Housing Policy and Housing Finance in the Czech Republic during Transition: An Example of the Schism between the Still-Living Past and the Need of Reform - Volume 28 Sustainable Urban Areas

299 Pages·2009·1.3 MB·English

by  M. Lux

S U S T A I N A B L E
U R B A N A R E A S
28
Housing policy and
housing finance in the
Czech Republic during
transition
An example of the schism
between the still-living past
and the need of reform
Martin Lux
Delft Centre for Sustainable Urban Areas
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The series Sustainable Urban Areas
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130&'4$)3*'5
ter verkrijging van de graad van doctor
aan de Technische Universiteit Delft,
op gezag van de Rector Magnificus prof. dr. ir. J.T. Fokkema,
voorzitter van het College voor Promoties,
in het openbaar te verdedigen op vrijdag 13 november 2009 om 10.00 uur
door
Martin LUX
MSc in economie en sociologie
geboren te Nový Jicín (Tsjechische Republiek)
Dit proefschrift is goedgekeurd door de promotor:
Prof. dr. P.J. Boelhouwer
Samenstelling promotiecommissie:
Rector Magnificus, voorzitter
Prof. dr. P.J. Boelhouwer, Technische Universiteit Delft, promotor
Prof. M. Stephens, University of Glasgow
Prof. dr. J. van Weesep, Universiteit Utrecht
Prof. M. Oxley, De Montfort University, Leicester
Prof. dr. ir. H. Priemus, Technische Universiteit Delft
Dr. M.E.A. Haffner, Technische Universiteit Delft
Dr. T. Kostelecký, Academy of Science of the Czech Republic
Housing policy and housing finance in the Czech Republic during transition
An example of the schism between the still-living past and the need of
reform
Delft University of Technology, the Netherlands
The author wishes to acknowledge the financial assistance of the Grant
Agency of the Czech Republic, grant No. 403/09/1915 “Social inequalities and
the market risks following from housing consumption. The real and desirable
response of state fiscal and monetary policies.”
Design and cover: Cyril Strijdonk Ontwerpbureau, Gaanderen
Dtp: Yvonne Alkemade, Delft
Printed in the Netherlands by: Haveka, Alblasserdam
ISSN 1574-6410; 28
ISBN 978-1-60750-058-2
NUR 755
Legal notice
The publisher is not responsible for the use which might be made of the
following information.
© Copyright 2009 by Martin Lux
No part of this book may be reproduced in any form by print, photoprint,
microfilm or any other means, without written permission from the
copyrightholder.
$POUFOUT
Preface and acknowledgements
1 Introduction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Meaning of ‘transition’ ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The goal of the book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Preliminary questions ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Theoretical and methodological framework . . . . . . . . . . . . . . . . . . . . . . 6
1.4.1 Theories on housing systems’ development . . . . . . . . . . . . . . . . . . . . . . 7
1.4.1.1 Inspiration in comparative housing studies . . . . . . . . . . . . . . . . . . . . . . 7
1.4.1.2 What theoretical framework to choose? . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.4.2 Theories on the role of the state in the field of housing
consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4.2.1 Economic perspective ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4.2.2 Social perspective ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.4.2.3 State as ‘rational economist’ and ‘understanding
paternalist’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.4.2.4 Why do states intervene as ‘understanding paternalists’? . . . 21
1.4.3 Methodology of assessment of the role of the state in the
field of housing consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.4.3.1 Public interventions in the field of housing
consumption – hypothetical cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.4.3.2 Public interventions in the field of housing
consumption – practical cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.4.3.3 The methodology of assessment of housing subsidies:
the concept of efficiency and effectiveness . . . . . . . . . . . . . . . . . . . . . . 37
1.4.4 Methodological discussion on international comparison of
housing systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
1.4.4.1 Case of misunderstanding – ‘social’ housing in transition
countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
1.4.4.2 Methodological imperative – individual openness of
researchers in comparative studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
1.5 Research questions ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
1.6 Outline of the book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2 Housing policies and housing finance during transition
in selected transition countries
Partial international comparison .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.1 Introduction ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.2 Privatisation of public housing and tenure changes . . . . . . . . . . . 56
2.3 Supply-side subsidies ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.3.1 Supply-side subsidies: the case of Poland . . . . . . . . . . . . . . . . . . . . . . . . 59
2.4 Demand-side subsidies ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.5 Subsidies and role of the state in homeownership sector . . . . 63
2.5.1 Subsidies to promote homeownership: the case of Hungary 67
2.6 Was anything shared among transitional countries? . . . . . . . . . . 69
3 Housing conditions, housing policy and housing
affordability in the Czech Republic during the transition . . . 73
3.1 Political and institutional context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.2 Economic context ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
3.3 Social policy ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
3.4 Demographics ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
3.5 Immigration ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
3.6 Housing conditions and housing policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
3.6.1 Housing policy between 1918-1948 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
3.6.2 Housing policy between 1948 and 1989.. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
3.6.3 Housing policy between 1989 and 2005.. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
3.6.3.1 Housing conditions ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
