Pension funds will be able to invest in housing, the law has been signed by President Pavel

Prague - Pension funds will be allowed to invest in housing, which should support housing construction in the Czech Republic. Taxpayers will also be able to reduce their tax base by the interest on loans taken out by housing cooperatives. The law that allows this was signed today by President Petr Pavel. The castle informed about it. The signed law builds on the new housing support law and amends related laws. It also introduces a rule that allows housing cooperatives and owners' associations to disconnect defaulters from services. The condition will be that the non-paying owner is in arrears with payment for three months.

All investments by pension funds in housing may not exceed 20 percent of the fund's assets. They could invest, for example, through a qualified investor fund or through another legal entity. Such a legal entity, a Special Purpose Vehicle (SPV), could issue bonds that the fund would purchase. A pension fund could invest no more than ten percent of its assets into one SPV or qualified investor fund. "According to pension companies, the volume of their investments could reach nine billion in a year, and up to 20 billion CZK in five years. This will lead to the construction of thousands of new apartments," stated Finance Minister Zbyněk Stanjura (ODS) in early March.

"The amendment will allow pension companies to invest to a certain extent in real estate funds, which on one hand will strengthen the diversification of the portfolios of participants in pension savings, and on the other hand will help develop the domestic housing market," said Aleš Poklop, President of the Association of Pension Companies of the Czech Republic, previously.

The law will also allow taxpayers to deduct interest not only from their own housing loans but also from the loans of the housing cooperative from their income tax base. The condition will be that the taxpayer is a member of the cooperative and pays these interests, and that the cooperative has only allocated to the members those interests that it itself pays. This new provision was included in the law in the House on the basis of an amendment proposed by Minister Stanjura and ODS MP Jiří Havránek.

The related amending law introduces an order to vacate an apartment into the civil procedure code. This aims to expedite disputes over the eviction of unlawfully occupied apartments. "Thanks to these changes, landlords will have quicker access to the apartment or house if the tenant refuses to vacate after the lease ends, which should also motivate them to rent apartments based on long-term lease agreements," the government stated in the explanatory report.