The government has approved the calculation of rent in state-supported affordable housing

Prague - The government today approved the calculation of rent in affordable housing, for which state support can be obtained for construction or acquisition. This follows from the results of the meeting. The amount should be set so that the rental income covers costs for the duration during which the building can be used for housing. At the same time, tenants should not pay more than what is stipulated by the regulations for affordable housing. The Ministry for Regional Development (MMR) will create a methodology for specific rental prices following the approval, as the current calculation process is complex and unclear, which was pointed out, for example, by the Ministry of Finance during the comment procedure.

According to the law, rent in affordable housing can be a maximum of 90 percent of the locally customary rent according to the price map of the Ministry of Finance. Thus, the state, regions, and municipalities can rent out apartments at most for what is called cost rent. This should be calculated based on the costs incurred for construction or acquisition and operation of the building.

The calculation process is designed by MMR to allow for the economically sustainable emergence of affordable rental housing while also ensuring that the tenant does not incur unnecessary costs. The calculation will depend only on the area designated for affordable housing; additional spaces that arise during the project, such as offices or other commercial areas, will not be included.

For example, in a building with 5,000 square meters designated for affordable rental housing and a total value of 300 million crowns, the monthly rent for an apartment of 70 square meters would be 16,310 CZK, according to the ministry. For an apartment of 40 square meters, it would be 9,879 crowns. According to data from Deloitte, in the third quarter of this year, a square meter in the Czech Republic was rented for an average of 336 crowns. Thus, a 70-square-meter apartment was rented for 23,520 crowns and a 40-square-meter apartment for 13,440 CZK.

Support for affordable housing is intended for the construction or acquisition of rental apartments and can be utilized for new constructions, renovations, or extensions. Part of the funds can be immediately used for a maximum of 40 percent of costs under specific requirements. The subsequent subsidized loan at the base EU rate for the Czech Republic, reduced by up to three percentage points, can be up to 65 percent of the project cost. Overall, subsidies and advantageous loans could cover up to 90 percent of the investment. The repayment period is up to 30 years, and early repayment is without fees.