Spectator on facebook

Spectator on facebook

Despite progress, Slovak housing market still hampered by ancient practices

Reaction to the VÚB mortgage announcement was markedly subdued. Real estate agents and brokers said they expected some increase in business as a result of the new mortgage plan, but added that the Slovak real estate market was being held back more by byzantine ownership regulations than low liquidity.
Igor Fedoroňko, executive director of Bratislavská Realitná Kancelária (Bratislava Real Estate Office, BRK), said that he did not think the VÚB plan would have any significant impact on construction of new housing units in Slovakia because it did not address the root causes of the country's housing crisis.
"In the last eight years, hardly any housing has been built in this country," he said (see chart this page). "Building flats is in the hands of private industry now, but since financing construction projects is still incredibly costly, and the government is still doing nothing to create the proper administrative conditions for investment, mortgages can have little effect."


Apartments like these near Lučenec are not easily afforded, even with a new mortgage.
Courtesy of Linia Magazine

Reaction to the VÚB mortgage announcement was markedly subdued. Real estate agents and brokers said they expected some increase in business as a result of the new mortgage plan, but added that the Slovak real estate market was being held back more by byzantine ownership regulations than low liquidity.

Igor Fedoroňko, executive director of Bratislavská Realitná Kancelária (Bratislava Real Estate Office, BRK), said that he did not think the VÚB plan would have any significant impact on construction of new housing units in Slovakia because it did not address the root causes of the country's housing crisis.

"In the last eight years, hardly any housing has been built in this country," he said (see chart this page). "Building flats is in the hands of private industry now, but since financing construction projects is still incredibly costly, and the government is still doing nothing to create the proper administrative conditions for investment, mortgages can have little effect."

Fedoroňko was equally pessimistic regarding the impact of mortgages on the market for existing real estate. "The reality is that these mortgages can only be used for about 20 percent of the flats that presently exist in Slovakia," he claimed.

The problem, Fedoroňko explained, lay in Slovakia's antiquated housing laws. "40 percent of existing flats are still owned by cooperatives, and buying legal title to your flat from a coop involves an enormously complicated administrative process," he said.

Ladislav Vaškovič, general director of VÚB's mortgage department, concurred. "Housing policy here is virtually unaltered from communist times," he said.

Slovakia's antiquated housing laws mean that people frequently have to resort to semi-legal means to secure accomodation. The state-set market price of coop flats, for example, is only about 30,000 Sk, but it can take years to acquire legal tenure, thanks to a bloated bureacracy bent on justifying its existence.

What people often do, explained Fedoroňko, "is to 'purchase' coop flats by paying a certain price, maybe 800,000 Sk, to the outgoing tenant for the Right of Occupancy." Given the unofficial nature of these arrangements, Fedoroňko said, "virtually 100 percent of these sales are of the black market variety."

Anxious to avoid taxes and bureaucracy, claimed Fedoroňko, vendor and purchaser complete their transaction without a formal contract, which of course means that the sale is ineligible for mortgage financing."Everybody who wants to earn some money is doing this - they feel that if they want to change their situation, maybe buy a house, they must find an extra-legal solution because privatizing a flat can take several years."

With another 40 percent of flats in Slovakia still belonging to the state, either at the national or municipal level, only 20 percent of flats are actually legally prepared for private sale and normal financing, said Fedoroňko. "So, as you can imagine, our office lives on rentals, especially to foreigners. Selling and buying housing is still very difficult, and this is a problem that must be resolved before we start talking about mortgages."

Top stories

Job ads should inform about basic salary

One of the proposal’s authors from the Smer coalition voted in May against a similar proposal authored by opposition deputies

The shortage of workforce is a growing problem for entrepreneurs.

Top 3 news from Last Week in Slovakia Video

EMA will not relocate to Slovakia - Job ads will have to state actual payrates - Trnava factory to produce electric cars

PSA plant in Tranva.

Námestie Slobody square closer to facelift Photo

The Bratislava city council wants to revitalise the square by the end of 2018

The winning project for revitalisation of Námestie Slobody square

Slovak hockey league will not rest during Olympics

Unlike the Slovak premiere hockey league, Swiss, German and Russian leagues will take a break during the 2018 Winter Olympics.

Ice hockey is popular in Slovakia