Slovak government approved contracts for the construction of 9,000 rental apartments

Bratislava – The Slovak government approved contracts with two investors for the construction and leasing of 9,000 apartments, with a contract value of 1.5 billion euros (36.5 billion crowns). Government representatives and Speaker of the House Boris Kollár informed reporters today. This is a pilot project aimed at supporting rental housing, from which the state hopes to ensure residents can access housing at lower rents compared to commercial rental prices.

Slovakia had previously approved a special law to support rental housing, under which a five percent value-added tax (VAT) rate will be applied to these constructions instead of the usual 20 percent rate. Investors will receive a guarantee regarding rental housing rules for a period of 25 years.

In the pilot project, the Slovak government will collaborate with the BWSG group and the Vienna Insurance Group (VIG), which have experience in the rental housing sector in Austria. VIG operates in Slovakia through the insurance company Kooperativa. According to Slovak Deputy Prime Minister Štefan Hollý, this is a private investment in which the state acts only as a regulator.

"People will feel this in tough times. Ordinary people can practically no longer buy any housing with their own resources," Kollár said, whose party We are Family advocated for this rental housing development project. He stated that people will be able to utilize a government-supported contract that will allow for housing that is 30 to 40 percent cheaper than the market price.

Interested parties for this housing will have to demonstrate their ability to pay rent. In the first five years, the rental agreement will be for a fixed term, after which it will be extended to an indefinite term.

In Slovakia, around 20,000 apartments are built each year, mostly single-family homes. Property residents usually buy into private ownership, and the regulated rental market is not well developed in the country. Apartment prices in Slovakia have been rising long-term, surpassing previous highs; however, in the third quarter of this year, the pace of real estate price increases slowed down. According to previous information from real estate agents, the housing market in Slovakia cooled during the period of high inflation and rising interest rates.