Rental housing has become a hot issue

Slovakia lacks not only apartments with rent control, but also dwellings.

Slovakia lacks rental housing.Slovakia lacks rental housing. (Source: Sme)

Supporting rental housing was one of the priorities present Speaker of Parliament and leader of the Sme Rodina, Boris Kollár, mentioned while running in the February general election. After his party succeeded and became part of the ruling coalition, support for rental housing was mentioned in the government’s four-year plan, even though far less than 25,000 rental apartments will be built each year, which is what they originally promised. Nonetheless, this has focused attention on the current lack of housing in Slovakia. Slovaks face not only a lack of rental apartments, but a housing scarcity in general.

“Support for rental housing with regulated rent is one way to provide affordable housing to all income groups,” wrote Jozef Kubala and Vladimír Peciar of the think tank Institute for Financial Policy (IFP), running under the Finance Ministry, in their study of rental housing published last November.

Legacy of the 1990s

Most Slovaks live in their own house or apartment - as much as 91.3 percent compared to the EU average of 69.3 percent. The share of apartments with regulated rent made up only 1.2 percent of the housing stock compared to the EU average of 8.7 percent. The share of commercial rental apartments accounted for only 7.4 percent compared to the EU average of 22 percent, according to 2018 data from the EU statistics office Eurostat.

“Slovakia does not have a sufficiently developed market for regulated or market rental housing,” reads the study.

The current situation in Slovakia is a legacy of the 1990s, when after the 1989 Velvet Revolution toppled the communist regime, the housing stock was massively privatised. The reason was the lack of funds that an obsolete housing stock needed for repairs. A side effect of this development is an over-average share of overcrowded and multigenerational households compared to the EU as well as the low mobility of the labour force.

“Behind this situation may be the lack of affordable rental housing or cultural customs,” reads the IPF study.

Another consequence is that the preference for one’s own housing and living in a rented apartment is understood as just an in-between stage to one’s own housing. Moreover, low-interest rates and the long-term high and unsatisfied demand for rental housing, for example in Bratislava, lead to a monthly mortgage instalment significantly below the commercial rental of an equal apartment, points out the study.

Furthermore, Slovakia lags significantly behind the European average in the number of dwellings per 1,000 inhabitants. Based on data from the 2011 census, the number of inhabited dwellings per 1000 citizens was 329 units, while the EU average was around 395 units. This means that Slovakia lacks the almost 400,000 dwellings needed to increase the housing supply to a total of over 2.1 million.

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