuzana Chudoba, founder of BTR Consulting, to a lack of synergy among state entities, municipalities, and market stakeholders. Chudoba advocates for a collaborative approach akin to Helsinki’s model, wherein the city provides land to a consortium of private developers, stipulating quotas for affordable housing units.

Municipalities in the Czech Republic, grappling with the legacies of previous property privatization, confront land scarcity issues that impede the replication of the Helsinki model. Consequently, alternative strategies, such as zoning plan modifications coupled with affordable housing construction incentives, are being explored. However, the impact of such measures on the housing market remains modest.

Despite prevailing challenges, municipal authorities are resolute in expanding the housing inventory, with approximately three-quarters of municipalities expressing intentions to do so. Supported by the Ministry for Regional Development, these endeavors receive backing in the form of land transfers and annual planning contributions totaling around two billion crowns. Furthermore, leveraging funds from the National Recovery Plan and synergizing with resources from the European Investment Bank, the government aims to bolster affordable housing construction efforts, signaling a concerted commitment to address the nation’s housing affordability crisis.

Article by Prague Forum