Czech municipalities abuse housing subsidy, Romani tenants in small towns pay higher rents than in Prague

Several towns in the Czech Republic are intentionally abusing the state housing subsidy by establishing and running residential hotels that charge high rents to the people in material distress who end up in them. The town hall covers the families’ housing costs through state housing subsidies that are sent directly to the town coffers. Those are the results of an analysis undertaken by the Czech Labor Ministry of the impact of last year’s savings package on ghetto residents. The Czech Press Agency has a copy of the report, according to which some government cuts and reforms evidently have significantly contributed “to the social decline of whole groups of residents”, while others had no impact on people living in ghettos.

“This mechanism has been abused by towns for many years (the payment of a high rent through the state subsidy), but currently this often concerns a targeted strategy on the part of municipalities. In some cases it has even been mapped that the towns themselves are establishing these residential hotels,” authors from the Demographic Information Center say in their analysis. Those monies flow straight to the town coffers as income.

As “one example standing for all of the rest”, the authors have named the town of Varnsdorf. They have pointed out that in the residential hotels there, the socially most vulnerable are paying rents that are “markedly higher than non-Romani residents would pay for an apartment in the Vinohrady neighborhood in the center of Prague”.

In privately-owned residential hotels, rents are also several times higher than private apartments. According to the analysis, they are three times higher in Kladno, 2.5 times higher in Sokolov, and up to four times higher in Větřní. All or most of these costs are paid by the municipality through the housing subsidy. “This approach motivates the owner of the residential hotel to keep raising rents. This creates a parasitic mechanism, which is very costly,” the analysis says. When the authors ask what motivates municipalities to participate in this approach, one explanation given is bureaucratic corruption.

The analysis was produced last year and followed the impact of the budget cuts and changes that took effect in January 2011. The authors spoke with ghetto residents and with professionals dedicated to the issue. They conducted interviews with about 160 people.

The analysis shows that the situation of people living in the ghettos is deteriorating. During the economic crisis, the options for low-qualified persons to find work evaporated further. The authors of the report say that welfare dependency has never been higher in the last 20 years. For a large number of people, money from the state is the only legal source of a livelihood. The testimonies of the residents of excluded localities show that the most-frequently used benefits are the social benefit, the housing allowance, per-child benefits and the parental benefit. Some benefits changed last year, including the social benefit, which was cut entirely. It is the abolition of that benefit in particular, according to experts, that has contributed to deteriorating the situation of “over-indebted families”. Many of them have stopped making payments on their debts altogether. They then lost their housing and ended up in the residential hotels.

The analysis also warns of discrimination in housing. Some groups are being “displaced” from the apartment market altogether. People in distress cannot find better housing – they don’t have the money for it and landlord prejudice prevents them from accessing it as well. The authors of the study said local politicians cannot be relied upon to play an active role in this issue. In their view, the state must get involved.

Most of the changes to the social system which started to apply last year, however, are said to have not influenced the life of ghetto residents at all. These changes often concerned employment and would only have been noticed by persons who already had work.

The government is planning to abolish the housing subsidy as of next year. The government wants to save about CZK 800 million annually by doing so.