Prague has a plan to reduce the cost of apartments by a third. Applicants would need to have treated
Institute of Planning and Development of the Capital The City of Prague (IPR) presented a new plan for housing development. Its strategy will focus mainly on the construction of affordable housing, increasing the number of city apartments and the city’s cooperation in construction.
“It is primarily in the interest of Prague itself to create a sufficient number of available new apartments. At the same time, it is necessary to focus on increasing the quality and attractiveness of housing and strengthening its sustainability, “says Petr Hlaváček, First Deputy Mayor.
According to him, in order to recommend new affordable apartments in Prague, the city must focus on improving the conditions for faster housing construction, for example by adopting the Metropolitan Plan.
The main role is rent and housing cooperatives
New construction projects for rental and cooperative housing are necessary for the city.
“One of the ways to affordable housing is cooperative housing construction, in the lowlands of the city cooperating by co-founding housing cooperatives, becoming their friends, providing suitable building plots and establishing the right to build cooperatives on these plots for up to 99 years. The cost of acquiring a cooperative flat will thus be reduced by up to a third compared to market prices in the given locality, “adds Hana Kordová Marvanová, Councilor for Housing Support.
The city has land for housing cooperatives and civic associations for the construction of apartment buildings on favorable terms and provides them with land through the so-called right of construction for up to the mentioned 99 years. This would then be based on either cooperatives founded by the municipality together with a private partner, or special civic associations inspired by the German so-called baugruppe. In both cases, the land will be bought by the subjects from the municipality to the repayment of their own house.
According to the city management, the advantage should be that cooperatives and associations organized by the owners of the future house will save the margin that people would otherwise pay to the development company. In addition, the price will be reduced by the value of the land until the house is repaid.
Overall, the purchase price of apartments should fall by up to a third. For the provision of land, the city will ensure the right to use parts of the apartments in the house, which can be used to accommodate representatives of the necessary professions, such as paramedics, teachers, firefighters or police officers.
According to councilors Hana Kordová Marvanová, the current situation is such that Prague negotiates with specific city districts, where it is looking for suitable building plots. “We are also negotiating with the Prague development company, which is in charge of land preparation,” added the councilor.
Prague Development Company (PDS)
– It is a contributory organization of the capital city of Prague, which was established on June 1, 2020.
– Prague established it with the aim of preparing municipal land and territory for the construction of apartment buildings.
– Specific projects prepared by the DSO are then prepared directly by the city itself or they decide to overload them with a private investor.
– One of the motivations for setting up a company is the housing crisis, which until 2020 had been a major political issue for several years.
The councilors have previously recommended that some city districts have shown interest in cooperative housing projects, namely Prague 11, Prague 13, Prague 8 and Prague 12. “A week ago, Prague 5 also joined,” added Kordová Marvanová for SZ Byznys.
According to her, Prague 13, which already has a resolution of the council on the establishment of a housing cooperative, is currently the furthest with the cooperative construction project.
“The entrustment of land is currently being discussed so that the city district can build affordable cooperative housing on it. I hope that the intention could be discussed in the holidays by the council in order to have the consent to entrust the land, “said Councilor Kordová Marvanová.
“We asked for the land to be entrusted to an affordable cooperative housing project. The whole project is based on the materials of the City Council. the city of Prague, which says that the city district or municipality will enter the project with the land (own or entrusted, editor’s note) and will announce a tender for a partner who will join a housing cooperative with the city district, “confirmed Ivana Todlová, representative for Prague 13 (for TOP 09), who is in charge of building affordable cooperative housing.
What will the housing association look like?
– One of the founding members of the cooperative will be a city, municipality or city district.
– The other members will then be individual applicants for flats.
– The partner will be a private trading company with experience in construction and organization of construction projects and which will have a long-term loan. They can be developers or an existing construction cooperative.
Do you have a quarter saved?
Applicants for membership will pay a quarter of the price of the apartment and the rest will pay as rent after moving in. The cooperative will repay the loan from the bank with the bank for up to thirty years. After the settlement of all liabilities, it will be possible to transfer the land to the ownership of the cooperative and to transfer the flats to the ownership of the members of the cooperative.
A significant problem with affordable housing projects is the aforementioned quarter of apartment prices that a new member of the cooperative must pay. For example, in the case of an apartment with a price of four million crowns, for those interested, it means having a million crowns saved from their own resources.
“We know that our project has one drawback – the cooperatives must have a large amount saved. Prague must no longer subsidize it, there are no programs for that, “commented Councilor Kordová Marvanová on the condition for joining the housing cooperative.
According to her, another plan is to set up state subsidy programs that would help people with funding advances. However, the first negotiations will come at the earliest after this year’s elections. “But the city’s help is already in the fact that it provides land and postpones payment for it,” we provide.
The goal is to get affordable cooperative housing at a price approximately one-fifth or up to one-third lower than the current market price.
