Plans for the construction of cooperative flats in Prague are collapsing. The councilors disagree
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Prague plans to establish a housing cooperative and subsequently build 5 to 266 new flats in Prague. This is the first project of its kind for the capital. The team led by Hana Kordová Marvanová’s Councilor for Legislation and Housing Support (STAN) is preparing to announce a public contract for the selection of a partner for the construction of the Smíchov project.
However, this is prevented by disagreements between the councilors of the capital. According to the original plan, the project should have been approved by the representative of the capital city of Prague, which he has not yet reached.
It is therefore clear that there will be at least a delay in its implementation. In the extreme case, however, according to Marvanová, the possibility cannot be ruled out that the plan for the construction of cooperative flats in Radlická will fall well. The situation is complicated by the upcoming elections.
Project in Radlická
- Gross floor area: approx. 20 thousand m2
- Usability: 72%
- Approximate average area of the apartment: interval from 54m2 up to 65 m2
- Approximate number of apartments: 221 to 266
- Estimated construction price from January 2022: CZK 835 million without VAT
- Construction process from foundation to handover of apartments: 3 to 4 years
Land for free
The first remark is that the cooperative will in fact get the right to use the city’s land for a long time from the capital completely free of charge, and Prague will not have any current profit from this. According to this comment, this was unjustified support for the cooperative and its members.
“I argue that it is not possible to subsidize the owner-occupied housing that will eventually emerge from the project by providing the city with land free of charge. There is a limited amount of land and if the users did not pay for the time they have leased it, the city will not generate additional values for any other projects, “said representative Pavel Zelenka (Prague Sobě).
According to Zelenka, cooperatives should pay at least one percent of its value during the use of the land, which in the case of land in Prague 5, according to current price estimates, would be based on about 1.2 million crowns per year.
“When this estimate is calculated for a monthly payment of about 250 flats, it is a fee in the order of hundreds of crowns. The moment the cooperative wants to buy the land, its market value is estimated and the cooperative pays only the residual value, “explains Zelvanová Zelenka, an alternative to the plans.
However, the author of the project argues several points against the complaint. At stake is a so-called contribution to the affordable housing development fund, which the city’s cooperatives will pay. I have to go, as in the case of the land rental fee proposed by the counterparty, by one percent of the current value of the land. However, the fee for the affordable housing development fund should act as a deposit for the future purchase of land.
Adam Zábranský, a councilor for housing under the Pirates, also opposes the original plan. According to him, the cooperative should pay both for the rental opportunity and for the purchase itself.
One third of the flats go to the city
Another point in which Marvanová defends the project is that the cooperative has the right to build on the city’s land, provided that it builds apartment buildings on it, in which Prague will have the right to rent in one third of the flats it will sublease.
“The capital will benefit from the right of construction in the form of obtaining these apartments and the selected sublease. Without the establishment of the right to build, these apartments would not have been built at all. Prague also has a pre-emptive right to the shares of other members, so it can further expand its municipal rental housing stock, “said Kordová Marvanová.
If the cooperative buys the city’s land after the end of the construction right, it will pay the usual price for it at the time of purchase. In addition, according to the current plan, Prague will receive a contribution to the affordable housing development fund for the entire duration of the right, with which it can dispose of and obtain financial resources for the implementation of the city’s housing policy.
“If the cooperative does not buy the land after the end of the construction right, the land will remain the property of the capital, which will receive apartment buildings as compensation and will keep the entire paid contribution to the affordable housing development fund,” the councilor added.
Recruitment of team members
The second comment concerns the method of selecting members of the cooperative, which some councilors consider non-transparent, and the selection of members of the cooperative, for example by lot, if there are more applicants than there will be flats.
“The recruitment of cooperatives is reminiscent of apartment queues. The applications are to meet with an unspecified authorized person and this gives the impression that this part of the project is unresolved and may lead to manipulations, “Zelenka shared doubts on behalf of the Prague Sobě association.
The association also does not like the fact that the project does not address the crisis scenario of a situation where some cooperatives would no longer be able to pay monthly “rent”.
However, according to Hana Kordová Marvanová, potential members of the team cannot be lustrated about their creditworthiness. Within the cooperative, they act only as “tenants”.
When joining a cooperative, potential members are subject to strict admission conditions. Moreover, the person in question does not become a debtor, but a tenant. As elsewhere, he is obliged to pay a monthly “rent”, if this does not happen, the cooperative has the right to exclude it, “says the councilor.
Conditions for joining the team
- citizenship of the Czech Republic and permanent residence in the territory of Prague
- absence of own housing
- debt-free (taxes, health insurance, social security, debts to the capital city of Prague and legal entities established by it)
Negotiations are continuing
According to Marvanová, the effort to compromise on the points described above should continue in the coming days. “If an agreement is reached, I could start the project in June with a vote in the Council. A week later, it could be voted on at the City Council, “said the councilor.
With the approval, Prague would take a step further on the way to the construction of the first cooperative flats, for which the city’s land would be provided. Thanks to this and other advantages of the project, such as lower developer margins, these apartments should be 25 to 30 percent cheaper compared to current market conditions, and thus more affordable.
“The project is ready at the moment, as soon as we compete with the partner, we will establish a housing association together. We have already noticed several people interested in this type of housing and we will be happy to help these people get more affordable housing, “says Kordová Marvanová.
The main advantage of cooperative housing is the fact that the applicants do not have to take out a mortgage, but the construction of the house will be financed from a loan that the cooperative will take for the construction. Individual cooperatives will repay this loan as part of the monthly payments associated with the use of the apartment.
Another benefit is the lower margin of the developer and the fact that, thanks to the support of the capital, cooperatives do not have to pay the land at the beginning. Land intended for cooperative housing will be provided by the city and the cooperative will establish the right to build on these lands for up to 99 years. After repaying the construction loan, the cooperative will be entitled to buy the land from the city. This will spread the cost of acquiring housing over a very long period of time.
Another part of the city where a similar project is planned is Prague 13. Its representative Ivana Todlová specifies. “Together with the City Hall, we have prepared a project of 150 apartments in Oistrachova Street. These are small apartments 2 + kk with a size of 50 meters. Prague 13 has selected other localities for a similar purpose. “