Affordable Housing Act
The Affordable Housing Act introduces a new legal framework for publicly supported housingconstruction, the rental of apartments under affordable conditions, support for a first residentialproperty, and the activation of vacant apartments. It repeals the previous Act on SociallySupported Housing Construction, better known as POS, subject to transitional rules forproceedings that have already been initiated.
The concept of affordable housing
For the first time, the Act systematically defines affordable housing. The key criterion is not onlythe market price of an apartment, but the total monthly housing burden. Housing is consideredaffordable where the rent, or the loan instalment or annuity, increased by average utility costsand maintenance costs, does not exceed 30% of the net income of the immediate family.
In practice, this approach means that the assessment of rights and obligations will have to takeinto account the actual household income, the number of family members, housing costs, andlocal conditions.
Who may be a beneficiary of the measures
The measures are intended for persons who do not have suitable residential property and whomeet the prescribed income and other conditions. The target groups specifically include youngpeople, families with children, persons over 65 years of age, persons with disabilities, familiesin which a member is a person with a disability or a child with developmental difficulties, formerprotected tenants, police officers, active military personnel, public and civil servants in shortageoccupations, and persons in shortage occupations.
An important part of implementation will be proving that the beneficiary and the members of hisor her immediate family do not own another suitable property, that they meet the incomerequirements, and that they use the property for housing, rather than for investment, rental, ortourist activity.
Purchase of an apartment and restrictions after purchase
One of the central measures is the purchase of an apartment under affordable conditions,including the possibility of payment in instalments. As a rule, the buyer must provide at least10% of his or her own participation, while the remainder is financed through a combination of acommercial bank loan and a loan from APN or the public institution for affordable housing. Aninterest rate of 1% per year is prescribed for public funds.
Purchasing such an apartment does not mean completely unrestricted disposal of the property.The Act prescribes long-term restrictions, including a prohibition on alienation, leasing, andchange of purpose for a period of 35 years, except under conditions determined by law. Thecontract must also contain a right of repurchase in favour of public-law bodies, and the statedrestrictions may be registered in the land register. For that reason, before entering into thecontract, it is necessary to conduct a legal review not only of the price and financing terms, butalso of the future consequences for sale, inheritance, financing, and encumbrance of theproperty.
Affordable rent and activation of vacant apartments
The Act also regulates the rental of apartments under affordable conditions. Rent is linked tohousehold income, taking into account utility costs and maintenance costs, and a minimum rentamount per square metre is also prescribed. The tenant is obliged to submit income data, whilea change in income may affect the amount of rent. Providing inaccurate data or failing to submitthe requested documentation may lead to termination of the contract.
The measure for activating vacant apartments is particularly important. APN may rent vacantapartments from private owners and sublet them to persons who meet the conditions foraffordable housing. The contract between the owner and APN is concluded for a fixed term,generally from three to ten years, with the possibility of extension. For owners, this mayrepresent a more stable rental model, but the contract must clearly regulate the rent, duration,termination, condition of the property, responsibility for costs, damage, and return ofpossession.
Support for a first property and construction of a house
The Act provides for support for acquiring a first residential property. The support may relate tothe purchase of a first property, subject to meeting conditions concerning age, residence, actualoccupancy, tax status, surface area, and the price of the property.
Support for the construction or reconstruction of a family house is regulated separately. In thispart, the right may be linked to a use permit, registered residence, actual occupancy, andinvoices showing paid VAT. If the property is alienated, rented out, or ceases to be used forhousing within the prescribed period, an obligation to repay the support with default interestmay arise.
Housing cooperatives and the role of local self-government
A new feature is a more detailed framework for non-profit housing cooperatives. This model isconceived as non-profit association for the purpose of resolving housing needs, and not as aclassic investment model. The Act therefore sets restrictions regarding ownership, disposal,and the influence of persons connected with construction, brokerage, and financing.
Local and regional self-government units have an important role in implementing the Act. Theymay adopt their own programmes, establish public institutions for affordable housing, provideland, establish building rights, grant exemptions from utility contributions, and co-financeconstruction. If a local unit has no programme or institution of its own, implementation isgenerally taken over by APN.
Legal consequences and conclusion
The Affordable Housing Act raises a number of practical legal issues. In apartment purchases,the decisive factors will be the terms of the public call, proof of target-group status, the contentof the sale and purchase agreement, restrictions on disposal, the right of repurchase, and land-register entries. In rental and sublease arrangements, termination grounds, responsibility forcosts, the obligation to provide data, and the protection of contractual parties will be important.In relation to support measures, deadlines, evidentiary documentation, tax conditions, appealprocedures, and the risk of repayment of funds will carry particular weight.
The new Act creates opportunities for buyers, tenants, owners of vacant apartments, investors,local units, and housing cooperatives, but at the same time introduces a complex system ofrestrictions and long-term obligations. Legal certainty will therefore depend on careful review ofthe conditions, contracts, APN decisions, and land-register status before any decision is made.