“I think that since a private investor will be involved in the project – a housing cooperative or a development company – we will gain the experience and mechanisms of a private entity, so the project will not be more expensive. We will gain the benefits of the private sector. We are convinced that the apartments will be cheaper in the final, “explained Ivana Todlová, representative for Prague 13.
The price per square meter of the construction project should thus be around 70 thousand crowns in the final.
On the other hand, the councilor of the capital city of Prague, Adam Zábranský (for Pirates), does not agree. He believes that the construction of rental apartments under the direction of the city will become more expensive.
“What a private developer is interested in building and selling cheaply, there will be an interest in maintaining the best possible quality for as long as possible. That is, other priorities, a different way of construction, the need for better quality constructions will mean higher costs than would be incurred by construction projects of private developers, “explained Zábzský Byzny for SZ.
However, it should be noted that private developers of construction are significantly more expensive to prepare for construction, which normally take up to ten years. The costs of risk from long-term approval are thus included in the final prices. As promised by Councilor Kordová Marvanová, in the case of construction for a cooperative in which the city will be located, the land will be ready, and the process will therefore be faster and cheaper.
Opposition: Cooperatives will not solve the housing crisis
The opposition also welcomes the plan to build affordable cooperative housing. According to the Deputy Mayor of Prague 11, Ondřej Prokop (for YES), this is a good alternative for those groups of citizens who for some reason do not reach for a mortgage. However, in his opinion, cooperative construction does not currently have the potential to carry out the housing crisis as a whole.
“The construction of the first apartment building on this principle will not take place until many years later. Because city districts will also face opposition from local citizens, appeals procedures in permitting processes, as well as private developers, “Prokop argues for SZ Byznys.
Another question that knows in the air within the cooperative construction is how these flats of the cooperative will be distributed, ie how the city will select their members. “If in the final up to 30 percent cheaper flats are compared to the market, as promised by the representatives of the Prague City Council, the supply of such flats will be dramatically lower than demand and open up space for corruption and trading with advantageous cooperative shares,” said the deputy mayor of Prague 11 .
A discount of a third is too much, the union claims
Martin Hanák from the Union of Czech and Moravian Housing Cooperatives also sees the plan for cooperation between cities and housing cooperatives as a step in the right direction to solve the housing crisis.
“Cooperative housing is one way to access accessibility. It has a chance to be a few percent cheaper than standard commercial housing. It should be based on the non-profit principle, “he explained.
However, he himself does not think that prices could be reached by up to a third, as promised by Councilor Kordová Marvanová. The realistic scenario is heading for the last final prices by about twenty percent, Hanák said.
According to him, a decrease in the price by one third could come only if the cooperatives get to the lands of the capital and the costs will not be included in the final price, because they will be repaid in the next few years.
“If the construction of cooperative housing in cooperation with the city could be carried out in Prague, it could be a positive inspiration for other cities in the region. It will be interesting to see how this initiative will affect other parts of the Czech Republic, “added as a result for SZ Byznys
Housing cooperatives, a new trend in the Czech Republic?
Cooperative construction is beginning to return to fashion elsewhere than in the capital. For example, a few weeks ago, Brno announced that it was preparing the construction of 93 cooperative flats in Francouzská Street (the Zábrdovice district). The project will cost hundreds of millions and construction could begin in 2023. According to current plans, construction should take two years.
“Extensive courtyard with the French possibility to build less than a hundred new apartments while maintaining sufficient greenery, in addition to walking distance from the center. The project is now entering the phase of processing documentation for zoning decisions, “said Mayor Markéta Vaňková (ODS).
But it is also being built in the center of Liberec. A house for cooperatives was completed there last year and construction continues. In the north of Bohemia, however, it is a commercial project without the participation of the city. 114 cooperative flats are growing on the site of the dilapidated area of the former Assembly Plants in the lower center of Liberec. “These are flats of all sizes, but most of them are smaller ones,” said Petr Černý, chairman of the Construction Housing Cooperative Sever, which builds the houses. Each apartment will have a cellar and the cooperatives will have 146 covered parking spaces.
Coalition dispute
Kordová Marvanová tried to enforce the support of cooperative housing last year, but a coalition dispute arose around it, when representatives of Prague opposed themselves and the Pirates. They criticized that after paying off the debt, the cooperative should buy the land from the city for an estimated price, regardless of the appreciation of the plot.
In recent years, Prague has been facing a housing crisis and high housing prices, which make its own flats inaccessible to the middle class. According to estimates, however, 70 percent of people in the Czech Republic still live in their own flat or house, a fifth in a rented flat and about a tenth in cooperative housing. According to the Union of Czech and Moravian Housing Cooperatives, there are currently about 700,000 cooperative flats in the Czech Republic. In total, there are 4.37 million flats in the Czech Republic, of which 3.83 million are permanently occupied. Of these occupied dwellings, 2.16 million are for apartment buildings.