The state will allocate less money next year for the repairs of panel houses and the construction of apartments

Prague - The State Housing Development Fund will allocate less money next year for the construction of rental apartments and for the repairs of panel buildings. In contrast, more money will be allocated for the construction of cooperative apartments. The government today approved the budget for the housing fund, which will see expenditures reduce by 40 percent year-on-year to approximately 5.63 billion crowns in 2007.
The reduction in expenditures is related to the fact that the fund can no longer rely on the relatively massive influx of money from the National Property Fund. This was the main source of income for the housing fund until 2005. This year's income, including the transfer of funds from 2005, reached 14.3 billion crowns. For 2007, the amount will decrease to 8.8 billion crowns.
Next year, the fund will support all existing housing programs. However, expenditures on non-returnable grants, which account for 43 percent of the fund's spending, will be significantly reduced. Therefore, the Ministry for Regional Development proposed funding for some programs only at the strictly necessary level.
The grants to municipalities for the construction of rental housing will decrease by more than 40 percent to 800 million crowns next year compared to this year. This means the fund could support 1,400 rental apartments. However, interest from municipalities is expected to be higher. This year, the fund managed to satisfy about 75 percent of applications. "An increase in this item compared to the proposed plan would mean an unsustainable burden on non-returnable tools," stated the Ministry for Regional Development (MMR).
Owners of panel buildings may also expect expenditure restrictions. Grants for interest payments on loans for repairs of these buildings, known as the Panel program, will decrease by 200 million to 700 million crowns. For emergency repair grants, 130 million crowns will be allocated, which is 270 million crowns less than this year. However, this amount is appropriate for the volume likely to be used for these purposes this year.
According to Finance Minister Bohuslav Sobotka (CSSD), the decline in grants for the construction of rental apartments and the repairs of panel buildings is not dramatic. "The fund must change from a grant fund to a revolving fund, meaning it should be more based on loans in the future," Sobotka told CTK.
"If the fund were based solely on grants, it would quickly run out of money and could not operate here in the long term," noted the minister. According to him, the fund's expenditures must also be assessed in the context of total public budget expenditures. "It is not possible for the state budget to save while state funds do not," he said.
For loans to young people for modernizing apartments, the fund's budget will decrease to 700 million from this year's three billion crowns. However, according to the director of the housing fund, Jan Wagner, this amount should be sufficient. In contrast, the fund's expenditures for loans for the construction or purchase of apartments for this group of residents will increase by 130 million to 1.5 billion crowns.
Conversely, higher amounts are planned for housing cooperatives for the construction of apartments, which could result in approximately 1,000 apartments built thanks to a hundred million crown grant. The fund now has 300 million crowns allocated for a planned program for repairs, modernizations, and regeneration of non-panel buildings.
By 2008 at the latest, the fund will need external income, such as grants from the state budget. Otherwise, according to the Ministry for Regional Development, there is a risk that it will not be able to continue providing grants. Previously, there was also consideration that the fund could obtain money from a portion of the revenue from the property transfer tax, but this proposal has not yet been approved.
However, Sobotka is against allocating part of the revenue from the property transfer tax to the housing fund. "I have never supported this idea. I am against the fragmentation of purposes for which taxes are collected. In my opinion, the best system is a simple, transparent one where tax revenues end up in the budgets of either the state, regions, or municipalities," Sobotka believes.
In the past, according to Sobotka, the fund received more than 15 billion crowns from privatizations. "And in my opinion, it should manage with these funds in the future, but I do not rule out that in the coming years certain grants will also be provided from the state budget specifically for financing grant titles," said the finance minister. Loans should, according to him, make up at least 60 to 70 percent of the fund's expenditures in the coming years.

The Budget of the State Housing Development Fund for 2007
(expenditures in millions of crowns)*

Program Name	2007 (proposal)	2006	Difference
Grants to municipalities for the construction of rental apartments	800	1400	-600
Grants to housing cooperatives for the construction of apartments	100	87.5	12.5
Grants for the repairs of panel buildings	130	400	-270
Grants for the construction of rental apartments for socially weak groups	100	100	0
Grants for interest payments on loans for repairs of panel buildings	700	900	-200
Grants for repairs of non-panel buildings	300	0	300
Grants for young people for construction or acquisition of housing	50	30	20
Loans to housing cooperatives for the construction of apartments	700	612.5	87.5
Loans to young people for construction or acquisition of housing	1500	1370	130
Loans to young people for apartment modernization	700	3000	-2300
Loans to municipalities for repairs and modernization of flats	300	300	0
Expenditures for securing support	185	190	-5
Administrative expenditures of the fund	60	55	5
TOTAL EXPENDITURES	5625	9445	-3820

* source: MMR, SFRB