As opposed to other regional policies, the Romanian Government is looking into eliminating subsidies granted for building homes with the help of mortgage loans, saying construction material prices have been cut significantly as a result of the crisis and that the public budget is under pressure.
The subsidy for building a mortgage home currently accounts for 30% of the construction costs, but cannot exceed the equivalent in lei of EUR15,000 and cannot exceed the value of the mortgage loan taken out.
The Government has not allotted money for this program in the past year and a half. All payment requests since February 2010 until the present were not considered.
On the other hand, the Government has kept the “First home” program going. Although the scheme was announced as a measure meant to get the real estate market and the construction market going, it only partially achieved its purpose.
The wide majority of financing granted as part of this program went to the acquisition of old homes, so the program only allowed banks to sell mortgage loans without taking on very high risks.
Although bank clients can take out government-guaranteed loans to build a home, only a few such loans were sold for this purpose because the whole process is so complicated that many clients gave up.
Less than 30,000 homes have been built through the state-backed housing program (ANL) – as much as was built on the local market in half a year during the boom period. The program announced by Elena Udrea, minister of Regional Development and Tourism, at the beginning of 2010, which was set to build 100,000 homes for young people within three years, falls into the same category of promises as the plans to build highways and rural infrastructure.
Hungary grants subsidies
The Hungarian Government announced this autumn that it would resume a program of subsidies for families that buy homes worth up to 30 million forints (around EUR100,000). The subsidy can exceed the forint equivalent of EUR8,000 and the quantum of the subsidy is set based on the number of family members, on the size of the home and on its energy efficiency. The subsidy can be accessed only by families with at least one salaried member and who do not have debts to the state budget.
Authorities in Budapest are also conducting a program to subsidize the interest on real estate loans, for which they have allotted around 1.3 billion forints (around EUR4 million) of next year’s budget. Estimates say between 3,000 and 5,000 families will benefit from the program of interest rate subsidies.
Town halls are the developers in the Czech Republic
The Czech state encourages the building of homes through a program which involves the local authorities themselves. They are in fact the developers of the real estate projects for which subsidies are allocated.
Although it has been modified to remedy problems that emerged over the course of time, the subsidy program has been functioning uninterruptedly for 15 years, and the amounts allotted by the state rose steadily.
(English version by Daniela Stoican)