3.6.3.2 Tenure changes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.6.3.3 Demand-side subsidies ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
3.6.3.4 Supply-side subsidies ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
3.6.3.5 Subsidies to promote homeownership . . . . . . . . . . . . . . . . . . . . . . . . . . 112
3.6.4 Housing finance ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
3.6.5 Housing affordability ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
3.6.5.1 General problems connected with measuring housing
affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
3.6.5.2 The methodology of measuring the affordability of
housing in the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
3.6.5.3 The affordability of rental housing in the ‘privileged’
housing sector between 1991 and 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 128
3.6.5.4 The affordability of rental housing in the ‘unprivileged’
housing sector (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
3.6.5.5 The affordability of owner-occupied housing in the
‘privileged’ housing sector (1991-2003) . . . . . . . . . . . . . . . . . . . . . . . . . . 136
3.6.5.6 The affordability of owner-occupied housing in the
‘unprivileged’ housing sector (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
3.6.5.7 Comparison and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
4 Effectiveness and efficiency of housing policy in the
Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .145
4.1 Effectiveness ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.1.1 Economic subsidy from rent regulation . . . . . . . . . . . . . . . . . . . . . . . . . 151
4.1.2 Economic subsidy from public housing privatisation . . . . . . . . 156
4.1.3 Housing allowance ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
4.1.4 ‘Social’ housing subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
4.1.5 Tax relief ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
4.1.6 State premium to housing savings scheme . . . . . . . . . . . . . . . . . . . . 163
4.1.7 Conclusion ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
4.2 Efficiency ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
4.2.1 Economic subsidy from rent regulation . . . . . . . . . . . . . . . . . . . . . . . . . 167
4.2.1.1 Data and methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
4.2.1.2 Conclusions and sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
4.2.2 Housing allowances ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
4.2.3 Tax subsidy ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
4.2.4 State premium to housing savings scheme . . . . . . . . . . . . . . . . . . . . 183
4.2.5 Conclusions ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
5 Efficiency and effectiveness of new supply and demand-
side subsidies in transition countries . . . . . . . . . . . . . . . . . . . . . . . . . .187
5.1 Analysis and criteria used for comparison of housing
policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
5.2 Evaluation and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
6 Efficiency and effectiveness of housing subsidies in the
Czech Republic
Conclusions from housing system analysis . . . . . . . . . . . . . . . . . . .199
6.1 Context analysis ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
6.2 Policy recommendations ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
7 Summary and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217
7.1 Main topic and goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
7.2 Theoretical and methodological background . . . . . . . . . . . . . . . . . . 218
7.3 Research questions and main findings . . . . . . . . . . . . . . . . . . . . . . . . . . 220
7.3.1 The wider context of housing subsidies in the Czech
Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
7.3.2 Evaluation of housing subsidies in the Czech Republic . . . . . 225
7.3.3 Partial evaluation of housing subsidies in other transition
countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
7.3.4 Other factors of low effectiveness and efficiency of
housing subsidies in the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . 229
7.3.5 Policy recommendations for higher effectiveness/
efficiency of housing subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Appendix A Public housing policy and instruments . . . . . . . . . . . . . . . . . . . . . . . .237
Appendix B Programmes to meet the social objectives of housing
policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .243
Appendix C Optimisation programme on public housing construction
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .249
References ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251
Summary ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .271
Samenvatting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .277
Curriculum vitae ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .283
1SFGBDFBOE
BDLOPXMFEHFNFOUT
I would like to thank for substantial help, inspiration and many valuable
comments to both content and the structure of the book prof. Peter Boelhou-
wer from OTB, Delft University of Technology in the Netherlands. The results
of several years of research presented in this book could not be achieved
without close co-operation with my colleagues at the Institute of Sociology,
Academy of Sciences, in Prague. My special thanks relates to Petr Sunega who
in 2000 established with me the research team focusing almost exclusively on
housing research; the field that needed substantial reform of perspectives in
the Czech Republic after 1990. After several years of common hard work and
mutual help we achieved the recognition of our research activities in domes-
tic environment as well as abroad.
I should not forget to thank the management of OTB and the management
of the Institute of Sociology, Academy of Sciences in Prague for excellent con-
ditions allowing me to finish this book. The work on this book was especially
supported by the Grant Agency of the Czech Republic, grant No. 403/09/1915
“Social Inequalities and the Market Risks Following from Housing Consump-
tion. The Real and Desirable Response of State Fiscal and Monetary Policies.”
Many thanks to my wife Lucie and to my children, Ondrej and Tat’ána, for
their patience and support. I owe them a lot…
Martin Lux
Prague, July 2009