STATUTES REGULATING FINANCING OF HOME CONSTRUCTION. In the period before 1989, the entire system of financing residential construction developed from planned management of the national economy. The state participated almost in full in the financing of home construction within a system of full residential construction and thus housing care was a government matter. Social changes in 1989 led to fundamental changes in housing policy and citizens themselves became responsible for finding a place to live. In the interest of putting a stop to unfavorable developments in this area, the Slovak Government adopted a “State Housing Policy”. The basic objective was to create legislative, technical and economic conditions to ensure the population available housing and for every household earning a reasonable income to be ensured housing. In connection with the above principles, instruments in the area of loans and government assistance were created to revive home construction. These instruments were supplemented and amended in 1999 and 2000, in accordance with the program declared by the Slovak Government, to conform to the opportunities and conditions of individual income groups.
CREDIT POLICY. The area of credit policy is closely connected to the government’s policy of subsidies, since all three main pillars of the credit system dedicated to promoting residential construction are associated with a system of government assistance (state bonuses to building society savings accounts and the government’s contribution to reducing mortgage interest rates). The government’s credit policy includes supporting the three main systems of financing home construction:
- A system of building society savings accounts was established in 1992 by Act No. 310/1992 Coll. on Building Society Savings, which was amended by Act Nos. 386/1996 Coll., 242/1999 Coll. and 443/2000 Coll. Three financial institutions are currently licensed to maintain building society savings accounts: Prvá stavebná sporiteľňa, a.s. (First Building Society), Stavebná sporiteľňa VÚB Wüstenrot, a.s. (VÚB Wüstenrot Building Society) and Československá obchodná banka, a.s. (Czechoslovak Commerce Bank). An amendment to Act No. 242/1999 Coll., effective on 1 October 1999, allows municipalities and cities represented by their supervisor or mayor, respectively, to be building societies. Further information on the possibilities and conditions for a building society savings account at a municipality can be found at http://www.pss.sk
- The system of government support for residential housing was established by Act of the National Council of the Slovak Republic No. 124/1996 Coll. on the State Housing Development Fund, which after having been amended was incorporated in full as Act No. 128/2001 Coll., whose full text was amended by Act No. 148/2001 Coll. This act addresses assistance provided to construct new houses (construction of an apartment in an existing residential unit, an apartment in a single-family home or the purchase of an apartment). Assistance is provided, in particular, in the form of a loan. Support from the fund can be received by either an individual or a legal entity (business, municipality, administrators of housing funds, housing cooperatives, apartment owner associations, etc.). In addition, a legal entity can receive assistance for all the purposes defined in the law and, in particular, support aimed at constructing apartments for lease, apartments intended for a mobile workforce and for the renovation of residential units are defined here. Detailed information on the possibility to obtain an ŠFRB loan can be found at http://www.sfrb.sk
- The mortgage financing system constitutes another means of financing residential construction. Act No. 21/1992 Coll. on Banks, as amended, defines a mortgage as a long-term loan maturing in at least five years and secured by a lien on property within the Slovak Republic. Mortgages are currently provided by the following banks: VÚB, a.s., Slovenská sporiteľňa, a.s.; Tatra Banka, a.s.; Istrobanka,a.s.; Ľudová banka (Volksbank), a.s.; HVB Slovakia, a.s.; ČSOB, a.s.; Unibanka, a.s. and OTP Banka Slovensko,a.s. .
SUBSIDY POLICY. Government support for residential construction, in addition to the home financing systems mentioned above, is expressed in both the allocation of subsidies from the state budget and resources obtained in the privatization process to ensure construction of apartments for lease, technical improvements and renovation of existing residential units. The extension of subsidies for constructing apartments for lease is regulated by the Ministry of Construction and Regional Development’s Regulation No. 8/1999, as amended by MCRD No. 1/2001 (construction of apartments for lease), No. 2/2000 as amended by Regulation No. 5/2000 (construction of technical improvements) and No. 3/2000 (eliminating systematic outages in residential units). In accordance with conditions laid down in these regulations, the Ministry of Construction and Regional Development provides the following subsidies:
- a) To construct apartments for lease, the amount of subsidies depends on the real value of the acquisition cost per square meter of floor space in the apartment for new construction or for converting non-residential space into an apartment.
- b) To construct technical improvements, subsidies are provided only for “initial construction” of technical improvements.
- c) To eliminate systematic outages in large housing estates caused by inadequate maintenance.
Subsidies to construct apartments for lease and make technical improvements may only be provided to municipalities and cities. Any extension of subsidies to construct apartments for lease and eliminate systematic outages under the above regulations do not bar an applicant from also obtaining another form of government assistance, i.e. support in the form of a loan on favorable terms from the State Housing Development Fund. In light of the current economic situation, where most municipalities do not have the necessary 20% of their own funding from the cost of construction available (which is a condition for receiving a loan from the State Housing Development Fund), The State Housing Development Fund Act was amended by Slovak National Council Act No. 148/2001 Coll. to allow municipalities to receive a loan for the construction of apartments for lease, even if the municipality does not have the above 20% of its own resources available. In accordance with an amendment to the State Housing Development Act, a municipality may start constructing apartments for lease without having any of its own resources available. In addition to a subsidy amounting to 30%, 40% or 50% (depending on the actual level of the building’s acquisition cost), the municipality will be able to get a loan from the State Housing Development Fund amounting to 70%, 60% or 50%, respectively, of the costs for the structure. Detailed information about government assistance for housing development as well as all legislation regulating subsidies and credits from the government is published in the Ministry of Construction and Regional Development’s website at
http://www.build.gov.sk/ under “Housing Policy”.
