Court rules rent system unconstitutional - stresses need for new legislation
Two weeks ago the Czech Constitutional court ruled that the rent system in place was unconstitutional for a second time. The decision has forced the country's coalition government to finally address the problem of liberalization of the housing market.
Anyone who has ever tried to rent an apartment in Prague or other parts of the Czech Republic will know first-hand just how difficult it is to find a flat here at a reasonable price. Thirteen years after the fall of the communism, the housing market has still only been partially liberalized, a situation which is has left many original tenants, protected by rent control, paying relatively low rent on the one hand, while leaving new tenants, many of them young families, with no choice but to try their luck on a limited open market - where rents often reach exorbitant rates. Now, signs of change: two weeks ago, for the second time, the Czech courts ruled the current rent system unconstitutional - a ruling that was welcomed by coalition government members the Freedom Union. The party's interim leader Ivan Pilip:
"The Constitutional Court ruling has confirmed the existence of a problem we have been addressing for some time - that the current system was intolerable because it outlined different rights for different population groups - the decision also stressed it was imperative a new solution be found. I'd like to point out that we are not saying there shouldn't be any kind of rent regulation, just that it should be a complimentary factor to two major principles: one, social politics should not be enforced at the expense of property owners' rights, and two, that the housing market will have to be widened extensively."
The court ruling has underlined the necessity to finally pass a law that would liberalize the market, at the same time securing tenants' rights, bringing rents in line with more accurate rates based on actual location and apartment size, while providing social benefits for families that might no longer be able to cover the costs. Finding a working compromise for the current government, though, is not likely to be easy - two different social policy concepts exist. On the one hand, the Freedom Union says the rights of property owners have been trampled on, by receiving disproportionately low rents, that make it impossible for some to maintain or upgrade their properties, let alone make a reasonable profit. On the other, the senior Social Democrats traditionally emphasize tenants' rights first, and warn of breaking open the market completely for fear that landlords would exploit the situation. MP Stanislav Krecek:
"We are very unhappy about some of the steps being taken by the Ministry for Local Development to prepare a law which would favor landlords. Of course, its not official, but some of the things we heard indicate the permanent raising of rents, not only in regulated rent apartments but even in non-regulated areas."
This kind of rhetoric is discounted by Freedom Union leader Ivan Pilip, who contends that Mr Krecek does not belong to the Social Democrat mainstream. Whatever the case both sides will have to work together to reach some compromise: no solution can be met by favoring any side - if anything the task at hand requires leveling a fair playing field for all.
Also, the government is now going to have to act fast: according to MP Stanislav Krecek the Constitutional Court ruling has momentarily struck down the legal basis for contracts between tenants and owners, which means that until new legislation is passed, tenants and landlords could theoretically shirk their responsibilities - of either paying rent or keeping up necessary maintenance: the possibility of abuse, while unlikely, is unsettling. The Finance Ministry, headed by the Social Democrats and the Ministry for Local Development, headed by the Freedom Union, appropriately enough, will work together to put forward a proposal as soon as possible, and it is safe to say any kind of new legislation will have to respect both tenants and landlords if it is to have any chance to pass.
