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The social housing sector in Prague and Warsaw: trends and future prospects

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Abstract

The paper provides an overview of trends and processes of change affecting new social housing provision in Prague and Warsaw. The local responses are reviewed within the context of changes to the national housing system defining the performance of municipal and non-profit housing sectors. The research analyses the mix of policy instruments implemented in three major policy domains—regulatory, fiscal and financial—to promote the production of new social housing in the two cities. The system of new social housing provision is examined as a dynamic process of interaction between public and private institutions defining housing policy outcomes. The outcomes are evaluated through a series of indicators related to housing output, stability of investment, differentiation of rents, affordability and choice. The overview demonstrates how significant shifts in regulatory and fiscal policy, coupled with decentralization of responsibilities for social housing, limit the opportunities for more efficient performance in the sector and its growth. This is particularly evident in Warsaw, where the sector operates as a social safety net. New social housing in both cities has better quality and remains affordable, but access is constrained and waiting times have increased. The research highlights the problem of declining output, dwindling financial resources, and lack of cost recovery due to universal rent control. This is eroding the sustainability of social housing, potentially leading to lower investment and subsequent privatisation. In Warsaw, housing allowances are a municipal responsibility making the liberalization of rents difficult, while Prague has moved in the direction of rent deregulation with a more robust system of means-tested housing support provided by the central government. Such policy choices map a different trajectory for the future of social housing.

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Notes

  1. Harloe’s definition above is an important point of departure, but this analysis excludes cooperative and owner-occupied housing in the post-socialist context that may have been provided with some public subsidy and support.

  2. Exchange rates 1 EUR = 27.55 CZK (Czech crona).

  3. Refurbishment of large-panel residential building is subsidized by the state in the form of interest subsidies. The support is available to all owners (i.e. municipalities, housing cooperatives, other legal or natural persons). This program accounts for upgrades to 20 % of the panel housing.

  4. Young families can obtain a low-interest state loan up to CZK 300,000 helping them to build or buy their own or cooperative flat or family house; there is no income limit.

  5. Adjustable flats are designated for persons with disabilities.

  6. The figures are calculated in cooperation with the Ministry of Labour and Social Affairs.

  7. Program description is available at http://www.sfrb.cz/programy/uvery-na-vystavbu-najemnich-bytu/.

  8. Commission Regulation No. 1998/2006 on the application of Articles 87 and 88 of the Treaty requires that the sum of all public subsidies provided to an applicant under the “de minimis” rule may not exceed in any three-year period the CZK equivalent of 200,000 EUR.

  9. Through the Integrated Operation Programme (IOP), problematic parts of Czech cities (i.e. cities with more than 20,000 inhabitants) can be renovated using the ERDF co-financing. Such problematic areas must be characterized by social problems (higher unemployment, higher poverty rate, etc.) and comprise at least 500 dwellings. Public spaces as well as residential buildings in the area can be refurbished with grants, while observing state aid limits and requirements.

  10. Housing allowances, introduced in 1996, provided income based support to owners and renters with income below 16 % of the minimum subsistence income in the last quarter of a calendar year (see Lux 2004). In 2000, the allowance was provided to 8.2 % of all households with an average value of CZK 633. State expenditures reached CZK 2.5 billion.

  11. Including municipal dwellings, tenant-type cooperative dwellings, Social Housing Association—dwellings (TBS), dwellings owned by State enterprises or State Treasury companies.

  12. Exchange rate 1 EUR = PLN4.15 (Polish zloty).

  13. Since 2007 the program provides interest rate subsidies on loans for up to 50 % of the interest in the first 8 years (WIBOR 3 M + 2 percentage points). Subsidies are provided for a maximum area of 50 m2 for dwellings and 70 m2 for houses, restrictions on the maximum price per 1 m2 apply. In 2009 the programme enjoyed a very dynamic growth: the subsidies were used by 30.9 thousand families (the total value of these loans was PLN 5.4 billion) (Interview data, October 2011).

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Acknowledgments

The author acknowledges the financial support of Social Sciences and Humanities Research Council of Canada for this research. Special thanks to Petr Sunega, Czech Academy of Sciences in Prague, Arthur Polak, Ministry of Ministry of Transport, Construction and Maritime Economy, Warsaw  Marek Golub, Director, Housing Policy Department of Warsaw Municipality and Alina Wieclavowicz, BGK, Warsaw for their efficient assistance, invaluable advice and critical comments.

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  1. Faculty of Environmental Design, University of Calgary, 2500 University Drive NW, Calgary, T2N 1N4, Canada

    Sasha Tsenkova

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Correspondence to Sasha Tsenkova.

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Tsenkova, S. The social housing sector in Prague and Warsaw: trends and future prospects. GeoJournal 79, 433–447 (2014). https://doi.org/10.1007/s10708-014-9535-0

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